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Department of Athletics has budget cuts plan to cover cash shortfall despite uncertainties.

Gene Smith Ohio State Athletic Director

Planning a budget is easy.

You just figure out how much money is going to come in. Then you subtract from that how much money you have to spend in order to earn that money.  The amount of money left over is how much you have for new projects and better pay for employees and better stuff for the people you serve.

It’s all  very easy, until you realize that you have no idea how much money  is going to  come in. Then, my friend, it gets a little dicey.

That is the position that Gene Smith and the Ohio State department of athletics find themselves as a result of the carona-virus pandemic.  They have no idea what their income will be, but still have obligations to  meet. There are scholarships to pay for, facilities to maintain, coaches contracts to honor, and on and on and on, yet they have no real idea how much (or how little) money they will generate to meet those expenses.

Earlier today cuts were announced to help address the expected shortfall, but at a press conference today Gene Smith warned that the numbers in their projections are still just educated guesses, not hard data. There is still uncertainty as to how much income can be expected from, for example, football media rights. How will cancelled games figure into that number? What is an nine-game schedule really worth? Those things have yet to be determined, yet budgetary steps had to  be taken. Then there are the known shortfalls, things like no ticket sales, no concession sales, parking revenue, and so on. And what about sponsorships? Will corporate America buy the signage in an empty Ohio Stadium? Probably not.

The salary cuts and furloughs announced earlier will cover part of the expected shortfall, but a big chunk of change, in the realm of 100 million dollars, still has to be accounted for .  Smith and his staff have waited as long as they could to formulate a plan, simply for clarity. Until a week ago there was going to be no football revenue at all. Now there will at least be some revenue, and that makes the planning a little easier.

Smith says that cutting costs will not include cutting sports programs, at least not at this time. OSU’s support of non-revenue sports will continue because of the benefits they bring to so many student-athletes as well as to the community. Smith pointed out that the life-lessons learned in football also apply to all the other sports, and having former athletes in the community that have learned those life-lessons is of benefit to the entire community.

So where is the money to operate going to come from? There are not enough reserves to cover the shortfall, so the department of athletics will borrow money from the university for immediate operating needs. That money will be repaid. Whether there will be an interest rate attached to the loan is something that is still under negotiation between the university CFO and the department of athletics

One Response

  1. The US govt last week updated the survival rates (i.e., IF infected) for Covid19:

    0-19 99.997%
    20-49 99.98%
    50-69 99.5%
    70+ 94.6%

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