The University of Arkansas Board of Trustees this afternoon approved entering into a loan agreement of up to $19.1 million they said is to help the Razorback athletic department make payments this year and next on debt from facilities bond issues.
The loan is a way to refinance annual debt payments and is also considered a part of other cost-reduction efforts taken on because of the pandemic’s effects on athletics, UA officials told the board.
Hunter Yurachek, athletic director at the University of Arkansas, Fayetteville, told board members the department now expects to see at “a minimum” a $20 million reduction in revenue this year from the $124.6 million originally projected for the year.
“Additional shortfalls and revenues can be anticipated if additional events are cancelled or further adjustments have to be made to our venue capacity levels,” Yurachek said.
The loan, with Regions Bank and affiliates, will have a maximum interest rate of 2% annually and is to be paid off by Sept. 15, 2028.
Clayton Hamilton, the top finance officer for UA’s athletic department, said the loan “will not increase the total debt for the athletic department or extend the number of years for outstanding debt beyond what is currently 17 years.”
Hamilton said debt payments total about $19 million. The loan is to be paid off “interest only” in the first three years, with the principal then to be paid back over five years.
The resolution was approved by the board without any opposition.
University officials last month said that most athletic department employees would see salary reductions beginning Sept. 1 for a total expected savings of about $3 million.
A new football schedule in place because of the pandemic has the Razorbacks playing five home games in Fayetteville, down from seven. The university also has said attendance will be capped at between 16,000 and 17,000 in a stadium that has a capacity to seat 76,412.