As more and more university athletic departments cut sports programs, the financial wreckage due to coronavirus pandemic it is becoming devastatingly clear – and that without considering a $ 4 billion loss if the 2020 football season is canceled, a development that would forever change college-level sports.
So far, university systems have suffered losses of hundreds of millions of dollars, which can grow significantly as decisions are made about returning students to campuses this fall.
A number of cost saving measures have been implemented 100 days from scheduled start the college football season: The Central American Conference announced several schedule changes, including plans to eliminate tournaments from the conference in eight sports; Cincinnati abandoned its men's soccer program; Old Dominion cut its wrestling program; Furman closed baseball and men's lacrosse; Bowling Green cuts baseball; Central Michigan ended men's athletics; and Akron has announced that it is eliminating men's cross country, men's golf and women's tennis.
Athletic directors are also reimbursing spring sports tickets and student fees for the spring semester, while instituting freezes, layoffs, mandatory leave and pay cuts, even for top coaches. More than 20 FBS athletic departments, including Arizona, Colorado, Kansas, Louisville, Minnesota, USC and Washington State, have announced voluntary salary cuts and / or mandatory licenses for coaches and sports officials.
For Power 5 schools, the possibility of a missed college football season seems even more significant.
"If there is no football season, or if the season is interrupted or shortened, there will be a massive drop," said TCU athletic director Jeremiah Donati. "There would have to be massive cuts. Could the department continue? Sure. It would probably look smaller. There would be potentially less sports and a lot less programming."
Patrick Rishe, director of the sports business program at the University of Washington in St. Louis, believes the next football season will be played – even during the spring – because of "astronomical financial implications" for athletics departments, if is canceled.
College athletics may simply not have a financial option.
Rishe estimates that the 65 Power 5 schools would collectively lose more than $ 4 billion in football revenue, with at least $ 1.2 billion of that due to the loss of ticket revenue. Each Power 5 school would experience at least an average loss of $ 62 million in football revenue, including at least $ 18.6 million in football ticket sales, he said.
Rishe's analysis for ESPN used publicly available data from the 2017 season of the Knight Commission for Inter-College Athletics and the U.S. Department of Education's 2018 Equity in Athletics Database, along with conservative projections of revenue increases over the past two years to reach 2020 it estimates whether the US was not in the middle of a pandemic. Rishe's projected losses are really conservative; they do not include potential losses in media revenue, conference distribution, donations and corporate partnership revenue.
The sports departments of the Power 5 public schools obtained, on average, almost half of their total operating revenue from football, with about 14% coming only from the sale of football tickets, according to an analysis of the financial data 2017-18 provided to ESPN by ESPN by SI Newhouse School of Syracuse University Public Communications.
"75 to almost 85% of all revenue in our departments is derived directly or indirectly from football," said Scott Barnes, Oregon athletics director. "Indirectly, I mean sponsorship dollars, multimedia rights, and then you have your gate, your donations and whatnot. The impact of not playing a season is devastating. It would shake the basis of intercollegiate athletics in the way we know it. Frankly , I am not trying to resolve this, because it would be such a devastating circumstance that we would almost need to open a whiteboard and start over ".
About half of the Power 5 public athletic departments were self-sustaining in 2017-18, meaning that revenues covered expenses without tuition funding or university support. Withdraw revenue from football tickets alone and only two schools still make the cut – Georgia and Texas A&M – according to data from Syracuse University.
Even more noteworthy: in a multi-billion dollar industry, less than half of FBS's sports departments have financial reserves that could be used during this type of crisis, according to a recent survey by the Lead1 Association, the professional organization representing sports directors at 130 schools of FBS. In the survey of more than 100 ADs, 41% of the Power 5 departments and 26% of the group of 5 confirmed to have this reserve.
Although there is no publicly available data that separates fan spending on games (for example, food / drinks, merchandise, parking) at college football stadiums, Rishe's analysis shows that Power 5 schools would collectively lose $ 303 million in game day revenue spent by fans (excluding tickets) or $ 4.7 million per school if there was no football season. In addition, collective losses on game days alone would be at least $ 1.5 billion, at least $ 23.3 million per school.
"Football is the elephant in the room," said Ohio State Athletic Director Gene Smith. "From that point of view, funding for all of our sports and everything we do for our student-athletes is significant. It is also important to our community in many ways. Every contest has a significant economic impact in central Ohio."
The 130 sports departments that make up the FBS level have varying economic models. Some earn a considerable share of revenue from the sale of tickets and donations, while others are financed by TV and media rights, conference distribution, tuition fees and / or institutional support.
Of the 52 Power 5 public schools included in the data from Syracuse University, 84.6% received their largest share of NCAA funding and conference distributions, post-season football and media rights. About 11.5% obtained their largest share with donor contributions and 3.8% generated more money from ticket sales in 2017-18.
The financial ramifications may be even worse for the Group of 5 programs, which include conferences such as Central America and the Sun Belt. Among the 56 public schools in the Group of 5, 62.5% obtain their largest share of funding with support government and / or university, 34% with tuition fees and 3.6% with donor contributions.
"Part of that is the broader context of universities," said NCAA President Mark Emmert. "There is no athletics department in America that does not experience problems, even if they have a regular football season. If we have a football season that includes fewer games or fewer fans, which is entirely possible, it will be expanded." This goes for all divisions ".
There is no better illustration of those who have and who do not have in college sports than the media rights fees earned by Power 5 members – hundreds of millions of dollars that do not end in less powerful conferences. The pandemic has also put that generosity at risk.
Industry executives told ESPN that media rights contracts with university conferences and professional leagues include force majeure clauses that can provide replacement games or other remedies for media companies if the games are not played for reasons like a pandemic. A spokesman for ESPN, a major rights holder, declined to comment.
According to its most recent fiscal record for the fiscal year ending June 2018, the SEC generated $ 432 million in TV and radio partners in 2017-18. Pac-12 reported $ 339 million on TV, ACC reported $ 277 million, and Big 12 reported $ 237 million. The most recent Big Ten record did not specify TV revenue, but its current media rights agreements with ESPN, Fox and CBS were worth $ 2.64 billion in six years, or $ 440 million annually.
If a season is shortened, TV executives said, the networks are likely to negotiate a proportional price with the conferences. Executives were not sure what would happen if, for example, the college football season was moved away from its traditional place in the fall and spring.
Big 12 commissioner Bob Bowlsby told ESPN that the league has received a full check of the College Football Playoff distribution for the 2019 season and expects to receive the full value of the 2019-20 ESPN and Fox TV contracts. He said the league hopes to make its scheduled distributions to members.
Last year, Big 12 distributed about 93% of the $ 418 million generated by the league equally to its 10 member schools, with $ 38.8 million each. Without football, this distribution would not be so great next year. Bowlsby said it was "too early to predict" what could happen if the next season was postponed, but it would certainly affect the league's results.
Although media rights represent, on average, about 24% of the revenue of Power 5 schools, it is significantly lower among the Group of 5. Power 5 programs generated almost $ 30 million on average from media rights, according to data from Syracuse University, while the Group of 5 schools, on average, earned about $ 842,500, or just 2% of total revenue.
"Our membership in the conference, AAC, in all honesty, is a very modest distribution," said Navy athletic director Chet Gladchuk. "We are not in the SEC or the ACC. We are not in the Big Ten, where everyone gets $ 30 [million] $ 40 million conference distributions. "
The Athletic Association of the Naval Academy, which supports 33 college sports teams by about 1,300 aspirants, is almost self-supporting, despite receiving only 2% of its federal government operating budget, according to Gladchuk.
About 60% to 70% of the Navy's athletics revenue is generated from football through ticket sales, corporate sponsorships, media rights, conference distribution, hospitality, concessions and donations, said Gladchuk.
"It is not a complaint, because when things are going well, we are an autonomous and balanced operation, and we can make it work," said Gladchuk. "It is not a request for funding in this context of support for the institution. It worked, we make it work and we balance our budget, but it depends on significant revenues from football, which is the catalyst for everything".
The financial consequences would be more severe if a shorter season did not include the opening of the Navy against Notre Dame or a conference-only schedule that prevented its game against the Army. According to Gladchuk, the TV revenue, warranties and ticket sales from these two rivalries are even more significant than the American Athletic Conference distributions that the Navy receives each year.
The exact details of the Navy athletic budget are not known. The Athletic Association of the Naval Academy is considered a private non-profit organization and is not subject to acts of open registration. The academy did not provide its most recent NCAA financial report to ESPN.
A self-sustaining budget, coupled with financial reserves, puts the University of Georgia in a better financial position than most FBS schools, should there be a canceled, abbreviated or delayed football season this fall.
According to the UGA athletic department, he has more than $ 102 million in reserve funds, which include 2019-2020 reserves, long-term investments and donor funds in general.
"We never thought it would be at that level," said Greg McGarity, athletic director at UGA. "With a budget of $ 153 million [for the 2019-20 fiscal year], we try to stay in this three to six month period in order to support our program ".
Georgia's football program accounted for almost half of the athletics department's $ 174 million revenue from ticket sales and contributions in the 2018-19 fiscal year alone, according to the latest NCAA Association Financial Report. Bulldogs generated $ 34.6 million in football ticket sales and $ 44.3 million in donations, many of which are associated with those tickets.
"You can run all the numbers and projections, but if you don't have that part of football, it's just distressing," said McGarity. "If you don't have a recipe for football, where does your recipe come from? It's a huge void that would create some terrible situations in the operation of a program."
Georgia's athletic department has already suffered some financial impacts because of the coronavirus pandemic. McGarity estimates that about $ 740,000 will be lost in SEC distributions because of lower NCAA payments, which canceled its basketball tournaments and other championship events. The athletics department also had to reimburse about $ 800,000 in athletics fees when classes on campuses were moved to the spring semester.
But Georgia also saved money after the cancellation of spring sports, which reduced travel, accommodation and food costs, and because of a dead recruitment period required by the NCAA, which prevents coaches from going on the road or recruits arriving on campus. In 2018-19, each of these sports competing in the spring – baseball, men's and women's golf, softball, men's and women's tennis and men's and women's athletics – lost money, combining to spend about $ 10.2 million. to more than they generated.
Men's basketball is the only other UGA program that earned more than it spent in 2018-19, with a surplus of about $ 2.9 million. Seven other nonprofit programs – women's basketball, equestrian, gymnastics, women's football, women's volleyball and swimming for men and women – have combined to lose more than $ 12 million in 2018-19.
Once criticized for not spending enough on the SEC's seemingly endless arms race, Bulldogs' reserves will allow them to make things work – at least in the short term – if they can't play football this fall or face a truncated problem, season just for conferences.
A season involving only the enemies of the conference would also save money from the larger schools in terms of payments to smaller schools that they normally owe for having them traveling to campus. But the loss of these types of payments to smaller schools, such as Georgia Southern, would be significant.
In 2019, Georgia Southern received $ 1.75 million in payments for playing road games at LSU ($ 925,000) and Minnesota ($ 825,000). Next season, the Eagles are scheduled to receive $ 1.45 million for playing on Ole Miss.
"I think that whenever you guarantee games in any sport, especially football, and for whatever reason they don't materialize, it's obviously a budgeted amount that will affect your results," said Georgia Southern athletic director Jared Benko.
In March, Benko took over an athletics department with an operating budget of $ 29.5 million that almost broke in the 2018-19 fiscal year.
Georgia Southern has instituted a freeze and moratorium on sports department spending. Benko said his department could also save money by limiting the number of scholarship athletes who attend summer school and bringing in novice athletes in the fall, instead of going to summer school as the Eagles did in the past.
Sun Belt schools are also exploring how to reduce travel costs, particularly for baseball and other over-the-counter sports, which may include street games closer to home to avoid commercial flights and multiple nights of accommodation.
"You will see a lot more regional schedules in many sports," said Benko. "I think the days of travel around the country are likely to be mitigated."
As bad as the past three months have been, university administrators fear that the worst is yet to come due to declining enrollments, stressed state budgets, lower endowments and rising health and public safety costs.
The California State University system, which announced that students will not return to its 23 campuses this fall, has already suffered $ 300 million in revenue losses. The University of Wisconsin System estimates $ 212 million in losses during the summer semester. Penn State expects $ 260 million achieved by the next fiscal year.
"The biggest shortcoming when discussing sports in college is that the schools themselves, many schools, are at deep financial risk," said Emmert. "Not in sports programs, just in general. There is enormous economic pressure on presidents at the moment. They know that if they don't have students on campus, they won't potentially have a prescription. They know that if they have a hospital and many do. all US university hospitals are losing a lot of money right now. They have all kinds of pressure on them, and sport is just another part of that. "
Rutgers President Robert Barchi called the pandemic "the greatest academic and operational challenge" in its history. Arizona President Robert C. Robbins described it as a "Category 5 or more hurricane that hits mid-campus".
This is of particular concern to sports departments, such as Arizona and Rutgers, who rely heavily on direct institutional support and student fees to finance the sport. According to an analysis of data from Syracuse University, Rutgers relies more on revenue from the university's general support fund (not including student fees) than any other Power 5 program. In 2017-18, Rutgers received $ 15.2 million, about 15% of its $ 100.7 million operating budget, through direct institutional support.
Colorado (9.5%), Arizona (9.1%) and Arizona State (9.1%) were the next highest among Power 5 programs in 2017-18.
In April, Barchi told the board of governors that the university would lose $ 200 million in revenue by June 30, with more significant losses in the next fiscal year due to the coronavirus pandemic, not including losses in athletics. Rutgers has already reimbursed $ 50 million in accommodation, food, parking and course fees, and the state froze about $ 73 million in advance payments.
The Scarlet Knights were already working with far fewer resources than their colleagues in the Big Ten. According to a study commissioned by the university in the fall of 2018, Rutgers' athletic department had a projected spending budget of $ 93 million in the 2018-19 fiscal year. Ohio's top ten powers ($ 221 million) and Michigan ($ 185 million) were spending twice as much.
When Rutgers left the American Athletic Conference for the most prestigious Big Ten in 2014, he projected that he would make $ 200 million more in the next 12 years. It paid an exit fee of $ 11.5 million to AAC and agreed to reduce the Big Ten's revenue share between $ 8.6 million and $ 10.6 million in its first six years in the league, from 2015 to 2020.
Rutgers supplemented those payments with advances from the Big Ten for a total of $ 48 million for future distributions.
As a result of these loans, the Scarlet Knights are not scheduled to receive a full share of the Big Ten until 2027. In 2020, Rutgers was scheduled to receive $ 28.6 million, compared with $ 53 million for the oldest members of the Big Ten.
Barchi announced a university-wide hiring freeze, pay cuts for senior leaders and other comprehensive cost-cutting measures. Rutgers football coach Greg Schiano, male basketball coach Steve Pikiell and female basketball coach C. Vivian Stringer will cut 10% in the next four months; athletic director Pat Hobbs will make a 5% cut.
"I'm sure we will need to do our part," said Hobbs. "It's a challenge. Although our budget is $ 105 million at a half billion dollar institution, saving in any area will help. At a time like this, there will be a big challenge for the university to continue to provide. So we will be creative and we will need to be very cost conscious ".
This domestic financing may no longer be available due to the economic slowdown caused by the pandemic. Although many Power 5 schools can survive without it – Pac-12 schools had, on average, the highest percentage of direct institutional support among Power 5 leagues, with 5.5% of their total revenue in 2017-18 – sports departments in the Group of 5, FCS and lower divisions of the NCAA may have difficulty doing so.
According to data analysis from Syracuse University, FCS schools received an average of 36.8% of their revenue with direct institutional support, and Division I leagues that do not belong to football obtained 32.5%.
Another concern among athletics directors, especially for non-Power 5 schools, is that students may not return to campus this fall, which would eliminate or at least reduce mandatory athletics fees in many cases. Smaller registrations would also result in less money on tuition fees.
While schools like Arizona, Auburn, Oklahoma, Oregon, Purdue and others have already announced that they plan to take face-to-face classes this fall, the final decisions will not be made by these schools and others until later. California State University schools that will not return to campus include Fresno State, San Diego State and San Jose State.
Only three Power 5 schools – Virginia (13.4%), Maryland (12.4%) and Rutgers (11.8%) – received more than 10% of their total revenue from mandatory student fees in 2017-18. According to the data, the Power 5 programs received, on average, 2.4% and the group of 5 schools obtained 21.9% of their revenue from the monthly fees of that academic year.
"We must have institutional support through tuition fees to survive," said North Carolina athletic director Jon Gilbert, whose department received $ 15.8 million, or 33.7%, of its 2017 tuition revenue- 18. "If we go into the fall and let's say that there are no students on campus and all classes are still online, all schools in the group of 5 in the country are in trouble because virtually all buckets of revenue will be reduced."
Gilbert announced on Monday that the ECU plans to eliminate one or more of the 20 sports it sponsors and would cut athletics spending by 10 to 20 percent in an effort to make up for a $ 10 million budget deficit.
On Thursday, the ECU announced cuts to sports programs after the coronavirus pandemic, eliminating swimming and diving for men and women and tennis for men and women. The school said the change would impact 68 student-athletes.
The elimination of programs, in addition to cuts in operations, the limits on summer school opportunities for student-athletes and regionalized programming will save US $ 4.9 million.
In April, UCF athletic director Danny White was criticized for suggesting to Orlando Sentinel that sports departments could benefit from government bailouts to tackle them in the coronavirus pandemic.
Cavaleiros are as dependent on tuition revenue and direct institutional support as any FBS program in the country. In the fiscal year ending 2019, UCF generated $ 23.7 million in tuition fees and received $ 7.5 million in direct institutional support, which represented almost half of its $ 69.1 million in total revenue.
If students are not on campus and the Knights are unable to play football this fall, the UCF athletics department may not be able to stay afloat without some government support.
"There is no answer," White told ESPN. "If university athletics is important to our society, and I think it is part of the reason why our higher education system is the best in the world, we may find ourselves in a situation where we ask ourselves as a society: & # 39; college? athletics or do we need to be creative about some loan program, be it the $ 35 million problem at UCF or the $ 135 million problem at SEC schools?
"There is no answer, just as there is no answer in corporate America and help is being provided to them. I would hate to see college athletics disappear. But, when asked: & # 39; What do we do if we miss a college football season? , & Financially there is no answer to that question ".
Intercollegiate sports, especially football and men's basketball, are often called university porches because of the public relations and marketing opportunities they offer through media exposure. Winning teams have historically led directly to increases in applications for admission and financial contributions from alumni and fans.
Will sport be so important for administrators in the post-coronavirus era of higher education?
"When this is over, those schools that support their athletic departments with student fees and other funds may no longer believe that the front porch is so important when the rest of the house is falling apart," said a Power 5 athletic director.
Even for the most financially stable track and field programs, the $ 75 million training contract days, the $ 55 million football facility, bloated support teams, multi-million dollar acquisitions due to lost coaches and steak and lobster dinners for recruits may be over.
"I am not saying that this gives us the opportunity to push a reset button, but I think it will definitely make people stop thinking about what they are doing with their capital projects, individuals with high salaries, including sports directors and if their institution has adequate reserves, "said Louisville athletic director Vince Tyra.
Andrea Adelson, Kyle Bonagura, Heather Dinich, Chris Low and Adam Rittenberg contributed to this report.