Iowa Athletics: Money Loser
The fiscal year at the University of Iowa ended July 1, so like the swallows returning to San Juan Capistrano, it's time to learn the new and creative ways that Iowa Athletics uses to claim it lost money.
The money generated by major-college sports keeps rising, but that doesn't make it any more likely that schools such as Iowa will turn a profit.
That reality is detailed in a comprehensive financial report of public university athletic departments compiled by USA Today that was released Thursday.
The report shows that Iowa's athletic department had total operating revenue of $113.25 million for the 2015-16 academic year, with expenditures of $116.17 million. The resulting deficit of $2.92 million marked the second consecutive year the department operated in the red.
In 2014-15, Iowa's athletic department brought in $105.97 million and spent $109.21 million for a deficit of $3.24 million.
We have previously discussed why this annual article on how Iowa is spending so much money to run the same athletics program it ran on literally one-third of the budget just ten years ago is almost entirely bullshit, and our favorite Northwestern/Iowa fan Kevin Trahan says much of the same over at The Comeback.
College athletic departments like to pretend they’re broke by focusing on “profits,” even though profit is a wholly irresponsible way to judge their financial health. That’s because they’re “non-profits”—they’re incentivized to spend as much money as they bring in, because if they don’t, there will be pressure to either return the money to the university to pay for academics or to pay the labor that’s generating all this money.
Instead, athletic administrators give themselves massive bonuses and hire needless employees in order to claim that they’re broke, and that there’s no way the money could be spent another way.
Trahan goes all-in on Iowa's $90 million Kinnick renovation project -- "Iowa decided to spend $90 million on renovating its football stadium, because the money is there to do it. Because of that, the Hawkeyes’ athletic department is $3 million 'under water.'" -- but that's not quite right, and understanding why it's not right is how you get to just how absurd Iowa's "profit" figures are.
The Kinnick renovation project, like the $54 million practice facility before it, and the basketball practice facility and covered driving range at Finkbine and the new boat house and the upgrades at Duane Banks before that, are capital improvements. That means, for purposes of accounting, they are generally not one-time expenditures. Instead, Iowa borrows the money for the improvements (or, in the case of the football facility, hits up its donor base for the full amount), builds the improvement, then depreciates it over 10 to 30 years while further expensing the interest on the loan and any maintenance expenses associated with keeping the building in good condition. If the Kinnick improvements are on a 10-year depreciation schedule, that means $9 million a year is hitting the books as expenses while exactly zero dollars actually leave Iowa's bank account to cover it (with an additional $4 million in debt service associated with the project paid out). It's a paper loss with no actual outlay of money. Now extrapolate that over the multitude of facility projects undertaken by Gary Barta, and you can see just how much Iowa's booked "loss" is a figment of an accountant's imagination.
Facility improvements are the best thing a real estate-heavy non-profit can do, largely for this reason, and there might not be a real estate-heavy non-profit in the state doing it on the level that Iowa athletics has over the last decade. Barta's done a great job in that respect.
Also, just in case you accidentally forget while Barta is running his Dickensian poverty scheme past everyone with a press pass in the coming weeks: Even with tens of millions of dollars in paper-only expenses, Iowa still would have turned a profit had a jury not found that Barta discriminated against Jane Meyer and forced a $6.5 million settlement of a lawsuit out of him. And that one has to be paid in straight cash, homes.
The Butler Did It
The news that Iowa somehow landed a 1,300-yard halfback for next season in early July has jolted football talk awake from its usual July slumber. Matt Brown at Sports on Earth had already ranked Butler as the 37th-best halfback returning this year before the transfer (he has Wadley eleventh), and seems excited by Iowa's two-headed monster backfield:
When we originally wrote this, Butler was ready for a senior season in Reno in which he'd be the best player on the Nevada roster. The Wolf Pack switched to an Air Raid offense under new coach Jay Norvell, though, and Butler announced on July 4 that he'll be a graduate transfer to Iowa. It's a big pickup for the Hawkeyes, who had two 1,000-yard backs last year and, despite losing LeShun Daniels, now will still have two 1,000-yard backs in Butler (1,336 yards at Nevada) and Akrum Wadley (1,081 yards, 6.4 yards per carry). Wadley will be the star, but Butler is an excellent addition with 3,316 career rushing yards.
Saturday Tradition is asking whether Butler's arrival could signal the inclusion of some option runs in the new Iowa offense, as he ran out of an option read system at Nevada (don't hold your breath). And Chris Cuellar at the Register makes an excellent point largely ignored in the immediate aftermath of Butler's announcement: Dude ran for 3,100 yards and graduated from Nevada while playing for AIRBHG:
Iowa was interested in Butler back in 2012 but never offered a scholarship, and he followed former Hawkeye assistant Lester Erb out to Nevada after finishing high school in 2014. Erb was a casualty in Nevada’s sweeping coaching staff changes in December and January.
I'm not saying he's tough. I'm saying he's Kevin Garvey.
All of this leads to the big question: Where does he fit in at Iowa next year? Obviously, Wadley is the starter, but Iowa has been desperately looking for an oft-used backup to help him out, and Butler brings much of the same versatility that Wadley provides an offense bereft of talent on the perimeter. It's difficult to know where Butler fits in an offense that we haven't yet seen, but Cuellar's article breaks it down well, as does the most recent DMR podcast with Iowa offensive line coach Tim Polasek.
Odds and Ends
Iowa baseball promoted director of operations Desi Druschel to pitching coach. Druschel has been with Iowa throughout Heller's tenure. He was previously the head coach at Mount Mercy University in Cedar Rapids and now-Ashford University in Clinton.
Yahoo ranks the 66 Power Five schools in overall athletic success, and for a place with "win" as the first word of its off-repeated mantra, " lag behind everyone in the Big Ten not named Rutgers" is not exactly success.
This is the best thing I've seen in weeks.