COLUMBUS, Ohio -- Ohio State athletics operated at a loss for fiscal year 2018-19 — though not as large as the one reflected in its annual Equity in Athletics Disclosure Act report to the NCAA.
Ohio State’s internal financial statements showed income of $210.3 million and expenses of $210.9 million for the period running July 1, 2018 through June 30, 2019. That resulted in a deficit of about $600,000 — an uncommon but not outrageous result for OSU and one covered by the athletic department’s reserves.
On the EADA report, Ohio State recorded income of $210.5 million and expenses of $220.5 million. However, OSU said that does not include $10.4 million in revenue from Buckeye Club donations and other gifts related to debt service and capital projects.
The money spent on projects such as the Covelli-Jennings Center, the Schumaker Student Athlete Development Complex and the Woody Hayes Athletic Center renovation was held in what OSU senior associate athletic director for finance Joe Odoguardi called “plant funds.” He said OSU’s external auditors’ interpretation of the EADA report was that those funds should not be included as income for that year.
The EADA report is the most public-facing accounting of athletic income and spending for NCAA programs. Reporters across the country obtain that report to provide a snapshot of an athletic department’s fiscal situation, as well as to track spending in specific areas such as recruiting or salaries. The income and expenditures are broken down by sport.
However, OSU athletic director Gene Smith said “That’s not a tool I’m accountable to.” He asked to meet with the reporters who put in requests for the report, which all schools were required to submit by Jan. 15. At that meeting he provided the internal financial summary in an attempt to explain why the numbers do not match.
Smith said an actual deficit of $10 million would require cutting staff and possibly sports programs. The internal budget numbers fell into what he considered a comfortable range.
“I feel really good about where we are," Smith said. “We had some uncontrollable expenses that sent us into a deficit. However, I feel real good about our expenditure controls.”
Ohio State’s athletic department is fully self-funded.
What the internals say
Per the internal report submitted by Ohio State, the athletic department budgeted for a surplus of $384,335 for 2018-19. According to Smith, the actual deficit of $624,359 resulted directly from the cost of the investigation into since-fired receivers coach Zach Smith, which OSU now says totaled $1.5 million.
That final payment came last May, near the end of the fiscal year.
Ohio State athletic director Gene Smith. (Doug Lesmerises, cleveland.com)
Ohio State athletics income undershot its expectations in a couple of significant areas.
• Buckeye Club contributions and other gifts were about $4 million short of budgeted projections.
• Football ticket sales also fell about $1.6 million below expectations. (Despite this, Ohio State did not increase ticket prices for 2019-20.)
The athletic department also spent more than expected in a couple of areas.
• Ohio State went about $3.2 million over budget on travel. Smith said was mostly attributable to increased costs for Rose Bowl travel, which is the most expensive potential bowl destination due to distance and other factors.
• Ohio State also paid about $2 million more in bonuses than expected, which Smith said mostly corresponded to achievement bonuses in football, men’s basketball and other sports. He said the athletic department previously did not budget to the maximum potential bonuses, but has done so beginning with 2019-20.
Those deficiencies were mostly offset by other increases in income or other savings.
• A new campus-wide pouring rights and sponsorship agreement with Coca-Cola brought in an extra $3 million. A new Big Ten television rights agreement brought in an extra $1.1 million.
• The entire budget came in $2.7 million below expectations thanks in part to lower-than-expected spending in areas such as Grant-in-Aid (scholarships) and university overhead.
What the EADA report tells us
A year earlier, Ohio State’s 2018 EADA report reflected expenses and revenues topping $200 million for the first time. The athletic department surpassed both levels again.
Some of the main takeaways from the budget numbers:
• Football remains the biggest driver of athletic revenue, totaling $115 million by itself. That was an increase of about $4.3 million from the previous year.
Men’s basketball revenue came in second at $24.9 million, about $1 million more than the previous year.
• Football ticket sales dropped from $59.4 million in 2017-18 to $50.5 million. Ohio State played one less non-conference home game due to the neutral-site game with TCU, though it did receive a $5 million guarantee for that game. Per the internal summary provided, OSU budgeted for that anticipated reduction in income.
• Ohio State paid $39.3 million in coaching salaries, only a slight increase over 2017-18. That number will drop for fiscal year 2019-20 with former football coach Urban Meyer’s contract coming off the books.
• Media rights income increased slightly from $42.6 million to $45.6 million.
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