The University of Kentucky athletics department expects to operate at a net loss of nearly $31 million over the next two fiscal years.
On Thursday, UKās Board of Trustees Athletics Committee approved a plan to lend the athletics department $141 million, including $110 million in capital investment loans for major facility projects and an additional $31 million in operating funds to offset expected deficits in fiscal years 2025 and 2026, as college athletics' new era of revenue sharing begins.
The University of Kentucky athletics department expects to operate at a net loss of nearly $31 million over the next two fiscal years.
On Thursday, UKās Board of Trustees Athletics Committee approved a plan to lend the athletics department $141 million, including $110 million in capital investment loans for major facility projects and an additional $31 million in operating funds to offset expected deficits in fiscal years 2025 and 2026, as college athletics' new era of revenue sharing begins.
As reported by WDRB in Louisville, the moves come as UK Athletics prepares to shift its entire operating model to a new nonprofit holding company, Champions Blue LLC, created earlier this year in anticipation of legal and legislative changes that will soon require schools to directly compensate athletes.
Related: Kentucky Plans to Convert Athletic Department Into Corporate Entity
"The Kentucky athletic department, a long model of financial self-sufficiency, likely would not have dreamed of an operating deficit even several years ago," WDRB's EricCrawford reported. "But today, the cost of doing business has hit home even at a department in the lucrative Southeastern Conference. And it surely isnāt the only place where that is the reality, though perhaps it is one of the more transparent."
The House v. NCAA settlement, approved one week ago, allows schools to begin sharing up to $20.5 million per year with student-athletes beginning July 1.
"While the university has praised the settlement as a necessary step forward, its financial impacts are already being felt ā and forcing fast, aggressive change," reported Crawford.
In addition to what is essentially a mandated payroll, schools could face further costs if they aim to maintain full roster sizes in all sports under the new model, Crawford added.
āWe are proposing a new strategic governance structure and operating model, unlike any in the country,ā said UK president Eli Capilouto. āThe goal is to incentivize innovation. The idea is to remain a premier program by pushing us to examine creative ways to grow and generate the revenues necessary to support our success.ā
Per Crawford's reporting, the $141 million being borrowed by UK Athletics would come from internal university loans ā meaning the school is effectively funding the departmentās near-term expansion and deficit coverage from its own financial reserves, with repayment expected over time.
Of that total, $31 million will cover shortfalls in fiscal years 2025 and 2026, and $110 million will fund capital projects and longer-term development.
