The University of Illinois’s athletics department has borrowed $32.5 million from the university system to renovate its basketball practice facility.
The loan, issued in August, was detailed as part of a records request sent to the school. The athletic department intends to pay it off entirely with donations—and is “close” to that total already committed, according to a spokesman.
That Illinois is going ahead with the project, and confident in its ability to fund the loan and interest entirely through donations, is a potentially positive sign for big-time college sports. This project pre-dates COVID-19, but many athletic departments have drastically reshaped their spending during the pandemic. That includes the halting of capital projects across the country.
The loan carries a term of 13 years, with an adjustable interest rate that starts at 3%. The school makes interest-only payments in the first three years, then begins paying down principal. Under current rates, the total payments are projected to be $40.3 million.
Funding projects initially through internal loans is standard practice at Illinois, according to athletics spokesman Kent Brown. “The university takes out the bonds, and we end up paying the university that amount,” he said. “We often have to pay a bit of a premium on some of our capital projects because of the process.”
Though they’re often announced as a single block of money, many athletic donations come staggered over a period of time—say, a $10 million gift over the course of seven years. Funding projects through loans gives the department access to that cash up front. Last year Illinois finished construction on a $79.2 million football practice facility that was funded in the same way. The school is currently building indoor practice facilities for its baseball and softball teams, and a new home for its soccer and track teams.
Illinois is also currently evaluating athletics revenue shortfalls from the pandemic-disrupted school year, a number that will depend heavily on how many football and men’s basketball games it plays. The Illini typically have a budget of about $120 million, and are expecting a shortfall of at least $20 million.
To further complicate things, the athletic department has more debt than almost any of its peers. Of the roughly 110 public universities in college football’s top division, Illinois ranked second in 2019 with $323.5 million in athletics debt, according to Sportico’s database. Only California ($438.6 million) was higher.
Built two decades ago, the Richard T. Ubben Basketball Complex houses the Illini men’s and women’s basketball teams. The renovation will add 45,000 square feet to the facility and remodel another 8,300 square feet of existing space. It will include more court space, bigger locker rooms, updated gyms and a more modern sports medicine area.
The project was part of the athletic department’s $300 million fundraising goal associated with the university-wide “With Illinois” effort, which has raised more than $2.13 billion to date. Donors to the project include an anonymous former Illini men’s basketball player, who gifted $2 million last September.