Pac-12 finances: Washington attempts to restructure stadium debt as Big Ten move looms

Washington’s athletic department broke the $150 million mark in revenue last year for the first time in school history and reported an operating surplus, according to financial documents reviewed by the Hotline.

But the most significant money matter on Montlake wasn’t included in an 81-page report to the NCAA and is months away from unfolding … if it materializes at all.

The school is “evaluating options” for refinancing the debt on the Husky Stadium renovation, a move that potentially could free up valuable cash for operations as the Huskies transition into the Big Ten.

Washington’s $280 million renovation of Husky Stadium in the early 2010s relied heavily on debt provided by the university’s internal lending program (ILP) over a 30-year period.

The athletic department paid $12.3 million in debt service in the 2022 fiscal year, per the financial report submitted to the NCAA.

But that figure dropped by approximately $3 million in 2023 after Washington’s board of regents approved a temporary restructuring plan.

The new approach allows the Huskies to make interest-only payments through the 2025 fiscal year, according to the regents:

“Restructure ILP debt service so that fiscal years 2023 – 2025 are $3.1 million lower per year, leaving (athletics) to pay interest only during these years. The principal amounts will be amortized over the life of the loans.”

The interest-only window ends in the summer of 2025, but the pressure on Washington’s budget will not.

The Huskies begin play in the Big Ten later this year after agreeing to enter the conference, along with Oregon, at a steep discount.

The schools will receive half-shares of the Big Ten’s annual media rights deal with Fox, CBS and NBC.

Over the course of the six-year contract term, that discount will result in the Pacific Northwest powers receiving about $180 million less than their peers in the Big Ten, including USC and UCLA, which were granted full shares when they agreed to join the conference in 2022.

Every dollar UW saves on debt service could help offset the revenue disparity.

As a result, president Ana Mari Cauce’s office and the athletic department have been “evaluating options for debt service in both the near and long term as a part of (the) annual budget development,” per a statement issued to the Hotline by Cauce’s office.

Any restructuring of the debt beyond 2025, when the interest-free window expires, must be approved by the regents. UW plans to make its case at the June meeting “in conjunction with board budget approvals.”

The savings from a restructured payment plan are not publicly known. But if, for example, the new rate lowered UW’s annual debt service by the same amount as the temporary shift to interest-only payments ($3.1 million annually) — and if that process played out for the entirety of the Big Ten’s media rights deal — the Huskies would save about $19 million.

If funneled to operations, that would cover the salary for a top-tier offensive or defensive coordinator over the entire timeframe.

Other news and notes from UW’s financial report to the NCAA, which was submitted earlier this year:

— The Huskies were one of five schools in the Pac-12 that reported an operating surplus in the 2023 fiscal year, along with Oregon, Cal, Arizona and Utah.

UW booked $151.6 million in revenue against $150 million in expenses.

— However, the schools include financial support from campus as revenue, in accordance with NCAA reporting regulations.

Washington’s campus support, which took the form of student fees allocated to athletics and direct transfers from the university, totaled $10.3 million last year — the fourth-lowest amount in the conference.

Oregon received no direct help from campus while UCLA received $2.1 million in support and Washington State received $6.8 million.

The total amount of campus support for the 11 schools was $150.5 million, according to an analysis by the Hotline. (USC’s budget was not available.)

— When campus support was removed from their revenue total, the Huskies showed an $8.7 million operating loss.

Only Oregon, which generated a $3.8 million surplus, fared better.

Arizona State, Cal, Colorado, Stanford and UCLA all produced shortfalls in excess of $30 million when campus support was removed from the revenue total.

— The Huskies declined to provide budget projections for the 2024 fiscal year, citing the changes in athletic directors and head coaches, the Pac-12’s negotiated settlement with the outgoing schools and the university’s new financial accounting system.

The combination has “created uncertainty in FY24 revenue/expenses that we are still actively reconciling.”

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