New report shows Rutgers Athletics has more than $265 million in outstanding debt
Additional information regarding the state of Rutgers Athletics’ finances was recently uncovered following an analysis conducted by The Record and NorthJersey.com.
The report found that Rutgers Athletics currently faces approximately $265 million in outstanding debt, with nearly half being associated with operating costs from the Big Ten Conference alone, according to the article.
In an effort to cover these expenses, Rutgers itself has loaned the athletics program $84 million over the past six years from its internal bank. The Athletics Department has been reporting these loans as revenue, which not only went against University policies and guidelines from the NCAA, but also falsely displays the department’s earnings and budget deficit, according to the article.
“It’s unsustainable, but I don’t have an answer as to what is the sustainable piece going forward,” University President Jonathan Holloway said in regard to the internal loans, according to the article.
The University’s official policy was updated in June to permit internal loans for operating deficits, after receiving inquiries from The Record and NorthJersey.com, according to the article.
J. Michael Gower, chief financial officer and treasurer, said the policy change had been in the works since 2020. Although any department can now take an internal loan to cover operating costs, Gower said athletics has been the only department to take such a loan.
The Athletics Department also took out approximately $48 million in loans from the Big Ten Conference and used approximately $25 million in state tax credits to help cover the costs of constructing new facilities. Rutgers was unable to provide a copy of its contract with the Big Ten Conference to The Record and NorthJersey.com, stating they do not have a copy of it themselves.
Rebecca Givan, president of the Rutgers American Association of University Professors and American Federation of Teachers, said the University's actions bring forward concerns about its accounting practices and reporting of financial information. She said she is unsure why the University did this, but believes it does not appear to be honest accounting.
“The other issue is just covering up the true size of athletics expenditures,” she said. “If it's appropriate to spend this much money on athletics beyond what the revenue that's being generated by the sports, then they should be open and honest about that … rather than having loans coming from other parts of the University.”
The money used to fund the internal loans come out of different areas of the University’s funding, including student tuition and fees. Givan said by doing this the University is using its students and employees to subsidize and pay for the athletics program without any transparency.
Rutgers Athletics relies on support from the University more than any of 52 public universities in the five richest conferences, with each student at the New Brunswick campus paying approximately $400 in fees for athletics alone, according to the article.
In addition, Rutgers was ranked last among these universities in terms of donations to athletics for operations from 2019 to 2020, 50th in generated revenue and 51st in ticket sales from 2019 to 2020, according to the article.
Despite these rankings, the University continued to rely partially on donations for construction projects, such as the two newest athletic buildings, which total approximately $150 million, according to the article. The donations for these projects only covered about one third of the price.
The condition of the program's finances has only been worsened by the coronavirus disease (COVID-19) pandemic as well, leading the University to make up for tens of millions dollars in shortfalls, according to the article. The specific amount is currently not known as the University declined to reveal this information.
Though, Givan said based on the financial documents, this behavior has been a trend for the University for a while, with aspects such as the large spending deficit and hidden subsidies long preceding the pandemic.
“Every other program at the University from the libraries to individual academic departments is told that they need to cover their own costs,” Givan said. “And athletics are apparently told that, even if they fall tens of millions of dollars short, the rest of the University will subsidize their costs. They won't be subject to the kinds of painful cuts that everyone else at Rutgers is all too familiar with.”
