Moody’s Downgrade Signals Trying Times in Sports

Budget pressures are starting to catch up with fast-growing athletics programs. On Wednesday, Moody’s Investors Service took the fairly unusual step of downgrading the revenue-bond rating of FSU Financial Assistance, a unit of Florida State University’s well-heeled Seminole Boosters.

A supporting organization of the university that raises money to feed the athletics budget, Seminole Boosters has long been one of the stronger fund-raising arms in college sports. But increasing costs in the athletic department–expenses climbed to $55.3-million in fiscal 2011, from $44.5-million in 2007–have drawn down the booster club’s financial reserves, Moody’s says, weakening its operating performance.

At the same time, Florida State appears ready to take on more debt, Moody’s says. The Seminole Boosters are considering several capital projects, with possibly $45-million in added bonds. Yet athletic fund raising and stadium-related revenues are “more prone to variability” than the university’s more diversified revenue base, the credit-rating agency says. In the eyes of Moody’s, it’s not paying off right now to fly so high.

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