The $100 Million Misunderstanding

Buried in an otherwise turgid George Zofflinger op-ed in the Bergen Record is this zinger:

“‘The stadium expansion project is being financed entirely with borrowed funds. It was rushed into, with incomplete plans and a $30 million funding gap. We now find the costs are escalating, and we are forced to make significant cuts in the project.

Also, there is an increase in what we are borrowing, from $72 million to $100 million. New Jersey public entities are in a league of their own when it comes to piling on the debt.”

Read that again.

Someone should be kissing us because we certainly are getting screwed.

Because the drive for $30 million in private contributions failed and failed some more — either there is scant interest in Rutgers football or the fans there are are poor because, ring doorbells as Seatbelt Corzine did, he apparently raised no more than a few empty beer bottles.  The vast bulk of purported Rutgers fans shut their wallets tight and does not that say something about the depth of fan support? — Rutgers now is going to borrow the whole $100 million, pace Zoffinger.

That makes no accounting sense.  None whatsoever.

Fuzzy math was required to attempt to show that this stadium expansion would be self-funding on a $72 million note (with the other $30 million coming in the form of those private contributions that did not materialize).  You cannot increase the borrowing by 40% and still insist this stadium will pay for itself.

It will not.  NJ taxpayers and Rutgers students will be forced to pay for Mulcahy’s Folly — just as we have been saying for months.

This whole borrowing scheme is vividly reminiscent of the cockamamie loans (piggybacks) that have helped trigger the national mortgage-housing crisis — but at least now everybody should know this kind of scheme is doomed to fail.

It is time to pull the plug on Mulcahy’s Folly.  We do not need this $100 million extravagance and apparently very, very few genuinely want it.

We demand to see a financial statement/business plan that shows neither public monies nor student monies will be needed to pay for Mulcahy’s Folly.

Rutgers students: Demand a halt to the stadium expansion…or hold your silence when the next round of tuition increases is imposed as the university scrambles to pay for Mulcahy’s Folly.

Rutgers alums: Hold on to your contributions to Rutgers because no matter where you want your money to go it will probably wind up helping to pay for Mulcahy’s Folly…unless our voices are loud enough to stop Phase 2 before the school finalizes its commitment.

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15 Responses to The $100 Million Misunderstanding

  1. Yahooda says:

    Good job Big Zoff.Someone is minding the store.Many of us appreciate your candor and expertise.Bring back those six sports and their talented student-athletes.Ride herd on this RUanway train to nowhere.As former Rutgers great Jimmy Valvano said”never give up,never give up,never give up”.

  2. hinson32 says:

    Rutgers just released that for the fiscal year of 07-08 a new record was set with $121 million given to the University. This is an increase of 9% from last year and an all time high. One or both of the following must be happening. Either the alums are happy enough to give record setting money to the University, or Rutgers has some great fund raisers.

  3. Grumpy Alum says:

    As was pointed out by a poster below, Hinson, this isn’t a record setting amount. Furthermore, the increase seems to come from large corporate donations, which would be expected, given that we are in the middle of a $1 billion fundraising drive. I’m happy Rutgers is getting better at raising money, but I don’t see it as some sort of de facto justification for the shambolic fiasco that surrounds the football program and the stadium gamble.

  4. hinson32 says:

    I was just responding to RU1000’s plea for Rutgers alums to stop donating to the University. Rutgers just released a press release saying it was a record amount, is that incorrect?

  5. Grumpy Alum says:

    Yes, it is incorrect. See the post by “Jeff” in the previous post.

  6. cody says:

    hinson32

    The record is 123.3 million in 2001. The following link will open a pdf file:
    http://oirap.rutgers.edu/instchar/factpdf/financ02.pdf
    Go to page 89 and you will see a summary of the fundraising over the years.

    McCormick and Mulcahy will say anything that appears to support their decision, with board support and a few politicians, and they will get away with it barring a huge scandal of facts yet unknown.

    If they are so sure this is sound financial policy why not put out a detailed study which should have done some time ago instead of soundbites?

    When they cut the six sports in 06 and 153 student athletes it was all accomplished with soundbites and no analysis was made public. The people trying to save the sports tried but they were ridiculed by the same board members appointed to look into Mulcahy’s handling of the finances.

    Rutgers will spend the money and my guess is no detailed analysis will ever be made public given what we know today.

  7. Polecat says:

    As chairman of the Board of Governors’ audit committee, what was Mr. Zoffinger doing all this time? What was the audit committee doing?

    Why did Mr. Zoffinger wait until now to write his Op-Ed? Is it because he’s rushing to identify himself as being on the side of the angels now that the nasty facts about Rutgers’ mishandling of funds have started to surface?

  8. Jeff says:

    Polecat

    I think Zoffinger has been blocked from a good deal of the records himself. If you go back to a lot of the December/January Op-eds (when the Stadium Expansion decision was being made) from the Bergen Record and the Ledger and such, you’ll see that he was always the most outspoken critic. He even said in a Home News Tribune article (July 28th)…“I am chairman of the audit committee and it hasn’t done me any good. Maybe this comptroller can get to the bottom of things.” You can choose to disbelieve this statement, but I don’t think he’s the one we should be complaining about.

  9. cody says:

    Just to show how the story changes since apparently there is very little if any analysis, the Coalition to Save our Sports (SOS) replied to Rutgers’ August 12, 2008 Media Statement (Rutgers is Committed to a Successful and Accountable Intercollegiate Athletics Program). This is a must read to get a better feel for how they operate. SOS went to great lengths to work with the board and Mulcahy submitting detailed analysis based on Rutgers own records as to why there would be no savings, indeed it might cost the university money. The article goes into detail at what was presented at the time but minds were made up and the BOG & Mulcahy could have cared less regardless of the damage inflicted. The link to the article is posted at the bottom of this reply.

    One small example is how they now say the extra costs of additional scholorships was factored in. NOT TRUE. At the time they said there would be NO additional costs. Here is what what said at a BOG meeting:

    “At the April 13, 2007 meeting of the Rutgers Board of Governors, SOS pointed out that the elimination of the six teams would result in Rutgers having to spend over $700,000 annually for additional athletic scholarships due to Title IX requirements triggered solely by the elimination of these teams, a fact which Rutgers had never publicly addressed. On the record, in taped proceedings, the then Chairman of the Board of Governors, Al Gamper, and the then Chairman of the Intercollegiate Athletics Committee, Ron Giaconia, each vehemently denied that would be the case, maintaining that there would be no such expenditure because “we don’t have” those funds. Gamper maintained that Rutgers would simply “reallocate scholarships from men to women to meet those Title IX requirements.” Giaconia echoed that assertion (Per Giaconia, “There will be no additional $700,000; there will be no additional $200,000. There will be a reallocation of resources.”).

    And McCormick, in his May 14, 2007 Memorandum (see footnote 4), essentially reiterated Gamper’s and Giaconia’s misrepresentations, calling the Coalition “incorrect as a matter of fact and law” as “[a]n institution does not need to spend additional money in order to comply with Title IX under these circumstances.”

    Yet, just over one year later, in his July 2008 Memo to members of his “Administrative Council,” McCormick admitted that “the university increased women’s athletic scholarships by more than $600,000 from the 2006-07 to 2007-08 academic year.” Men’s athletic scholarship spending was not, in the 2007-08 school year, cut from 2006-07 levels; there was no “reallocation.”

    To see how cutting six sports (150+ student athletes) did not save a dime and possibly cost the university read the enire article at:

    http://www.swimmingworldmagazine.com/lane9/news/18915.asp?q=Rutgers%20Revisited:%20Coalition%20to%20Save%20Our%20Sports%20Responds%20to%20Rutgers%20Media%20Statement

    This shows the quality of management at Rutgers. Facts mean zero. Once they decide to do something without any public input or a detailed analysis they will not change course even when the facts prove them wrong. They will spin the story multiple times to avoid having to change course regardless of the damage done. As I said in my last post I doubt anything will change since serious analysis or debate of the issues appears to be taboo at the top of rutgers management team.

  10. Grumpy Alum says:

    Cody, great post. There’s no question that the BoG and the president of the university were either utterly negligent in assessing the fiscal consequences of cutting the sports, or they deliberately misled the university community. The fact that such mendacity is tolerated shows just how deep the hole we’re in is.

  11. cody says:

    Thanks Grumpy Alum. I’d like to add one more example of what is true but a little misleading IMO.

    In the article published on 8/24 titled “Director defends Rutgers’ sports” Mulcahy states “Head coach Greg Schiano has also led the program to success in the classroom. In the most recent Academic Progress Report (APR), the index established by the NCAA to measure a student-athlete’s progress toward graduation, Rutgers football was ranked No. 3 nationally in the Football Bowl Subdivision (formerly Division I-A).”

    It should be noted that the Big East also posts an “All-Academic Team” each year. Nominations for the All-Academic Team are submitted by each of the BIG EAST’s 16 member institutions. To be eligible for the honor, a nominee must have competed in a BIG EAST-sponsored sport, earned a varsity letter, attained a minimum grade-point average of 3.00 for the preceding academic year, and completed a minimum of two consecutive semesters or three consecutive quarters of academic work, with a total of 18 semester or 27 quarter credits, not including remedial courses. The cut sports would have added greatly to this list. As you might guess football does not participate.

    Back to the APR rating that Mulcahy seemed to use to justify the stadium expansion and cutting of the six sports. Let me quote the previous article I posted:
    “Rutgers is fond of touting the NCAA “APR” statistics. APR does not in any way measure academic excellence, nor is it supposed to. It measures, instead, minimal progress towards a degree. It ignores Grade Point Averages, except to determine compliance with minimum eligibility requirements, nor does it reward honors program participation. It is, therefore, hardly a real measure of academic success”

    I don’t have anything against football but if Mulcahy is going to use the above statements to justify his actions then clarification is needed, as is usually the case when he speaks. How many would have made the Big East All Academic Team where the standards are obviously much higher.

    Measuring minimal progress towards a degree while ignoring Grade Point Averages is hardly something that justifies what is going on let alone brag about it.

    If you want to see the 159 student athletes that made the much more demanding All Academic Team go to this link:
    http://scarletknights.com/news/release.asp?prID=6748
    A list that would be much larger if not for the cut sports. Mucahy should measure the football team against these big east standards not the APR ratings.

    Again I have nothing against football but Mucahy’s comments are misleading until the standards are defined in greater detail which he did not do.

    I think most football fans would probably agree the cut sports should be reinstated given the facts.

  12. bronxboy says:

    Cody, great info on the terminated sports and all academic team standards. As for the APR, considering that it doesn’t include those players who have transferred, dropped out or been discharged from the program for misconduct, it’s also an inaccurate, artificially high measure of the projected graduation rate. Apparently, there is no lie, deception or misrepresentation too dissolute for this BoG or administration to proffer in supporting big time football.

  13. Grumpy Alum says:

    Agreed, Bronxboy. Cody, thank you for the informaton. I should add that I think few people have objections against football tout court. It’s what football has become at Rutgers – has degenerated into – that infuriates me. If Rutgers could keep improving as a university, not cut sports, not cut faculty lines and classes, then what happened with football wouldn’t really bother me. But when football gets endless funding increases while departments like economics struggle to pay administration staff, then the train has well and truly come off the rails.

  14. cody says:

    Grumpy, I agree. The problem isn’t football but leadership at the university and how they conduct business. Just think of the frustration when the six sports were cut in a black box mode for the 150+ athletes and their families, just sound bites about savings with absolutely no debate and analysis given. When a detailed analysis was presented to the BoG by the SOS it was ignored, ridiculed and the BoG refused to show how they came to their conclusion, just more sound bites as detailed in a previous post by Gamper which was 100% wrong. I even received an email response from McCormick and he stated he refused to say what the basis was for eliminating the sports.

    What this tells us is they make decisions off the cuff, shrouded by secrecy regardless of any analysis to the contrary and stifle any debate.

    Maybe I’m missing something but this sounds like poor leadership or maybe it’s a case where power breeds corruption but this may be a little too harsh at this point.

    What you and others are seeing is what the SOS has been fighting for years now with no success. It’s a leadership issue, football is just the catalyst that is bringing it to the forefront. Unfortunately a leadership problem is something that doesn’t change very easily, if at all.

  15. SueEmAll says:

    All you supposed smart guys and not one barrister in the bunch? Any class actions filed? Any organized boycotts with Malone or Weinberg bullhorning bi partisan support? Any tuition lowering petitions circulating the campus? Did anyone take the time to see if the lounge was done(as you claim it wouldn’t be) or inspected for a proper CO? Too busy discussing philosophy of McCormickism, while they keep kicking dirt in your face. Golden footballs trumps no balls every time. Now go on and discuss,disect and bullshitt your way through this post for a week and a half before you ever do anything.Give yourself a thousand crying towels and compare IQ’s.That’s a well founded organization you have there alright.All Hot Air and going No Where!

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