Ohio State coach Ryan Day and Michigan’s Sherrone Moore shake hands after the Wolverines’ upset victory, marking their fourth consecutive win in the historic rivalry.

In recent years, college athletics have experienced unprecedented financial shifts, driven by factors ranging from pandemic-related disruptions to changes in revenue streams and operational costs. Most notably, The Columbus Dispatch reported that Ohio State University’s Athletic Department faced a substantial operating deficit of over $37 million during the most recent fiscal year. This figure not only underscores the financial strain on one of the nation’s most prominent athletic programs but also raises questions about the sustainability, management, and future direction of college sports programs amidst evolving economic realities.

This comprehensive analysis explores the causes behind this deficit, its implications for Ohio State, the broader landscape of college athletics finances, and the strategic steps that institutions like Ohio State might consider to navigate these challenging times.

Context and Background

Ohio State’s Athletic Program: A Powerhouse

Ohio State University’s athletic programs are renowned nationally, with football, basketball, and other sports generating significant attention, revenue, and prestige. The Buckeyes football team, in particular, is a perennial powerhouse, drawing large crowds, lucrative television deals, and sponsorships. Historically, these programs have been financially self-sufficient or even profitable, contributing substantially to the university’s overall budget.

The Financial Impact of the COVID-19 Pandemic

The COVID-19 pandemic, beginning in early 2020, caused dramatic disruptions to college athletics. Games were canceled or played without fans, leading to a sharp decline in ticket sales, concessions, and merchandise revenue. Many programs faced financial uncertainty as they navigated these losses, and Ohio State was no exception.

Shift in Revenue Streams

Beyond pandemic-related issues, the landscape of college sports has shifted with changes in media rights, NIL (Name, Image, Likeness) policies, and conference realignments. While media deals for major conferences like the Big Ten remain lucrative, the pandemic’s financial shock and ongoing operational costs have strained budgets.

Dissecting the $37 Million Operating Deficit

What Does Operating Deficit Mean?

An operating deficit indicates that the athletic department’s expenses exceeded its revenue during the fiscal year. This figure includes costs such as coaching salaries, facility maintenance, travel, scholarships, and administrative expenses, minus income from ticket sales, media rights, sponsorships, licensing, and other revenue sources.

Sources of Revenue and Expenses

• Revenue Sources:
  • Ticket sales and game-day revenue
  • Media and broadcasting rights
  • Sponsorships and partnerships
  • Licensing and merchandise sales
  • Donations and fundraising
• Expenses:
  • Salaries and benefits for coaches and staff
  • Facility operations and maintenance
  • Travel and accommodations
  • Scholarships and player stipends
  • Equipment and operational costs

The reported deficit suggests that, for the latest fiscal year, the department’s expenditures significantly outstripped income, impacting the university’s overall financial health.

Factors Contributing to the Deficit

1. COVID-19 Pandemic and Reduced Revenues

The most immediate factor is likely the pandemic’s impact. During the 2020-2021 seasons, attendance was limited or prohibited, drastically reducing ticket revenue. Although some revenue streams recovered partially in subsequent years, the lingering effects and cautious return to full capacity may have continued to suppress income.

2. Rising Operational Costs

Athletic departments face escalating costs—especially salaries, healthcare, facility upgrades, and travel expenses. The competition for top coaching talent and recruiting can drive salaries upward, further increasing expenses.

3. Infrastructure and Facility Investments

Ohio State has invested heavily in its athletic facilities, including the renovation of Ohio Stadium, new training centers, and other infrastructure projects. While these improve competitiveness and fan experience, they also represent significant capital expenditures that impact annual operating costs.

4. NIL and Player Compensation

The NIL era has introduced new financial considerations. Though primarily a cost to athletes, the increased investment in athlete branding, marketing, and compliance can indirectly raise operational costs.

5. Administrative and Compliance Costs

Growing scrutiny over compliance with NCAA, conference, and Title IX regulations, along with administrative overhead, can contribute to higher expenses.

Broader Implications of the Deficit

Financial Sustainability Concerns

A $37 million deficit signals potential stress on Ohio State’s athletic budget. If such deficits persist or grow, they could impact funding for scholarships, facilities, or other athletic initiatives. The department may need to reevaluate its revenue strategies and cost controls to ensure long-term sustainability.

Impact on Athletic Programs

While Ohio State’s football and basketball programs generate substantial revenue, losses could influence less profitable sports, potentially leading to cuts or reduced support for Olympic and non-revenue sports. The department’s financial health directly affects the breadth of athletic offerings.

University-Wide Financial Considerations

As a major public research university, Ohio State’s athletic revenue and expenses are intertwined with institutional finances. Large deficits could influence university budgeting, tuition, or fundraising priorities, especially if external sources seek accountability.

Reputational Challenges

Financial struggles may affect Ohio State’s ability to compete for top athletes, coaches, and sponsorships. Maintaining competitiveness requires ongoing investment, which could be constrained by financial deficits.

Strategic Responses and Future Outlook

1. Revenue Enhancement Strategies

• Enhancing Media Rights and Sponsorships: Leveraging Ohio State’s brand to negotiate better media deals and attract sponsorships can bolster income.
• Expanding Licensing and Merchandising: Growing merchandise sales through online platforms and global markets can generate additional revenue.
• Facility Utilization and Events: Hosting non-athletic events or tournaments can diversify income streams.

2. Cost Management

• Operational Efficiency: Streamlining administrative functions and reducing unnecessary expenses can help control costs.
• Salary and Contract Negotiations: Reassessing coaching and staff contracts to align with revenue realities.
• Shared Resources: Collaborating with other departments or institutions to share facilities and services.

3. Building Endowments and Donations

Strengthening fundraising efforts, alumni giving, and endowments can provide a more stable financial foundation, reducing reliance on game-day revenue alone.

4. Emphasizing Long-term Planning

Developing sustainable financial models that anticipate future challenges, such as fluctuating media rights or NIL impacts, is critical.

5. Transparency and Stakeholder Engagement

Clear communication with stakeholders—students, fans, alumni, and university leadership—about financial challenges and strategies fosters support and shared responsibility.

Broader Industry Trends and Challenges

The Growing Financial Gap

Many major college athletic programs are facing similar fiscal pressures. The pandemic’s financial impact, combined with rising costs and changing revenue models, has widened the gap between revenue and expenses for many institutions.

NIL and Its Financial Impacts

While NIL offers athletes new earning opportunities, it also adds complexity to financial planning. Ensuring compliance and managing these costs without overextending budgets is a new challenge for athletic departments.

Conference and Media Deal Dynamics

The Big Ten Conference’s new media rights deals are expected to be lucrative, but the distribution of revenue and the timing of payouts can influence departmental finances in the short term.

Fan Engagement and Attendance

Post-pandemic, attendance patterns are still stabilizing. Fluctuations in fan engagement directly impact ticket sales and game-day revenue, affecting overall financial health.

The Ohio State Athletic Department’s reported $37 million operating deficit is a stark reflection of the complex and challenging financial environment facing college athletics today. While Ohio State remains a powerhouse with significant revenue-generating capabilities, the pandemic’s impact, rising costs, and evolving revenue streams have created substantial financial pressures.

Addressing this deficit will require strategic planning, operational efficiency, innovative revenue generation, and stakeholder engagement. The department’s ability to adapt to these challenges will determine its long-term sustainability and success.

Despite the hurdles, Ohio State’s rich athletic tradition, passionate fan base, and institutional support provide a strong foundation for recovery and growth. By embracing transparency, innovation, and fiscal responsibility, Ohio State can navigate these turbulent times and continue to uphold its reputation as a leading force in college athletics.