Opinion: Pandemic impacting finances, spending at OU, OSU, but both have one big thing in their favor — no allotments
Budget cuts have been made at Oklahoma State.
Nothing has been formally announced, but deputy director of athletics Chad Weiberg acknowledged cuts to operational expenses in both the athletic department and the sport programs. Such moves have become common as schools across the country deal with the coronavirus pandemic.
And more cuts at OSU are likely coming.
“I think we will do furloughs and salary reductions,” Weiberg said. “We are going to do all those things.”
“We are not going to cut sports,” he said, emphasizing the “not.” “We are not going to not fund scholarships. That’s why we are here. We’re going to continue to do the things that we’re here to do.
“And we feel good about our ability to do that.”
There are similar vibes from OU. Budget cuts of $13.7 million were announced earlier this month with reductions in operating expenses, including salary reductions for any employee making $1 million or more annually, but athletic director Joe Castiglione has said scholarships will be honored. Similarly, there has been no talk of program elimination.
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At a time when the future of college sports is uncertain, athletic departments everywhere are looking at their bottom lines. Revenues have already taken a hit with the cancellation of the NCAA basketball tournaments and spring sports. But with COVID-19 cases spiking in most of the country, the uncertainties surrounding revenue in college athletics have grown significantly in recent weeks, especially as it relates to the biggest revenue-producing sport, football.
What happens if the season is condensed or pushed back?
What about crowd sizes being reduced?
Serious fallout in the form of program cuts is already happening at some schools. Stanford recently announced 11 sports would be eliminated after the 2020-21 academic year, including wrestling, men’s volleyball and field hockey. Connecticut cut men’s cross country, men’s swimming, men’s tennis and women’s rowing. Akron dropped cross country, men’s golf and women’s tennis while Boise State dropped baseball and swimming. Old Dominion eliminated wrestling, Central Michigan track and Cincinnati men’s soccer.
One website tracking program cancellations, MatTalkOnline.com, indicates 270 sport programs have been cut, dropped or suspended with no announced return date across all levels of college athletics.
The reasons why are complex, but the recently released 2019 NCAA athletic department revenue database compiled by USA TODAY in partnership with Syracuse University’s S.I. Newhouse School of Public Communications may offer one possible answer.
In a word: allotments.
Private universities such as Stanford are not included in the database, but of the other schools mentioned above that have cut sports during the pandemic, all get at least 30% of their total revenue from student fees or school funds. Four of the six get more than half of their revenue from these allotments.
Why is that significant?
Every athletic department is dealing with the likelihood of decreased revenue from private donations, corporate sponsorships, shares from the NCAA and their respective conferences, ticket sales and third-tier broadcast deals. But athletic departments that rely heavily on student fees and school funds have additional worries.
What if a school’s enrollment plummets because of the pandemic?
What if the college has to give refunds for classes or housing?
What if a university loses a huge chunk of state funding?
Athletic departments dependent on allotments are facing the potential of significant and crippling losses in their revenues.
Take UConn as an example. During fiscal year 2019, the athletic department received $8.8 million in student fees and $35.1 million in school funds. That’s a whopping $43.9 million in allotments.
Worse, they accounted for 54% of the athletic department’s total revenue.
There’s a strong correlation between being financially dependent on a university and dropping sports. According to MatTalkOnline.com, 20 NCAA Division-I schools that have cut at least one sport during the pandemic, and of those, 15 are public institutions included on USA TODAY’s revenue database. All but two receive at least half of their revenue from school funds and student fees.
Eight of them receive at least 70%.
The worrisome thing is that program cuts may only be starting. Of the 227 athletic departments on the database, more than two-thirds (152) receive allotments that account for at least half of their total revenue.
Again, the reasons for cutting a program are complex. This isn’t a linear equation. A does not necessarily equal B. But the correlation is between super-sized allotments and sport-program reductions may be stronger than ever amid the uncertainty of this pandemic.
It’s a painful time in college athletics — and program cuts are the most painful part of all.
“Absolutely,” Weiberg said. “Because you know that’s impacting people’s lives, coaches and their families, student-athletes and their dreams. And that’s exactly why … that’s the last thing we want to do.”
The good news for OSU and OU is that neither takes student fees or school funds that are used for general operations.
According to USA TODAY’s revenue database, OSU has taken a little less than $90,000 in student fees the past two years, but Weiberg said it is money given to the athletic department by the OSU student government for marching band travel. It cannot be used for any other expenses.
Weiberg said OSU also has a student fee of $5.50 per credit hour, but that money goes toward servicing the debt for facility expansions on Gallagher-Iba Arena and Boone Pickens Stadium. The funds pay down the bonds, and because the university holds the bond, it just applies the fees toward that debt.
The money never even cycles though the athletic department.
“We pride ourselves on trying to stand on our own,” Weiberg said. “We believe that is our responsibility to do that as much as we possibly can. We don’t want to be any kind of drain on the university’s resources.
“We believe that we should operate on the resources that we’re able to generate.”
So it goes at OU, too.
When Castiglione arrived in Norman a little over two decades ago, the athletic department was struggling to balance its budget. It periodically received a working capital loan from the university that accumulated and fluctuated over time.
“That loan,” Castiglione said via text, “ballooned to well over $15 million.”
But that loan has long ago been paid off — “Eleven years ahead of its payment schedule,” Castiglione said — and for many years, the athletic department has run a surplus and has actually paid some of that excess back to the university.
According to the USA TODAY database, OU athletics transferred nearly $5.9 million to the university in fiscal year 2019.
If all of that sounds like good news, it is. For OU. For OSU. For the health of major-college athletics in our state.
In this day and age, nothing is certain, of course. No one knows how long the pandemic will last or what ramifications are yet to come. No one knows just how hard total revenues may be hit in Norman or Stillwater.
But in both places, the athletic departments don’t have to worry about the double whammy of allotments tumbling, too. That creates a bit more stability and reduces the possibility of having to make the most painful cut of all — a program elimination.
“We are resolute on that,” Weiberg said. “We are not going to do that.”
Jenni Carlson: Jenni can be reached at 405-475-4125 or email@example.com. Like her at facebook.com/JenniCarlsonOK or follow her at twitter.com/jennicarlson_ok.
Since the start of the pandemic, 20 NCAA Division-I schools have eliminated at least one sport program. Fifteen of them are public universities and are part of the 2019 NCAA athletic department revenue database compiled by USA TODAY in partnership with Syracuse University’s S.I. Newhouse School of Public Communications — and all of them get at least a quarter of their revenue from student fees and school funds.
Here’s a look at those schools and their allotments:
School, Student fees, School funds, Allotment % of total revenue
Akron, $0, $26.0 million, 69.9
Appalachian State, $12.7 million, $9.4 million, 58.0
Boise State, $3.6 million, $11.4 million, 29.7
Central Michigan, $0, $25.2 million, 72.2
Chicago State, $867,000, $3.6 million, 74.8
Cincinnati, $0, $29.7 million, 43.1
Connecticut, $8.8 million, $35.1 million, 54.2
East Carolina, $15.3 million, $22.4 million, 62.9
Florida International, $22.4 million, $6.2 million, 77.2
Northern Colorado, $2.0 million, $11.0 million, 71.9
Old Dominion, $28.8 million, $0, 61.3
Southern Utah, $1.7 million, $10.4 million, 78.4
Winthrop, $5.4 million, $4.5 million, 74.9
Wisconsin-Green Bay, $1.6 million, $44.4 million, 51.1
Wright State, $0, $10.0 million, 81.0
*Brown, Dartmouth, Furman, Hampton and Stanford have also dropped sport programs during the pandemic, but as private universities, they are not included in the USA TODAY database.