Everyone is seemingly astonished that the University of Tennessee's Athletic Department is carrying more than $200 million in debt. I'm here to tell you that Ohio State's Athletic Department isn't far behind. In 2011 Ohio State reported $183,555,456 in outstanding athletics related debt. We paid around $17 million to service that debt. See page 11 line items 6 and 7 at the link.
The debt is actually down from a few years ago. In 2004 Ohio State had more athletic department debt than any other public institution ($202,671,662). And that was after University Accounting moved the debt from the construction of the Schottenstein Center from the Athletic Department's books to the Office of Student Affairs books.
I personally think it takes money to make money in college sports. The facility upgrades that served as the source for most of this debt have been both needed and appreciated. Plus, Ohio State does everything on a large scale (from enrollment, to research, to stadiums, to coaching hires), so I don't think there's any reason to fret. Ohio State is in a much better position to pay off the debt than UT seems to be (Ohio State was second nationally in football attendance both last season and this season with over 105,000 per-game attendance average).
Here's a link OSU's Debt Management Report from 2007. It's easy to read and provides an overview of all university debt.
I thought some of you all might find this information interesting.
It's interesting, but the item in OSU's favor is that the athletic department, while holding debt, has been in the black (>$10 million revenue surplus for 2011).
Tennessee posted a $4 million deficit for 2012. This hurts their ability to pay off their debt.
Very true. I mentioned that OSU is in a much better position to pay off its debt than UT. Ohio State can continue to try to increase revenue through promotions and apparently ticket price increases. UT looks like it is faced with having to cut items from the AD budget (while it pays two coaches not to coach).
Excellent forum topic, I used to work for the department and when I saw the UT debt forum I thought, if our fan base only knew we are in pretty much the same boat.
What it boils down to, is our brand, and as you both stated, the ability to stay in the black and continue to pay down debt.
yea, BUT, look at the years BEFORE 2011 (USA Today link). Very tight positive cash flow, and 2009 was negative. 2011 appears like the exception vs the rule...based on past 6 years data. That's a concern. I'd say 2011 and 2006 look ok....the others? Not so much!
There have been some tight years. There's no doubt about it. But I think the more important trend to notice is that revenue is increasing far faster than expenses are increasing. The USA Today link doesn't have the 2012 numbers, but we know them, and we know that they continue to reflect this same trend. Revenues in 2012 were up to $142 million and expenses actually dipped to $116 million. That means the Ath Dept was in the black $26 million.
The trend should continue like this for the foreseeable future. With the Big Ten Network, Ohio State has built-in streams of reliable revenue. Things are already looking up for 2013 in large part due to the Athletic Department entering into a 10-year $100 million apparel contract. The $10 million per year payout is double what the previously existing agreement paid.
There's a lot of money to be made here. I'm a little concerned about them adjusting ticket prices. I like the idea of a 'premium prices' for big games, but I worry that they might overshoot the sweet spot.
Truest line: It takes money to make money
There is a difference between debt and deficit. Holding debt isn't necessarily a bad thing. Running a deficit usually is.
Hence the upgraded ticket prices and the talk of premium games etc for upcoming seasons. They have to stay holding the debt and not running a deficit and occurring more debt.
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