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Rams Club Athletic Boosters Look To Sell Up To $98M In Tax Free Bonds

Carolina fans in the Dean E. Smith Center in Chapel Hill, N.C. wait to watch the North Carolina Tar Heels take on the Gonzaga Bulldogs in the NCAA Championship on April 3, 2017. North Carolina would go on to win the game 71 to 65.
Matt Couch
Carolina fans in the Dean E. Smith Center in Chapel Hill, N.C. wait to watch the North Carolina Tar Heels take on the Gonzaga Bulldogs in the NCAA Championship on April 3, 2017.

The Rams Club wants to sell $98 million in new tax-free bonds, but the UNC Chapel Hill athletics booster club needs approval from the North Carolina Treasurer's office first, and that's not a slam dunk.

Local governments and certain nonprofits can sell tax free bonds. These are generally for projects in the public interest, says State Treasurer Dale Folwell.

Part of the responsibilities of the Treasurer's Office is to operate the Local Government Commission, and can approve tax-free debt for 1,300 entities, including cities, airports, water sewer projects, private colleges and the like.

In looking to consolidate some debt and start new projects, the Rams Club wants to sell $98 million in bonds through this program. The Club could borrow money through conventional means, but has access to this avenue because of its connection to an academic institution.

"Being able to issue bonds at a tax-free rate lowers the amount of interest that has to be paid," said Folwell.

The Rams Club mission is to "offer financial aid to worthy young men and women seeking an education at the University of North Carolina at Chapel Hill, and to support University programs by providing services and funds for the construction of facilities or purchase of equipment."

As part of that mission, Rams Club President  John Montgomery says it raises money to fund athletic facilities. Recent projects include:

  • Indoor Practice Facility: $40 million
  • Soccer/Lacrosse Stadium Renovation: $35.5 million
  • Field Hockey Stadium: $14.9 million
  • Smith Center Locker Suite: $5.6 million
  • Finley Fields – South: $2.5 million
  • Track Complex/Finley Fields – North: $14 million
  • Boshamer Stadium Locker Room: $1.2 million
  • Kenan Stadium Turf Project: $2.5 million
  • Total: $116 million

Many of these projects are already complete, and the new bonds would partly service old debt, according to Rams Club information. The amount that the Rams Club would ultimately look to borrow could be less than the full $98 million.
In its application, the Rams Club noted that the Wolfpack Club at N.C. State University issued debt in the same way. In 2017, the Wolfpack Club issued $12.6 million in bond debt, of which $10.8 million was used to refinance existing debt, according to the Rams Club application.

"Although, the amounts are different, the same rules apply," according to the Rams Club application to the Treasurer. "In issuing that bond, the Agency made the determination that the entity and its projects qualified under federal tax law, and that the Wolfpack Club and its financing met the requirements of the Agency’s statute and policies."

Kenan Stadium

The Local Government Commission must approve the bonds. And might still, though it's not a guarantee. But that issue is secondary to critics like Kevin Trahan, a college sports analyst. He says this is just one more example of why college athletes should be paid.

"It seems to me that these boosters would very clearly pay the players if that was an option available to them, and if that helped North Carolina win," he said. "But the system right now, it works for the boosters, it works for the schools, and it works for the administrators. So there's not really an incentive to change."

Trahan argued that it's the athletes putting in the work, yet are disproportionately rewarded.

"I mean I think in a lot of ways, it's kind of similar to our entire economic system," he said. "A lot of the labor is minorities and people who aren't as well off, and then they transfer the benefit disproportionately at least compared to the rest of our history, to rich white people, and this is it just kind of to the extreme."

For his part, Treasurer Folwell says only that he wants to be fiscally responsible.

"I'm not anti-Rams Club or anti any club, it just seemed like an extremely large amount of money for a booster club to be borrowing," he said.

The Local Government Commission is scheduled to hear the Rams Club request in February.

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