I don't know if the debt has any attached security interests in real estate. I'd be curious to know. And I highly doubt that Grant Field is owned by the GTAA, not that that would preclude GT granting a security interest if it wanted to.
OK, so I decided to answer this question. At the moment we have two big bond issuances outstanding, one for $88,000,000 from January 2011, and another for $126,000,000 from February 2012. (Both of these include portions refinancing older debt, including the GOL-era debt expanding the north stands. Remember those days of attendance optimism!) I looked up the original offering statement for the Feb 2012 bonds. Here's a link for the curious. It quite plainly states that
So there's no security of any kind for these bonds. And the statement it is also quite clear that no other organization, like GT itself, or the Foundation, or Dave Braine, is on the hook for these debts. That said, obviously there are all kinds of institutional reasons by GT would step in. But it's not legally required to, at least not by the bonds.
He did, actually. He said nobody is happy about those debt obligations, but he didn't think we should regret any of the capital expenditures. Would he rather have McCamish or the debt load? The former all day. The bottom line is that facilities are super important to everyone: from coaches to recruits to the general public. (Of course, he might prefer to give up the empty North Stands to reduce the debt load but nobody asked that hypothetical!)
It doesn’t have to.
Not just junior to secured bonds, but to any secured creditors (so to their security). And as the former chairman of the unsecured creditors committee in a thank-you-Lehman-Brothers bankruptcy estate, I can promise you that being an unsecured creditor is worth a whole lot less than being a secured one. This doesn't just affect your relationship to other creditors (though I agree that's the primary distinction), it also affects how the court treats your claims and your relationship to other stakeholders.
GT did spin off the GTAA as a corporation... in 1934. The distinction you're overlooking is the difference between a for-profit corporation and a not-for-profit corporation. The GTAA is a non-profit corporation. If the GTAA had profit rather than the promotion of student athletics as its purpose, it would have vast and far-reaching effects on many aspects of its operations. Not only would its profits be taxable (and do not assume that the IRS would accept all the GTAA's regular expenses as offsets to its income), but no donor could give money tax-free anymore. You don't get a tax break for investing in a corporation, so that would immediately devalue by 30-35% every capital campaign. Just imagine having to raise an extra 30% in order to build McCamish...
I'm sorry but this make no sense. The GTAA already 'reinvests all earnings' back into the business. The equity never has any 'intrinsic value' if capital and profit cannot be returned to the owner. The earnings would be taxable where they wouldn't be otherwise. The GTAA already allocates seats and other benefits according to the amount you 'invest.' Would be really hard to maintain amateur status if you abandon any pretense of charitable purpose. Heavens knows the GTAA needs all the creative thinking it can get, but this one's a swing and a miss.
Plenty of corporations do not issue dividends. The NPV of future cash flows still have value and inflate the stock price. Owners gain value from stock price increasing because, eventually, the corporation has to issue dividends or perform a buyback.
