Financial Realities - Some Programs Have HUGE $$

Greene Rice FIG

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If the new governor told Rutgers new president we are cutting the amount we are sending you from $1.17 trillion to $750 million I don't see how our athletic department's budget could expand.

If our president said no college who losses money on sports will get federal funding we would be in a heap of trouble.
 

Greene Rice FIG

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CHATGPT said our endowment is $2.06 billion....so $100M could be what it could generate in income. In 2020 the Rutgers endowment had $1.4 B
 

-RUFAN4LIFE-

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If the new governor told Rutgers new president we are cutting the amount we are sending you from $1.17 trillion to $750 million I don't see how our athletic department's budget could expand.

If our president said no college who losses money on sports will get federal funding we would be in a heap of trouble.
Most universities don’t turn a profit on athletics. This is not a Rutgers specific issue and our annual loss would be much smaller if alums donate along the same lines as those at our B1G peers. Thats where the revenue issue has always been.
 

Fat Koko

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CHATGPT said our endowment is $2.06 billion....so $100M could be what it could generate in income. In 2020 the Rutgers endowment had $1.4 B
ChatGPT plucks the number from a Rutgers webpage.

Another source puts the fiscal 2024 endowment at $2.18 billion. This source is helpful because includes it data for almost every North American university or university system in a single Excel worksheet.

The endowment pays out 4% per year, or roughly $80 million at the endowment's current value. However, these funds are earmarked to specific causes, such as scholarships and endowed chairs. Endowment earnings are not a slush fund for the university to spend as it wishes.
 
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Greene Rice FIG

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Most universities don’t turn a profit on athletics. This is not a Rutgers specific issue and our annual loss would be much smaller if alums donate along the same lines as those at our B1G peers. Thats where the revenue issue has always been.
i think you can count on a hand the amount of schools that lose more than us.
 

Greene Rice FIG

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MY BOTTOM LINE......

The business model that has athletic departments expanding budgets to pay players $20,000,000 is going to crack...... Only a handful of programs have the free cash flow to do it.

What is the real purpose of college athletics? Is it to raise tuition prices?
 

RUDivision

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Most universities don’t turn a profit on athletics. This is not a Rutgers specific issue and our annual loss would be much smaller if alums donate along the same lines as those at our B1G peers. Thats where the revenue issue has always been.
Less then 20 D1 schools are profitable. The loses range vastly up into the 200MM.
Rutgers is far better off then most.
 
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Retired711

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I have heard there will be pay to play (Rev Share and NIL without fair work returned) and true NIL ( NIL with fair work returned). Pay to play will be capped and true NIL will not. The governing body will determine what is pay to play and what is true NIL (fair work).
. Pay to play will be forbidden; true NIL will not. Deloitt's job is to figure out which is which.
 

PSAL_Hoops

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. Pay to play will be forbidden; true NIL will not. Deloitt's job is to figure out which is which.
But Deloitte is technically only required to look at deals originating through the school or connected to the school - correct? Or has that changed. For example if Nike reaches out directly to said player - no Deloitte? And if so, how is that differentiated from Booster A reaching out to said player (if neither go through Deloitte).
 

Retired711

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But Deloitte is technically only required to look at deals originating through the school or connected to the school - correct? Or has that changed. For example if Nike reaches out directly to said player - no Deloitte? And if so, how is that differentiated from Booster A reaching out to said player (if neither go through Deloitte).
You are correct. The assumption is that Nike or someone else not affiliated with the school is only going to engage in commercially sensible deals. But I believe that Deloitte is going to look at all deals to ensure that they are not sweetheart deals designed to persuade a player to come to or stay at a particular school. We'll have to see the exact terms of the settlement when Judge Wilken gives it final approval -- which she hasn't done yet. (She can force the parties to change it.)
 

Greene Rice FIG

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If I have $300,000,000 and I spoil my kid and i want Cooper Flagg at his birthday party there is only one Cooper Flagg. Who is to say $5,000,000 isn't a fair price?
 

Retired711

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If the new governor told Rutgers new president we are cutting the amount we are sending you from $1.17 trillion to $750 million I don't see how our athletic department's budget could expand.

If our president said no college who losses money on sports will get federal funding we would be in a heap of trouble.
Rutgers gets nothing near that from the state. Last year's appropriation was $564 million. Again, that money goes to costs of instruction. It gets another $500 million or so to pay fringe benefits to professors and staff.

The bigger question is posed by your second paragraph. Holloway was willing to subsidize the athletic budget. Barchi wasn't; he was pressing to end the subsidy. What will the next President want? He or she will doubtless be influenced by how big the deficit will be once we start paying players.
 

PSAL_Hoops

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You are correct. The assumption is that Nike or someone else not affiliated with the school is only going to engage in commercially sensible deals. But I believe that Deloitte is going to look at all deals to ensure that they are not sweetheart deals designed to persuade a player to come to or stay at a particular school. We'll have to see the exact terms of the settlement when Judge Wilken gives it final approval -- which she hasn't done yet. (She can force the parties to change it.)

That makes sense. Clearly they can’t require red tape review on every third party engagement as they wouldn’t have the capacity. Hopefully every deal will at least need to be submitted and Deloitte will have the right to review any of them but only the internal ones will require it. SMU doesn’t have the market interest to justify any value in paying “real” money to a player to put their picture on an ad for some local vendor or such. There also can’t be lower limits of small amounts that don’t need to be reported otherwise those schools will concoct large volumes of small deals for individual players that sum to the amount they want for doing nothing or diminimis things.
 
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Fat Koko

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MY BOTTOM LINE......

The business model that has athletic departments expanding budgets to pay players $20,000,000 is going to crack...... Only a handful of programs have the free cash flow to do it.

What is the real purpose of college athletics? Is it to raise tuition prices?
At the power conference schools, the purpose of college athletics is to pay football coaches.

Greg and his staff earn more than every coach in every other sport combined.

People like to write, "football drives the bus," but on my math the football program lost more money than any other program in 2024, even when allocating a large majority of media rights revenue to football.

At other schools, such as the Ivy League and service academies, the focus is on student participation in athletics.
 
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Retired711

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That makes sense. Clearly they can’t require red tape review on every third party engagement as they wouldn’t have the capacity. Hopefully every deal will at least need to be submitted and Deloitte will have the right to review any of them but only the internal ones will require it. SMU doesn’t have the market interest to justify any value in paying “real” money to a player to put their picture on an ad for some local vendor or such. There also can’t be lower limits of small amounts that don’t need to be reported otherwise those schools will concoct large volumes of small deals for individual players that sum to the amount they want for doing nothing or diminimis things.
I think the threshold for review is $600. Deloitte has constructed some kind of computer program for recording and auditing transactions. We'll see how well it works.

The problem isn't internal deals. The schools can pay up to their cap amount without having a specific NIL deal with a kid. The problem is deals between boosters and athletes to lure a kid to come a school or stay there.
 

Greene Rice FIG

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Rutgers gets nothing near that from the state. Last year's appropriation was $564 million. Again, that money goes to costs of instruction. It gets another $500 million or so to pay fringe benefits to professors and staff.

The bigger question is posed by your second paragraph. Holloway was willing to subsidize the athletic budget. Barchi wasn't; he was pressing to end the subsidy. What will the next President want? He or she will doubtless be influenced by how big the deficit will be once we start paying players.
That adds up to over $1B....you are doing a little mental accounting. The University takes a $1 billion from the state. Rutgers athletics losses $75,000,000 (not exactly sure). If you want to allocate the money we get from NJ to payment of professors to feel better that is great. If I look at the database of NJ state employees Schiano and Pikiell are on the same list as the professors you want to direct NJ taxpayers money to.
 

Retired711

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Rev share is pay to play.
Pay to play by *the school* is fine. But the school is limited by the overall cap on compensation. Pay to play by boosters is not. Both are technically NIL payments, but the two categories are considered very different in the settlement.
 

Retired711

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That adds up to over $1B....you are doing a little mental accounting. The University takes a $1 billion from the state. Rutgers athletics losses $75,000,000 (not exactly sure). If you want to allocate the money we get from NJ to payment of professors to feel better that is great. If I look at the database of NJ state employees Schiano and Pikiell are on the same list as the professors you want to direct NJ taxpayers money to.
I'm not sure I know what you're driving at, but the $500 million is specifically allocated to paying fringes. The other $560 million goes to costs of instruction. Neither sum can be used for other purposes. As I pointed out above in my reply to @PSAL_Hoops, the subsidy comes from reserve money -- the University's savings account. Again, the key question is whether the next University president wants to continue to have reserves used to balance the athletic department's budget.

P.S. the fact that Pikiell and Schiano are in the same data base as professors does not mean they get paid from the same sources.
 

Greene Rice FIG

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Sorry.....Greg Schiano, Steve Pikiell and the Macroeconomic 1 professor all have paychecks payable from the state of NJ.

Since you know more about this than me (not being snarky, you do) where exactly does the $75,000,000 or so shortfall from the athletic department come from? Is it part of a "pool" that directly or indirectly needs $1B to pay fringes or cost of instruction?

What the **** is a fringe? I know what a flush is.
 

Retired711

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Sorry.....Greg Schiano, Steve Pikiell and the Macroeconomic 1 professor all have paychecks payable from the state of NJ.

Since you know more about this than me (not being snarky, you do) where exactly does the $75,000,000 or so shortfall from the athletic department come from? Is it part of a "pool" that directly or indirectly needs $1B to pay fringes or cost of instruction?

What the **** is a fringe? I know what a flush is.
I'm sure you know what a fringe is -- it's, for instance, the health insurance an employer buys for employees.

Yes, the checks all come from the State of NJ. But they're not all paid for the same way.

If you believe the linked story -- I tend to believe it because it's taken from a publicly available report -- about $8 million of the short fall is paid by the state. ( I didn't think it was that much,but, let's face it; that's chicken feed in a $58 billion budget) $14 million comes from student fees. A few million comes from donations . The rest (about $41 million) comes out of the University's reserves.

https://www.nj.com/sports/2025/02/r...price-the-largest-deficit-in-the-big-ten.html
 

Greene Rice FIG

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I'm sure you know what a fringe is -- it's, for instance, the health insurance an employer buys for employees.

Yes, the checks all come from the State of NJ. But they're not all paid for the same way.

If you believe the linked story -- I tend to believe it because it's taken from a publicly available report -- about $8 million of the short fall is paid by the state. ( I didn't think it was that much,but, let's face it; that's chicken feed in a $58 billion budget) $14 million comes from student fees. A few million comes from donations . The rest (about $41 million) comes out of the University's reserves.

https://www.nj.com/sports/2025/02/r...price-the-largest-deficit-in-the-big-ten.html
My point is that it is all mental accounting.....

Tuition is tuition. Line items don't change the bottom line. It just allows us to put things in different buckets. Remove the athletics deficit and all of a sudden the $14,000,000 to student fees go to paying professors and the state sends less $ to RU and everyone's taxes in the State of Nj go down a few pennies.

I think it is politically easier to demand RU to "balance" it's athletic department when 30 or so percent of the deficit is the amount players are being paid.

It technically wouldn't be wrong for a politician to say the State of NJ is paying college athletes to play a game.

No I didn't know what a fringe was.
 

Retired711

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My point is that it is all mental accounting.....

Tuition is tuition. Line items don't change the bottom line. It just allows us to put things in different buckets. Remove the athletics deficit and all of a sudden the $14,000,000 to student fees go to paying professors and the state sends less $ to RU and everyone's taxes in the State of Nj go down a few pennies.

I think it is politically easier to demand RU to "balance" it's athletic department when 30 or so percent of the deficit is the amount players are being paid.

It technically wouldn't be wrong for a politician to say the State of NJ is paying college athletes to play a game.

No I didn't know what a fringe was.
Student fees do not go to paying professors. Maybe it would go to other things student fees pay for, such as health services, intermurals and career help - maybe fees would diminish. Money is not as interchangeable as you suggest.

But there's one thing we agree on: paying $20 million on top of what Rutgers is already paying creates a burden that the President and the Board of Governors may no longer be willing to bear.
 
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PSAL_Hoops

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Student fees do not go to paying professors. Maybe it would go to other things student fees pay for, such as health services, intermurals and career help - maybe fees would diminish. Money is not as interchangeable as you suggest.

But there's one thing we agree on: paying $20 million on top of what Rutgers is already paying creates a burden that the President and the Board of Governors may no longer be willing to bear.

I think money is probably a bit more interchangeable in practice than you think. Grants typically have project budgets with details of exactly how the money will be spent but there’s usually a healthy indirect cost allocation (say 15%) regardless of the source (whether it’s a foundation funding a research initiative, the state government funding academics, etc. so many things can be grouped in that G&A bucket and there’s a lot of breathing room. No, not everything. But enough where it’s likely that an additional 20M to fund paid athletes likely means that a larger chunk of other Rutgers initiatives are being used to cover that general stuff and less direct funds being used for those other, non-athletic initiatives. The actual extent of this would be hard to estimate.
 

Retired711

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I think money is probably a bit more interchangeable in practice than you think. Grants typically have project budgets with details of exactly how the money will be spent but there’s usually a healthy indirect cost allocation (say 15%) regardless of the source (whether it’s a foundation funding a research initiative, the state government funding academics, etc. so many things can be grouped in that G&A bucket and there’s a lot of breathing room. No, not everything. But enough where it’s likely that an additional 20M to fund paid athletes likely means that a larger chunk of other Rutgers initiatives are being used to cover that general stuff and less direct funds being used for those other, non-athletic initiatives. The actual extent of this would be hard to estimate.
Heavens knows I do not want to take this thread on a political tangent, but the indirect cost allocation for government grants has usually been more like 50-60% than 15%. That's why universities like Rutgers are fighting so hard against the Trump Administration's attempt to cut it back to 15%. That money basically pays for the building, support staff, etc. Probably a little leaks through to pay for costs of instruction,, but not much.

In any case, we agree that Rutgers is going to have to take a deep breath before committing to use $20 million to pay athletes. Athletics benefits the institution in lots of ways -but at some point the price tag becomes too high. At the very least, we can expect that other sports will be cut back unless alums can be found to endow them (as has happened at other public universities like Berkeley, my alma mater.)
 

PSAL_Hoops

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Heavens knows I do not want to take this thread on a political tangent, but the indirect cost allocation for government grants has usually been more like 50-60% than 15%. That's why universities like Rutgers are fighting so hard against the Trump Administration's attempt to cut it back to 15%. That money basically pays for the building, support staff, etc. Probably a little leaks through to pay for costs of instruction,, but not much.

In any case, we agree that Rutgers is going to have to take a deep breath before committing to use $20 million to pay athletes. Athletics benefits the institution in lots of ways -but at some point the price tag becomes too high. At the very least, we can expect that other sports will be cut back unless alums can be found to endow them (as has happened at other public universities like Berkeley, my alma mater.)

Yeah - I put the 15% that’s standard in other (less regulated) grantors (Foundations and such that support specific research initiatives or set projects that are underway). My point is that amongst all the pots of funding that roll into Rutgers there’d figure to be some wiggle room in terms of shuffling dollars.

Yes - you are right in that there is uncertainty right now around federal funding, and a domino effect in terms of other funding sources since many other non-profits viability rely on federal dollars. Which ones get cut and which don’t will have an impact on available funds everywhere - but your right. Different conversation entirely though.
 
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Heavens knows I do not want to take this thread on a political tangent, but the indirect cost allocation for government grants has usually been more like 50-60% than 15%. That's why universities like Rutgers are fighting so hard against the Trump Administration's attempt to cut it back to 15%. That money basically pays for the building, support staff, etc. Probably a little leaks through to pay for costs of instruction,, but not much.

In any case, we agree that Rutgers is going to have to take a deep breath before committing to use $20 million to pay athletes. Athletics benefits the institution in lots of ways -but at some point the price tag becomes too high. At the very least, we can expect that other sports will be cut back unless alums can be found to endow them (as has happened at other public universities like Berkeley, my alma mater.)
Almost all the $20 M is going to come from the increased Big Ten Media payout, which is going to be $80M - $100M this year.
 

Greene Rice FIG

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At the power conference schools, the purpose of college athletics is to pay football coaches.

Greg and his staff earn more than every coach in every other sport combined.

People like to write, "football drives the bus," but on my math the football program lost more money than any other program in 2024, even when allocating a large majority of media rights revenue to football.

At other schools, such as the Ivy League and service academies, the focus is on student participation in athletics.
not at all ivies
 

Greene Rice FIG

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Almost all the $20 M is going to come from the increased Big Ten Media payout, which is going to be $80M - $100M this year.
The increased payout in the future was the rationale given why it wasn't a big deal for the huge deficit. Now the increase is being used to pay players. What is the projected YoY increase of media rights?

What's going to happen if we hit a recession and/or lose a lot of people like me who get off the train. I cancelled B1G network and Peacock last week. I am guessing the media deals are locked up, but...
 

Retired711

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Almost all the $20 M is going to come from the increased Big Ten Media payout, which is going to be $80M - $100M this year.
Yes, but that means, of course , that the $20 M is not going to be available to pay other expenses and so the deficit will not be reduced and may instead rise.
 

Fat Koko

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The increased payout in the future was the rationale given why it wasn't a big deal for the huge deficit. Now the increase is being used to pay players. What is the projected YoY increase of media rights?

What's going to happen if we hit a recession and/or lose a lot of people like me who get off the train. I cancelled B1G network and Peacock last week. I am guessing the media deals are locked up, but...
Media rights 2023 2024 % change

Rutgers $44,137,387 $45,635,642 3.4%
Ohio State $49,796,025 $52,794,280 6.0%
 
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