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The Thumbsucker Proxy

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Evidently, there is some controversy in B/CS about the Chancellor's annual review of the main campus' president...

Quite a professional operation they're running there...

However, when the story first broke, there was an interesting tidbit of information. In the university president's rebuttal of the poor review, she mentions that the TAMU Athletic Department had borrowed $16 million from the university, and had not developed a good plan to repay it. This had happened under former TAMU president Bob Gates.

http://www.aggiesports.com/blogs/-16-million-loan-to-A-M-athletics-department-news-to-me--how-about-you--

The initial reports were that this was a $16 million line of credit. Now, that in itself isn't damning. Lots of businesses have lines of credit to cover gaps between expenditures and revenues. A line of credit representing over 20% of the budget is a little high, but more the reason to borrow it from a source that will give you low rates, right?

Wrong. The latest installment...

http://www.mysanantonio.com/sports/AM_athletic_director_backs_16_million_loan.html

This was not a line of credit. It was an interest free loan in 2006, that had to be repaid from 2010 thru 2019. I estimate such a deal as being worth $4 - 6 million transferred to the AD from the university. Chicken feed, really. I mean, really, this is chicken feed. This is Texas A&M, and they spend this much on actual chicken feed each year.

Also, note these excerpts from Bill Byrne's explanation of why this isn't an issue.

Byrne said none of the $16 million loan has been used on any new construction — that's all been privately funded, he said. Instead, it's been used to cover an increase in the cost of scholarships, electrical and plumbing issues and simply fixing new problems on old buildings, among other things. For instance, the light poles on Kyle's east side.

That's reassuring, to know that the gap in spending was not due to one time expenditures on buildings, but rather to an inability to meet regular operating costs. It's like when your wife tells you not to worry about having to move money from savings to checking- it's not due to those new dresses (her mother paid for them); rather, it's due to the high electric and water bills. Reassuring, right?

Byrne said the department has cut costs, for example, by axing media guides for every sport but football this coming school year.

"That will save us about $250,000 in printing costs," Byrne said, adding that the Big 12 athletic directors also have voted to nix football media guides starting next year.

Good! That leaves only a $3.75 million annual shortfall, $2.75 million if the old poles stop rusting. Add $1.6 million to repay the loan, and they're withing $4.3 million of breaking even!

The situation isn't helped by the unscheduled millions the Ags pay to ex-coaches. In 2002, firing RC cost $2.1 million ($1.1 million as a payout to Alabama, and $1 million to Slocum). They are currently paying $4.4 million to Fran. The only AD I can find with a burden close to that is Clemson's, which is paying $3.5 million to Tommy Bowden.

Look, this isn't a crisis...yet. There is a way out- win football games. Years ago, Dodds used to say that he could tell you what UT's AD financial shape would be next year if you would tell him how many football games we would win. he said 8 wins was the break even point- win less and we lose money, win more and we make money. Byrne understands that- his prior job was at a place that used to win 9 games every year for as long as most could remember.

Things will only get interesting if the Ags have a poor football season next year. They are in no position to buy out a coach's contract. Sherman has six more years at $1.7 million per year. If they have a poor season, they just may have to ride it out, due to the high buyout expense. The fanbase will not appreciate this, should it occur, and may start inquiring about the cost of a new Athletic Director. I look at the Baylor game as a key guidepost. Losing to the Bears in 2009 would cause the TAMU Athletic Department, and Bill Byrne specifically, a lot of trouble.