GT athletic dept has amassed $229 million in debt

[65Jacket]

Why are you making such a big deal out of this at this time. I have known about this for years. We had to upgrade facilities to be able to recruit. All of these major projects were started by generous gifts from big time contributors such as the Brocks, Chandlers, Zelnacks, and Texiera.The sky is not falling, but we do need to do our share to fund our program, and so do the students.

 

[awbuzz]

odd. the link works for me. Google this "FY2015 - GTAA - Audited Financial Statment.pdf" and you should find it

Will try on PC later... Maybe it's an issue using phone.

 

[33jacket]

i guess no one here has a mortgage of debt they amassed.....LOL

 

[LongforDodd]

...

@BigBankFanBoys I hope you're right, especially now that this is a thing http://www.americanbanker.com/news/...ivacy-but-banks-can-restore-it-1078492-1.html

@GTFans sorry for the off topic ramble. I'll self-Censor myself from this thread henceforth

Please continue...don't stop. This is something fresh and new that is contributed here.

 

[LongforDodd]

i guess no one here has a mortgage of debt they amassed.....LOL

I trust GT to be fiscally responsible but can the same be said of everyone else who has skin in this game? This economy relies on debt, leveraging, and the repayment of that debt. There are some parallels with this facilities arms race to the recent financial meltdown. Our we overleveraged? Do we have "enough in reserves" for when/if the income streams start to slow or even dry up? IDK but I guess I have to trust those in charge.

 

[New Old Guy]

The numbers cited are only part of the story. The headline grabbing amounts of $229million and $13.3 million looks like GT is drowning in debt, but the reality is GT is no where near defaulting on debt payments.

The total owed on the facilities and other projects is $229 million, and the annual debt obligations on the total is $13.3 million (according to the article). What they leave out is the fact that facilities like our indoor practice facility and other projects are financed for the most part by commitments from generous donors like the Brocks (http://patch.com/georgia/midtown/techs-new-football-facility-nears-completion). Also keep in mind, GT is also paid by TV/media contracts, which alone pay for the annual debt service. That's all not including ticket sales, merchandise, marketing agreements, etc. GT has been very good about allocating funds to cover future debt and contract commitments.

I get the gist of the article that schools feel the need to extend themselves to compete with each. The fact is, the athletic department is a business, as are other schools athletic departments. Like businesses from any other sector, everyone needs to invest in infrastructure, staff, and research to compete in their respective sectors.

Another part of the story left untold is that GTAA also has significant investments that are earning more than the interest on that long term debt.

 

[forensicbuzz]

Look at the University System of Georgia in general. Does anyone think that the campus improvements over the past 30 years have been paid for with cash? When I look at the McCamish Pavilion, the upgrades to BDS, Russ Chandler improvements, The Byers Tennis Complex (Bill Moore), the Brock practice facility, Mewborn Field, the Zelnak practice facility, I see an investiment in our branding. We're known for world class academics with pretty good athletics too.

 

[augustabuzz]

The is off the rails. There is something that just doesn't feel right about all of this. I don't feel this way exclusively about GT, but college sports in general.

"Georgia Tech, an athletic department that depends on mandatory student fees to help pay its bills has amassed $229 million in debt, records show.

In 2014, Georgia Tech athletics collected about $5.1 million from students, which covered about 7 percent of the department’s spending. Spread proportionally across the entire athletics budget, that means students covered about $980,000 of Georgia Tech’s $13.3 million annual debt payments on sports facilities including an indoor football practice field, upgrades to the basketball arena, a basketball practice facility and a softball field."

https://www.washingtonpost.com/spor...384dd4-a558-11e5-9c4e-be37f66848bb_story.html

My understanding is that after the $229 million debt, the GTAA has about $100 million. So, although the debt is something to watch, it is not overly concerning.

 

[Whiskey_Clear]

Much ado about not much. I find it a bit humerus that some complaining about the debt also think we should be just as enticing to 17 year olds as Stanford, Bama, Notre Dame, and Oregon are. And is Vanderbilt really the University we want to hold up as an ideal to follow in cost cutting? Vanderbilt?? Mind blown.....

 

[JacketFromUGA]

Much ado about not much. I find it a bit humerus that some complaining about the debt also think we should be just as enticing to 17 year olds as Stanford, Bama, Notre Dame, and Oregon are. And is Vanderbilt really the University we want to hold up as an ideal to follow in cost cutting? Vanderbilt?? Mind blown.....

 

[OldJacketFan]

very well played sir!

 

[Stonewall]

Georgia Southern put expanding its stadium on the backs of its students.

The students voted overwhelming in favor of the stadium expansion and FBS fees.

http://news.georgiasouthern.edu/2012/09/28/students-vote-to-support-proposed-student-fees/

 

[65Jacket]

The students voted overwhelming in favor of the stadium expansion and FBS fees.

http://news.georgiasouthern.edu/2012/09/28/students-vote-to-support-proposed-student-fees/

It's heart warming to see students who believe there is more to college than academics, it's called fun. I had a lot of fun at GT, and most of it was at Grant Field ( now BDS ).
I attended all of the football games ( and not because they were free ) and ran there five or six days a week on the track team .The track was in the stadium at that time.

 

[dressedcheeseside]

It's heart warming to see students who believe there is more to college than academics, it's called fun. I had a lot of fun at GT, and most of it was at Grant Field ( now BDS ).
I attended all of the football games ( and not because they were free ) and ran there five or six days a week on the track team .The track was in the stadium at that time.

You mean the "rat track" right? "Rats on the field, rats on the field, rats on the field!..."

Also, the field is still called "Grant field." The whole thing is called Grant Field at Historic Bobby Dodd Stadium.

 

[first&ten]

Look at the University System of Georgia in general. Does anyone think that the campus improvements over the past 30 years have been paid for with cash? When I look at the McCamish Pavilion, the upgrades to BDS, Russ Chandler improvements, The Byers Tennis Complex (Bill Moore), the Brock practice facility, Mewborn Field, the Zelnak practice facility, I see an investiment in our branding. We're known for world class academics with pretty good athletics too.

Maybe the problem is , Tech athletic programs are not getting a satisfactory return on their investments.At least that's the way I see it.

 

[65Jacket]

You mean the "rat track" right? "Rats on the field, rats on the field, rats on the field!..."

Also, the field is still called "Grant field." The whole thing is called Grant Field at Historic Bobby Dodd Stadium.

I know it's still called Grant Field, but was assuming a lot of our younger posters were not aware of the history. The RATS did sit in temporary bleachers on the track.Those seats were remove after football season each year. Unfortunately, I entered school in January and missed my RAT quarter. I regret missing out on that and wearing a RAT cap. I think it would be great if freshmen were still required to wear them. (I know the band freshmen still do)

 

[Cam]

I obviously support the athletic program at GT, but it's sort of unreasonable to force fees on students unless they want the money to go towards that. Might be best to have a default plan, but then allow students to allocate funds where they want them. Within certain ranges. Then again, I'd prefer if there were no fees altogether. My $25k graduate stipend minus the $2800 in yearly fees and near mandatory $800 parking pass makes living in a major city... difficult. Though that's a topic for another time.

 

[RLR]

In other comments tangentially related to the main issue in this thread, two former GT athletes are at the forefront of displacing the banking industry.

Lara Hodgson (http://nowcorp.com/AboutUs/Management/tabid/3023/Default.aspx)
Ryan Gomba (https://even.com/about)

 

[jwsavhGT]

Fitch Affirms Georgia Tech Athletic Association's Rev Bonds at 'A+'; Outlook Stable

http://www.businesswire.com/news/ho...ffirms-Georgia-Tech-Athletic-Associations-Rev

KEY RATING DRIVERS

INSTITUTIONAL ALIGNMENT: GTAA is strategically important to and aligned with the Georgia Institute of Technology (Georgia Tech), as GTAA administers Georgia Tech's comprehensive intercollegiate athletic program. Georgia Tech is not obligated to repay debt of the separately incorporated GTAA, but the organizations have overlapping governance and institutional goals.

STRONG FUNDRAISING: GTAA benefits from strong philanthropic support, bolstered by the development activities of Georgia Tech and the Georgia Tech Foundation (the foundation). GTAA exceeded its $250 million fundraising goal as part of Georgia Tech's $1.5 billion comprehensive campaign concluding in calendar 2015.

DEFICIT-GENERATING OPERATIONS: GTAA generates sizeable GAAP-based operating deficits, which are not uncommon for a stand-alone, athletics-focused auxiliary enterprise. Strong fundraising and sound investment management have offset operating deficits and bolstered GTAA's net assets over time.

HIGH DEBT BURDEN: GTAA maintains a high pro forma debt burden as a result of added leverage in recent years and use of non-level, back-loaded debt structures. The high debt burden is partly offset by GTAA's lack of additional debt plans and its robust fundraising ability.

 

[Buzz776g]

Fitch Affirms Georgia Tech Athletic Association's Rev Bonds at 'A+'; Outlook Stable

http://www.businesswire.com/news/ho...ffirms-Georgia-Tech-Athletic-Associations-Rev

KEY RATING DRIVERS

INSTITUTIONAL ALIGNMENT: GTAA is strategically important to and aligned with the Georgia Institute of Technology (Georgia Tech), as GTAA administers Georgia Tech's comprehensive intercollegiate athletic program. Georgia Tech is not obligated to repay debt of the separately incorporated GTAA, but the organizations have overlapping governance and institutional goals.

STRONG FUNDRAISING: GTAA benefits from strong philanthropic support, bolstered by the development activities of Georgia Tech and the Georgia Tech Foundation (the foundation). GTAA exceeded its $250 million fundraising goal as part of Georgia Tech's $1.5 billion comprehensive campaign concluding in calendar 2015.

DEFICIT-GENERATING OPERATIONS: GTAA generates sizeable GAAP-based operating deficits, which are not uncommon for a stand-alone, athletics-focused auxiliary enterprise. Strong fundraising and sound investment management have offset operating deficits and bolstered GTAA's net assets over time.

HIGH DEBT BURDEN: GTAA maintains a high pro forma debt burden as a result of added leverage in recent years and use of non-level, back-loaded debt structures. The high debt burden is partly offset by GTAA's lack of additional debt plans and its robust fundraising ability.

Question for our finance-knowledgeable folks: what is a 'non-level, back-loaded debt structure' exactly?