As college football sputters its way through this unusual 2020 season, schools are confronting heavy revenue shortfalls.
Athletic departments across the country are eliminating programs, furloughing staffers and asking coaches to take pay cuts (kind of). But those are minor moves; the big ones will most likely come in the form of securing loans—from the university, the system or outside sources.
The Texas Tech Red Raiders just took one of those, a relatively small sum of $1,055,000, borrowed from the Texas Tech University System at a rate of 3%. It’s unclear exactly what the loan was used for, or the length of time the athletic department has to pay it back—it was divulged in an open records request but university officials declined to provide any more details.
It is, however, a small piece of the $25 million revenue shortfall that the Red Raiders are expecting relative to last year, a hit that would be roughly a quarter of their annual athletics budget. The department spent $95.1 million in fiscal 2019, with revenue driven by football ticket sales ($11 million), donations ($24 million) and media payments ($25 million). It also has $80 million of debt, which carries an annual debt service of $14.8 million.
With football capacity capped at 25% due to COVID-19 restrictions and winter sports like basketball looking at potential disruptions, it’s logical that the department would be looking for financial assistance. It hasn’t eliminated any sports—it offers 15, one more than the NCAA minimum—but in August the athletic department eliminated 40 positions and reduced salaries among remaining employees, a move that would save the school $4.49 million over the next year.
It’s sourcing new revenue, too. Last week the athletic department extended the naming rights agreement to its basketball arena, which will pay it an additional $16 million through 2035.
The Red Raiders aren’t the first, and they won’t be the last to go the loan route. The University of Arkansas System board of trustees, for example, recently approved a $19.1 million bank loan to help the Razorbacks pay off debt service on facilities bonds. The Pac-12 Conference is also considering a loan package that would give each of its 12 athletic departments access to capital. That package, originally around $1 billion total, will likely be smaller now that the conference is planning to play a short football season this fall.