Michigan athletic department $240M in debt

Jim Harbaugh and his Michigan football team may be off to Italy this spring thanks to an anonymous donor footing the bill, but that doesn’t mean the athletic department as a whole is just as lucky.

The university’s athletic department is currently $ 240 million in debt, according to Bill Shea of Crain’s.

Even with an average attendance number of 110,468 fans last season (tops in all of college football), a large and deep pocketed alumni base, the athletic department still must be careful with how it manages it debt, especially with more and more people cutting out cable.

“We watch very closely with what’s happening to ESPN,” said Kevin Hegarty, UM’s executive vice president and chief financial officer.

The root of the massive number of debt comes from new facilities being built and renovations to existing ones, such as Michigan Stadium, which received a $ 9.1-million renovation in 2011.

Michigan’s debt is expected to grow to $ 371 million by 2046, which is still lower than Cal’s current $ 445-million debt.

“We are constantly in the market, looking for opportunity to take advantage of reduced interest rates,” Hegarty said. “We’ll manage that down as much as we can.”

Beginning in 2019, Michigan will be making $ 20 million a year in debt payments, before dropping to $ 15.7 million in 2022 and continuing at that number until 2036.

Hegarty acknowledged the large sum owed each year, but stated increased revenues will be able to offset the increased debt payments and even lower interest, and more can be paid on the principal.

A reason for that is due to the Big Ten signing a new six-year media rights deal with ESPN, that coupled with FOX and CBS Sports, would bring in $ 2.64 billion over six years, roughly $ 188.6 million to each school during that duration.

“We plan conservatively,” Hegarty said, who added the university as a whole carries a $ 2.1-billion debt total.

If problems arise, Hegarty also mentioned ticket price increases would go into effect, to help offset any losses occurred elsewhere.

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NCAAF | theScore

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