Ohio State athletic department pursuing loan to cover projected budget deficit

Joey Kaufman
Buckeye Xtra
Not having fans in Ohio Stadium this season will result in a financial hit of about $60 million to the athletic department's bottom line. [Kyle Robertson/Dispatch]

Ohio State’s athletic department is pursuing a loan from the university as it manages a projected $107 million deficit for the current fiscal year.

During a conference call with reporters on Wednesday, athletic director Gene Smith said no terms had been finalized and it was unknown if the loan would have interest.

“I'm going to battle for it not to be an interest-bearing loan,” Smith said. “It should be interest-free. We're going to do our best to develop a long-range plan.”

The sizeable budget hole for the department, one of the wealthiest in the country, is largely the result of the coronavirus pandemic that has led to a postponed football season in the Big Ten and one that will not see fans in attendance at games this fall.

Football ticket sales is the largest source of revenue for the department and originally was expected to surpass $60 million in sales this season, with a schedule that includes a home date against archrival Michigan.

In securing a loan, the athletic department would be required to make annual repayments to the school over some period of time, in addition to the yearly debt service payments for facilities.

Smith said he expected the loan to come from the university, which has an annual operating budget approaching $7.5 billion, rather than through a bank or another outside lender, an option he said he had not explored.

“I haven’t approached that because we’re comfortable working with our CFO in the university,” Smith said.

OSU’s athletic department is largely self-sufficient and does not receive funding from the school or state government, nor any money from student fees, all forms of financial assistance that are common throughout the college athletics industry.

According to the annual revenue and expense reports it files with the NCAA, the department has not received outside aid since the 2007 fiscal year, when it brought in a small sum of $3,189 through government support.  

A loan was the most drastic step Smith said he expects to take during this year as they brace for the sizeable budget shortfall.

Seeking to maintain self-sustaining status, no subsidies are on the horizon.

“It's very important,” Smith said. “We don't want to be a burden to the institution. We want to be an asset. That's what we want to do, and there's a focus on making sure we maintain that status as an athletic department.”

Speaking with The Dispatch on Wednesday, university president Kristina M. Johnson said the coming months should put the finances for the athletic department in a clearer picture.

It should be able to realize tens of millions of dollars in media rights revenue if the Buckeyes can play its football season as scheduled, starting in late October.

For now, Johnson expressed few reservations about the measures taken, including the pursuit of a loan, which will be settled between the finance office and athletics.

“I've always said don't make decisions due to short-term situations that can't be reversed over a long period of time,” Johnson said. “So if you have a massive event, and you can take out a loan, for example, and amortize that over a longer period of time, then there's a way to bridge that particular gap. And I think that that's always an approach.”

Ohio State is not the first Big Ten school to pursue a loan in response to the financial crisis in college sports.

Last month, Iowa athletic director Gary Barta said his department was looking at obtaining a $75 million loan to assistant with its shortfall.