Ohio State AD Gene Smith Outlines How the Athletic Department Will Handle Estimated $107 Million Budget Deficit
Ohio State was one of four athletic departments to collect more than $200 million in revenue last year and it sponsors more varsity sports (36) than any school in America. Still, the Buckeyes haven't gotten through the CoVID-19 pandemic unscathed.
Shortly after The Ohio State University announced a projected budget shortfall of $107 million during Fiscal Year 2021, Buckeyes' Athletic Director Gene Smith addressed a pool of reporters on Zoom. He began the call by acknowledging how difficult yesterday was for the athletic department.
“Yesterday was a challenging day for everyone,” Smith said. “Everyone was impacted in some form or fashion, whether it be furlough, salary reduction or opportunity."
Among the most important things Smith stressed: Ohio State would not be eliminating any varsity sports, nor would they be cutting back on things essential to the student-athletes health and overall experience.
“Not at this point in time,” Smith said emphatically, when asked about cutting other sports. “Of course, everything is an available option into the future but, right now that’s not a major conversation. All of us care about student-athlete opportunities and the experiences provided in all sports to young people. I know we all love football and that’s what we focus on, but it’s special when you see other sports winning conference championships, or national championships, or graduating with academic success and staying in Central Ohio to begin jobs.
“At the end of the day, the lessons learned in those sports are equivalent to football. Those kids derive the same benefits. If you did the math in terms of scholarships and what not, a super majority of them are paying their own way. Its an interesting numbers issue. We have reduced expenditures in their operations budget and the coaches have been great about that. But elimination has not been on the table.”
The fact of the matter is Ohio State's budget remains uncertain. It's significantly more certain than if the football season would have been postponed indefinitely, but until things materialize for basketball season and for television rights deals, Smith knows he is working with an evolving situation. The media rights money that the school will bring in is not include in the projected $107 million deficit.
"We don't have clarity on basketball. We made some assumptions there." Smith says he hopes to have some clarity on the schedule in the next few weeks. "Those numbers are guesstimates. The sponsorship numbers are guesstimates."
If you missed it earlier on Wednesday, you can read about some of the specifics of the announced budget cuts.
Ohio State's athletic department is self-funded, meaning it does not rely on any financial assistance from the university as a whole. There aren't many schools in the country that operate that way and it's something Smith is proud of - but he also knows it presents a unique challenge during this unprecedented time.
“We have been self-supporting and will continue doing that,” Smith said, noting how Eastern Michigan University would have covered debt when he was there. “But there are around 20-plus schools that are self-sustaining in athletics, and we are one of them. We have been working with our chief financial officer to develop a long-term debt recovery plan and pay back a loan over time…
“So, every year moving forward, we will have a line item in the budget for debt recovery based upon number of years and interest. I will certainly battle to keep it interest free, because it should be interest free...
“None of us has ever experienced what’s happening right now with the pandemic, “ Smith noted. “It causes you to think differently about a lot of things that we have learned and are forced to now deal with. It changes everything. For example, never thought I would have to articulate CoVID-related items in a game contract.”
Especially while under his watch, Smith has taken pride in Ohio State athletics being an asset to the university, not a burden. It is his intention that things remain that way, even during the most challenging financial crisis of his career. Smith says he understands why some people believe athletic departments should be setting aside money in a "rainy-day fund", but that's something "philosophically I just don't support."
Just as the rest of us are in our every day lives, Smith is taking it one day at a time and trying to make the best decisions he can to keep Ohio State athletics healthy and vibrant. He's got his work cut out for him, but he's proven over the last 15 years he's more than capable of doing the job well.