OSU Athletics
Ninety Million is Not Enough - Part One of a Two-Part Series
By John PorentasWith an operating budget of 90 million dollars, the Ohio State Department of Athletics is the envy of...well...almost everybody else in the collegiate athletics business.
The ninety million dollar budget at OSU supports a program that includes 34 sports and 900 student-athletes. Large schools, small schools, medium-sized schools, famous schools, and not-so-famous schools look with awe and envy at the scope and quality of the program that the funding makes possible. What OSU athletics wants, it gets, and what it gets is always first class.
In simple math, OSU has about 100,000 to spend annually for each student-athlete, whether you're talking about football, fencing, field hockey or men's basketball. In a simple world, that would be plenty of money for each student-athlete. The world however, particularly the world of big-time college athletics, is not simple. Athletic administrators at OSU who are responsible for keeping the the teams on the field say that 90 million will not be enough going forward, and are looking at ways to increase revenue.
Where does it go?
According to Senior Associate Director of Athletics for External Relations Tom Hof, the Department of Athletics expends approximately 11 million of the 90 million budget on scholarship costs alone. The 11 million dollar check written to the University goes toward covering tuition, books, room and board for the 900 student-athletes at OSU. That's just over 12 per cent of the budget and leaves about 79 million for other operating costs.
Current Director of Athletics Gene Smith has a goal of maintaining a 10% reserve for the department, a reserve that has been depleted a little in recent months.
"We are sitting on a little-south of a seven million dollar reserve that will take a little hit with legal fees, things of that nature, associated with the NCAA case and the O'Brien case, but we want to get that well-north of 10 million dollars," Smith said in a recent exclusive the-Ozone interview.
"Every year we strive to have a profit at the end of the year that we can drop into our reserves."
Assuming Smith will find three or four million dollars in this year's budget, there is 75 or 76 million remaining to be spent. Amazingly enough, it all does get spent.
The overhead associated with the OSU Athletic department is staggering. The University alone dings the Department of Athletics for about six million a year for overhead costs, bringing to 17 million the total dollars that the Department of Athletics pays to the University general fund, or just under 19 per cent of the total athletic budget. That leaves around 70 million to run the rest of the department. It sound like a lot of money. It isn't.
Coaches salaries, travel costs and facility maintenance are huge expense items, as are administrative salaries. Jim Tressel's recent raise put a nice dent in the remaining 70 million. The salary costs of the football assistant coaches, strength and conditioning coaches, academic support staff, and administrative staff mounts quickly when you just consider football. The other 33 sports don't cost as much as that one sport, but you can bet that the pay scale at OSU is near the top of the market place in almost every sport, for head coaches and assistant coaches alike. At last check, Gene Smith was not working for free, and there are dozens of other top-level administrators at OSU who must be paid.
OSU student-athletes don't have to endure too many long bus trips. When an OSU team goes to the West Coast (as many do) or for that matter pretty much anywhere not to a bordering state, they fly. You have 900 student-athletes that have to get to where the competition is along with their coaches, trainers, managers, and the rest of the support staff. The baseball team spends almost the entire month of February on the road, flying out for weekend series then flying back to attend classes. The same is true for the softball team. Both basketball teams are on the road almost every week once the Big Ten season rolls around. Lodging and food costs on the road are huge. Nine hundred student-athletes along with their coaches, trainers and other support staff can burn a lot of travel money.
OSU's facilities are second-to-none. The cost of keeping them that way is staggering. Fields must be maintained and periodically replaced. Buildings must be heated, cooled, updated, maintained, cleaned and repaired. It adds up to big money.
The cost of medical staff, injury treatment, and training costs is huge. OSU has full-time physicians on staff, not to mention a professional training staff. Money is spent for physical therapists, sports psychologists, and other medical specialists. Serious injuries, such as the recent unfortunate injury to Tyson Gentry, produce major medical bills, all of which are paid by the athletic department.
Training equipment, training rooms, uniforms, printing (everything from tickets to game programs to media guides), redcoats, game-day management, game-day announcers, sports information people, administrative assistants, scoreboard maintenance, heating, cooling, maintaining the Zamboni, making ice, and shoes are just a few of the budget items that eat up the balance of the budget. Our guess would be that what OSU spends in a year on towels, soap and laundry costs would support several average middle income families. Recruiting budgets are enormous, and the compliance department alone employs three full-time attorneys.
From time to time, there is a little money left at the end of a fiscal year, but once the reserves are accounted for, the money gets spent. The OSU Department of Athletics is the largest single donor to the OSU libraries, and other new initiatives to plow money back into the University are under way.
"We're looking right now at collaborating with the medical center on a sports medicine institute," said Hof.
Where does it come from
The operating budget is funded for the most part by ticket sales. According to former ticket director Richelle Simonson, her department was responsible for raising 60 million of the 90 million that went into operating the Department of Athletics last year. That department also operates The Official Team Shop, which generated four million dollars in revenue, half of which came from online sales. Simonson added that OSU's aggressive use of the Internet to handle ticket sales has been a boon to the department.
"We were the first college to be out there with an e-commerce site. We went online in 1998," said Simonson.
"The Internet has fundamentally changed everything that we do in our office. It has taken us from a 9 to 5 operation to a 24/7 operation. The convenience is ordering has made it the primary ordering tool for our fans. It has gone from a very small percentage of what we do to the largest percentage of how people purchase a ticket."
Fund raising produces a big portion of the remaining 30 million dollars of the budget. The Buckeye Club generates approximately 8 million dollars that can go directly into operating funds. Other income sources include corporate sponsorships, rental of facilities and services, program sales, parking fees, tailgating fees, etc. Surprisingly, merchandise sales not made by the Department of Athletics itself does not benefit the Department of Athletics much. The trademarks and licensing department at OSU is a function of the University, not the Department of Athletics. The royalties paid by companies producing OSU gear go to the general fund, not athletics. A small portion of those proceeds are returned to athletics, but the lions share of that money does not. That t-shirt you bought at a store other-than The Official Team Shop did very little to help the Department of Athletics.
Why the concern?
The good news is that football is the cash-cow that drives athletic department budget. The bad news is that football is the cash-cow that drives the athletic department budget.
Football produces a ton of money for OSU, but football has pretty much maxed out. The tickets are all sold so there is no room for growth in the number of seats that get filled. Neither is there much room for price increases for football tickets.
"I think we're near the top end of what the people are going to be willing to pay," said Simonson.
That leaves the department with little or no growth in football while expenses continue to rise.
"Ten years ago, our cost for scholarships were about 5 million, now they are 11 million," said Hof citing just one of the rising costs for the Department of Athletics.
"It's very important to grow the budget," said Smith.
"We have annual increases in travel costs, tuition costs, utility costs. This year our steam bill went up by 55 per cent, so we always have significant increases on expenditures that are out of our control, so we have to find new funding to handle those. Additionally, we are a major contributor to the University for certain University initiatives. For example, we contribute 500,000 dollars a year to the library. We support the music department, and other university operations, so growth in our budget is critical," Smith said.
Then there is the unmentionable. What if football stopped producing all that revenue. Couldn't happen? Famous last words, because there are real-life examples of that happening at places where nobody though it could.
"We hope that nothing would ever happen to Ohio State football where there would be diminished interest, and people say that could never happen, but they said that at Alabama, they said it at Oklahoma, and those programs hit obstacles that were unforeseen," said Hof.
"They didn't win, and suddenly people started to stay away from the games. If they stay away, then they're also not donating," Hof said.
"There are some schools where there are successful football programs where they still have had to cut sports. There is no baseball at Wisconsin. Men's gymnastics is down to 20 schools maybe. I know that several years ago Nebraska dropped some sports, and they average over 75,000 fans per home game," Hof added, pointing out that a successful football program does not ensure financial stability.
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