No HE given Holy Cross' anemic endowment in 2018

HC's net return on endowment investments in 2018 was $54M, a decline of 36 percent from 2017's net return.

Bucknell's net return declined by 30 percent, BC's declined by 13 percent.  Bowdoin's net return grew by 39%.  (Bowdoin has Druckenmiller advising it.)

The end of fiscal year value of HC's endowment grew by $34 million or 4.5 percent.  Bowdoin's grew by $182 million or 12.5 percent.  Bucknell's increased by $50 million, or 6.2 percent.  (The net gain of $34 million was less than the investment gain because some of the investment returns were used to operate the college.) 

With widespread predictions of slowing economic growth in 2019, and flat or nearly so economic growth in 2020, fiscal 2018 was probably the last year to catch the boat on garnering great investment returns and bolstering the endowment's value over the near-term.

This is admittedly an oversimplified calculation, but Bowdoin's $182 million would yield about $8 million in additional monies for Bowdoin to spend on operating the college;  HC's $34 million would yield about $1.5 million.
 
The end result:  no money in the coffers to pay for the men to jump to HE.

So it goes.

(No financial statements yet available for Lafayette or Colgate.)  
 
 

Who or what do you think will pay the additional cost of the men being in HE?

Expenses M/W hockey  2016-17, $ in millions
BC 4.1 / 1.9
BU 3.4 / 2.2
HC 1.7 / 0.6
Northeastern 2.9 / 2.0
Notre Dame 5.0 / 0
Providence 3.4 / 2.0

The additional costs to HC for the women joining HE is probably not as high as indicated, as there were no merit scollies for the women last year.  However, some women, like Georgetown's football players, were undoubtedly receiving need-based aid. but that aid would not be recorded in the team expense totals. (A legacy from days of playing in a lower division.) 

For the men, the additional cost is probably about $1.5 million.  (And none of the other five listed teams play off-campus and thus have no venue rental costs.)  Notre Dame lost about $3 million playing in HE last year, all the other schools lost money as well.  Women's ice hockey, there is no meaningful revenue recoupment for the expense.

In essence, both men's and women's ice hockey in HE would cost HC about $5.0 million, with very little offsetting revenue.  At the mandated 4.5 percent annual distribution of endowment value for operating expenses of the college, it would take $110 million of endowment to underwrite fully the expense of HE membership;. about $60 million of endowment value to underwrite just the added cost.

HC's endowment has underperformed its peers for years, the cumulative consequences of that is that it crimps spending for new initiatives, particularly where the ongoing costs are high.



 

Your annual advice, which they have annually ignored..

I have no particular inside information.

The college is in the middle of a big capital campaign, yet donor contributions to the endowment totaled about $17 million for the two fiscal years between July 2016 and June 2018.  That amount ain't going to grow the endowment.

And in those same two fiscal years, HC distributed $57 million in endowment monies to help pay for the operations of the college.  HC relies greatly on investment returns to both increase the value of the endowment and pay most of the monies distributed for operations of the college.  And when the investment returns turn south......?

On July 1, 2007, the value of the endowment was $649 million.  On the old board there was chatter about how long it would take to reach $1 billion.  Two years later, the endowment value had plummeted to $492 million. Now nine years after that bottoming out, the endowment value is at $783 million.   But this is only $132 million more than it was in 2007.  In the world of college finance, that is underperforming.  And that has consequences, ----dreams and hopes are dashed.

And it is reasonable to assume a slowing economy will slow endowment growth in the near-term, which is bad news for the endowment..  The so-called 'sugar high' from the tax cuts is already receding, and despite the promises of tax cut supporters, the corporate tax cut has led more to stock buybacks rather than capital investment, and there's been very limited real growth in employee compensation.  

If the increased cost to HC from the men joining HE is $1.7 million, and the endowment can't pay for it, then HC can charge each of the 3000 HC students about $550 apiece in increased tuition and fees to pay for it.. 

We have a better chance of getting struck by lightning and winning the lottery in the same day than we do of competing in the Hockey East any time soon.

It would be a total waste of money to join the Hockey East right now given how far the hockey program has fallen, and how little was invested in hockey during our recent $100M investment. We can't even win a game in the Atlantic Hockey playoffs right now.

If there's money hanging around, spend it on MBB or Football.