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Sunday, September 19, 2010

New A.D. will have full slate of projects

Investments in future of athletics clear from fundraising activity, debt

Rock Chalk Dancers, from left, Molly Ryan, Jade Daniels and Brooke Ryan pose Wednesday during a shoot for the Rock Chalk Dancers calendar with photographer Tamalee Baker in the west hallway of Allen Fieldhouse on Sept. 15, 2010.

Rock Chalk Dancers, from left, Molly Ryan, Jade Daniels and Brooke Ryan pose Wednesday during a shoot for the Rock Chalk Dancers calendar with photographer Tamalee Baker in the west hallway of Allen Fieldhouse on Sept. 15, 2010.

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Kansas University’s next athletics director will be coming into a department with new and expanded facilities developed during Lew Perkins’ seven-year tenure on campus.

And raising money to pay off those bills will be a priority, just as it is today.

“We want to continue fundraising … (and) swinging the pendulum forward,” said Sean Lester, interim athletics director, on the radio this past week.

Finances

Kansas Athletics Inc., the not-for-profit athletics organization at Kansas University, reported $93.67 million in total liabilities for the 2008-2009 year, up nearly 55 percent from a year earlier.

The bulk of the increase: More than $32 million in bonds sold to finance construction and remodeling projects at Allen Fieldhouse, the Horejsi Family Athletic Center, the Wagnon Student Athlete Center/ Parrott Athletic Center and vicinity.

Those bonds are in addition to the $17.8 million the department borrowed in 2004, to refinance the remainder of $27.2 million in bonds that had been issued six years earlier for upgrades at Memorial Stadium and the fieldhouse.

In all, those two bond issues leave Kansas Athletics responsible for paying about $3.3 million a year for principal and interest through the year 2033.

The department is up-to-date on its payments, backed by the operations and assets held by Kansas Athletics, said Jim MacMurray, vice president for finance at the Kansas Development Finance Authority, which issued the bonds and has served as an intermediary between the department and its bond holders.

And whoever ends up leading the athletics department will be responsible for seeing that the ongoing performance remains strong on the financial scoreboard, through whatever challenges and opportunities arise.

“It’s a business,” MacMurray said. “They’re going to have to operate it to basically pay the bonds. A lot of things can happen over 25 years.”

Among developments during the past year, after the department filed its latest audited financial statements and other documents with the IRS:

• The department cut a $3 million check to Mark Mangino, satisfying the financial portion of a settlement for him to leave as KU football coach a year after leading the team to an Orange Bowl title.

• Perkins himself retired Sept. 7, cutting short previous plans to stay on the job for another year. KU said that Perkins would receive a $600,000 retention bonus that Perkins would have received by staying on the job until next June, and that Perkins would be receiving about $2 million from KU after the Sept. 7 announcement — all of it from Kansas Athletics, not taxpayer sources.

Pledging to pay

Susan Wachter, the department’s chief financial officer, said private donations were being used to cover bond payments. Debt for the Anderson Family Football Complex — a project whose planning was taking shape just before Perkins’ tenure — was financed in part by a $6.5 million loan from the KU Endowment Association and backed by pledges and contributions from donors.

Athletics paid back endowment for the bridge loan, and athletics continues to collect on pledges.

“I’m on plan and on target,” said Dana Anderson, whose family’s name is on the complex and is paying about $400,000 this year. “Haven’t missed a beat.”

While some donations haven’t always come in as planned — the department previously has acknowledged that Thomas Kivisto, for one, had been behind on at least some of his contributions — the project’s bills have been paid going forward.

The department can turn to reserve funds or other sources to make ends meet, Wachter said.

“You go get it where you’ve got the funds to do it,” she said.

Pushing ahead

The department’s long-term debt ranks sixth among athletics departments in the Big 12 Conference, said Jim Marchiony, an associate athletics director. And the department has no plans to stop pushing forward on initiatives to bolster KU fields and other sites for athletes and fans.

The department still has plans to build a Gridiron Club on the east side of Memorial Stadium, locate an “Olympic Village” for nonrevenue sports — including soccer, softball, and track and field — southwest of Allen Fieldhouse, and provide millions of dollars to the chancellor’s office for use in academic and other areas as she sees fit.

The Gridiron Club originally had been sold as a project slated to be open this fall and to be financed solely by club memberships bought by donors. At last check, the effort had generated about $4 million.

“We’re having discussions, both internally and with donors and people with vested interests in Kansas Athletics, and we’re keeping those projects alive,” Marchiony said. “We’re talking about all of it because the Gridiron Club can make all of the rest of it happen.”

While the club and its associated projects have no specific timeline, he said, “we want to do it as soon as we can, but we’re not going to do it without the funding.”

Overall donation levels remain strong among alumni and friends, Marchiony said, and contributions are coming in at least as strong as last year.

“Kansas Athletics has very loyal and generous donors,” he said.

Building success

Investments in new, expanded and refurbished athletics venues have been and will continue to be essential in the world of intercollegiate athletics, Marchiony said. The recent rumblings of conference reorganization only reconfirmed that spending money at Memorial Stadium, Allen Fieldhouse and other KU venues was paying off.

“What we needed to do, and what we always need to do, is put Kansas Athletics in a position where we can compete on a national level and in the Big 12,” Marchiony said. “And these renovations have done that.”

It’s important for the Big 12 to remain strong, he said, and for KU to remain strong in the conference it needs to good coaches, student-athletes and facilities.

“It’s very important to position Kansas as a leader in intercollegiate athletics,” he said.

Dale Seuferling, president of the Endowment Association, acknowledged that Kansas Athletics has worked to improve its assets through upgrades to venues and related work. Such moves are decided by the department, one that is slated to get a new leader in the coming months.

The association last year held $47.6 million in deposits for Kansas Athletics.

“You have to make a conscious decision about making an investment in the future and determine what is needed to build success,” Seuferling said.

Comments

jakzhumans 8 years, 8 months ago

What's the "full slate of projects" referred to in the headline? The only thing discussed in any detail was raising funds to pay down debt on projects that have already been completed. Even the future projects mentioned in passing, the Gridiron Club and Olympic Village, were only mentioned in the context of the fundraising needed to complete them. So really the headline should have been, "New AD Will Need to Continue to Focus on Fundraising". Isn't that really the thrust of the article?

And in that case, doesn't it make sense to cite KU's current revenue levels? You mentioned the debt. You mention the ranking of that debt compared to other Big 12 schools (an unremarkable 6th). You mention the annual payments on that debt. And not once do you mention - in an article about revenue - the amount of revenue Kansas Athletics brings in every year. This despite the fact that it was part of the same tax filing you used to determine the debt level. Here's the basic facts from that document:

Total Revenue - $85,212,337 (Up almost $1.1 million over 2008) Total Expenses - $64,419,917 (Up over $3.1 million over 2008) Total Profit - $20,792,420 (Down roughly $2 million from 2008)

So, in short, the net result of the added debt service cut into Kansas Athletics' profit by about 10% in 2009, but they still brought in almost $21 million in revenue over and above all expenses. So the only way Kansas Athletics would be in any danger of not being able to comfortably absorb their debt service each year is if their annual revenues dropped by over $20 million from 2009 levels, something wildly unlikely to happen given the 900-pound gorilla in the room that you ignore....the new Big 12 television contract that developed out all the conference realignment shenanigans, a contract likely to INCREASE revenue for all member schools by several million dollars each year.

It took me, someone who is not a professional journalist, about 3 minutes to look up all of this information, and I used your paper's own website to do it. But I guess it's not sexy to write an article that says "New KU AD WIll Step into Rosy Financial Picture".

kureader 8 years, 8 months ago

Thank you for providing the information that probably should have been in the article.
This article is better, though, than the one written last week by LJW that was clearly intended to generate rumors and gossip about KU's financial situation. At least this one quoted KU sources and gave some context to KU's recent borrowing. Certainly, one can't help but wonder about KU's financial situation and feel uncomfortable about how Lew used the department's money. KU just tossed 5 million to two people to get them to leave. It would be nice to read a comprehensive article that was simply intended to inform, not to persuade. After reading this article, including your comments, KU's financial situation is still unclear. I do think the continued discussion of the Gridiron Club is more wishful thinking than part of an attainable plan.

KEITHMILES05 8 years, 8 months ago

The new AD MUST get rid of all the Perkins AD's who have had long time association with him. They are total liabilites in the "trust factor" the Chancellor speaks about. Nothing else matters and there will be no trust developed until these people are GONE.

frompekka2sasha 8 years, 8 months ago

Do the writers at LJW acknowledge the opinions of the readers when they are facts? This supposed financial "mess" was debunked by several people at the time of the last article. What is the point of this article?

FreddyinLA 8 years, 8 months ago

The first project should be to clean out the dead wood Lew brought in. 55% increase in liabilities in one year?? Bond obligations until 2033??

Sweet Lew wasn’t raising money; he was selling out to the wall street pig farmers. Nice to see the unethical travel expenses in NYC were for a good cause, lining the pockets of wall streets finest.

We’ve been had people.

On a more positive note, looks like no plans in place to get rid of our beloved track.

kuhawks28 8 years, 8 months ago

Boy you really ticked off "wildhawk2198." :)

I got a chuckle out of it though.

Wildhawk2198 8 years, 8 months ago

Jayhawkinnebr: Get off it! Coach Gill is OUR football coach!!! Try supporting the work he is doing! The staff has played 3 games and hasn't even brought in a recruiting class yet! There is a reason he took the WORST program in NCAA history to a conference championship in just 2 years. Coach Gill KNOWS what he is doing. If you would have actually watched any of the last 3 games you would know that it is a lack of execution by some young and inexperienced players is why we are losing. Oh, wait, and BEAT #15 GT!!!

GET OFF COACH GILL'S BACK!!!

All of the TRUE supports and fans that understand what it takes to build a program are in full support of Coach Gill, his staff, and the players!!!

ROCK, CHALK, JAYHAWK!!!

gardenjay 8 years, 8 months ago

Totally agree with KEITHMILE, and it includes the Lawrence Police Chief who was hired a week before Perkins left, which is totally unethical. Especially for the position overseeing ethics, good grief.

741hawk 8 years, 8 months ago

Right on FreddyinLA. Can't have a quality BCS football facility with an eight-lane track inside it. The only three BCS schools separating their fans from the field with a track are Duke, Univ of Washington and KU. (Great company, huh!) So . . . how did those three schools fare last weekend?

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