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Ohio State athletics projects $107 million deficit in 2021 fiscal year

Ohio State athletic director Gene Smith said the 2021 budget will include department-wide budget cuts, furloughs and other reductions. Twenty-five full-time athletics positions will be eliminated. [Dispatch file photo]

The Ohio State athletic department projects a $107 million deficit because of the COVID-19 pandemic in its fiscal year 2021 budget, the university announced Wednesday.

Ohio State said its 36-sport program, the largest in the country, "will remain intact" with scholarships fully funded as well as complete support services.

In what it termed a conservative estimate, Ohio State projects revenue of about $73 million for an operating budget of $180 million in fiscal 2021. That does not include media-rights revenue, which is still to be determined by the Big Ten Conference and its television partners. Last year, total revenue exceeded $200 million.

In a conference call with reporters, Ohio State athletic director Gene Smith said the budget figures are mere guesses because so much is yet to be determined or could change depending on the length of the pandemic.

"Our budget is uncertain," he said. "We have the numbers, but just to be quite frank with all of you, they mean nothing at this point relative to accuracy. They're estimates. Our media rights are still being determined."

The Big Ten announced last week that it will reinstate football, with a nine-game schedule beginning Oct. 24, after previously postponing all fall sports.

"(The Big Ten is) working closely with our television partner to ascertain what the value of our current schedule is," Smith said. "There have been a lot of games postponed, so hopefully we can play all the way through. But if we don't, then that number changes again."

The 2021 budget will include department-wide budget cuts, furloughs and other reductions. Twenty-five full-time athletics positions will be eliminated. Coaching positions are not among them. 

Forty-seven contracted employees -- including Smith, head coaches, football assistants, some assistants from other sports and top administrators -- have voluntarily agreed to take 5% reductions in their base salaries. Of the 47, only Smith, head football coach Ryan Day, men's basketball coach Chris Holtmann and women's basketball coach Kevin McGuff have compensation beyond base salary that would be subject to the 5% reduction, according to Ohio State. Day's would amount to $236,777.77 by June 30, 2021.

Smith said those 47 employees can't have their pay reduced without their permission, based on their contracts. When asked if those employees should take a steeper pay cut since many are at the top end of the pay scale, Smith replied, "We wanted everyone to be treated the same. And we felt comfortable with that (cut), and so does our team."

The Fawcett Center at The Ohio State University photographed on Thursday, July 16, 2020. [Fred Squillante/Dispatch]

Furloughs of varying lengths will be required of 345 employees, including 213 who will have 10-day intermittent furloughs between Oct. 6 and June 30. On the athletic strength and conditioning staff, 48 members will take five-day furloughs. Eighty-four employees will be placed on a 60-day continuous furlough or be redeployed from Oct. 9 through Dec. 31.

"I think Gene has done a great job in a very difficult situation limiting the number of the reduction in (work)force to be done, although a single reduction in force is very difficult, as well as the furloughs and the cuts in the contracts," Ohio State president Kristina Johnson told The Dispatch. "This decision was 5%. He's an excellent manager and a wonderful leader, and I endorse his approach."

Upon the coronavirus outbreak in the spring, Smith warned that the fiscal impact of the pandemic could outweigh those of the Great Recession a decade ago, prompting budget cuts to be made before the start of this fiscal year.

The cuts amounted to $5.6 million through a hiring freeze, no merit increases, elimination of travel, a pause on some planned facility projects and operating budget spending restrictions.

The school also is saving $9.6 million through debt restructuring. Annual debt payments are one of the largest expenses for the department. It had $250.7 million in outstanding athletics-related debt through the 2019 fiscal year, according to revenue and expense filings with the NCAA. A copy of the 2020 form is not yet available.

Ohio State's athletic department is self-funding and does not receive financial support from the university or student fees, unlike many in the college sports industry.

"We've been self-supporting and will continue to be self-supporting," Smith said. "We've been working with our chief financial officer and our CFO office, and we're developing a long-term debt-recovery plan," he said.

If the Buckeyes play a football season this fall, they would realize significant television revenue that could help reduce the size of the deficit. 

Media-rights revenue totaled $45.6 million during the 2019 fiscal year, much of it tied to the broadcast of football games.

But OSU athletics' budget hole is also due to coronavirus restrictions that will prohibit fan attendance at Ohio Stadium when the season begins next month.

With fans prohibited, the athletic department is left without revenue from ticket sales, its biggest source of income, which were expected to total $64 million this fiscal year, according to projections.

Other gameday revenue comes from parking fees, concessions and merchandise sales.

"Our furlough and reduction-in-force plan was significantly more challenging prior to the announcement that football would come back," Smith said. "We decided that we had a chance for it to be available in the fall, so we held out and we reduced the impact significantly. (It's) still a major impact, but it's not as bad as it would have been if football didn't come back in the fall."

The only other OSU sport that makes a profit is men's basketball. Smith said all he knows about a basketball season is that it will be "Five-on-five with a ball and officials. (Everything else) is still being developed.

"We anticipate even if we have basketball games, I'm not sure how many we're going to have at home. We're hopeful that we have in double-digits. But even with that, we know that our attendance will be zero, or significantly less (than usual) depending on what's happening at that particular time with the virus."

Smith said the pandemic's effects have caused his department to re-evaluate the way it operates in every way.

"None of us have experienced what we've experienced in the pandemic," he said. "It's caused you to think differently about a whole lot of things."

brabinowitz@dispatch.com

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