Student-Athlete Salaries Pose New Worry for Higher-Ed Munis (1)

US universities’ athletic budgets are becoming another source of concern for investors who buy higher-education municipal debt, about five months after the approval of a settlement that allowed top sports colleges to pay their student-athletes.

Schools including Clemson University and the University of Oklahoma have mentioned the potential for financial hits to their athletics operations in bond-offering documents in recent weeks. And athletic departments at schools including Texas A&M University, the University of Michigan and the University of Southern California have trimmed staff or programs to offset some of the pressure, according to S&P Global Ratings.

The risk, S&P ...