The Big Ten’s decision to cancel the fall football season has the potential to leave lasting financial consequences for both the conference and its member universities.
The financial impact has already been seen at Ohio State as the university’s Department of Athletics is projected to lose over $130 million dollars as a result of the lost seasons, according to the fiscal year 2021 financial plan by the Board of Trustees’ Audit, Compliance and Finance Committee. With this loss, Ohio State’s Department of Athletics is dealing with an unprecedented situation in its attempt to build back its lost revenue.
“When you look at the size of this reduction, everything, basically, has to be on the table for the apparatus for the athletic department to remain solvent,” Trevon Logan, professor of economics at Ohio State and research associate at the National Bureau of Economic Research, said.
One option is cutting lower-revenue sports, which has already been done in the Big Ten. On Aug. 21, the University of Iowa announced they were discontinuing men’s gymnastics, men’s and women’s swimming and diving, and men’s tennis in an open letter to the Hawkeye community.
“With the recent postponement of fall sports and immediate financial impact due to this decision, we believe this path is necessary to strengthen athletics and position our programs for future success with the resources we have,” the letter reads.
Although this remains an option, Ohio State athletic director Gene Smith said in a July 9 conference call with media members that Ohio State is looking to avoid both cutting sports as well as pay cuts for coaches.
However, as a result of the large drops in revenue seen around the Big Ten, Ohio State may not have a choice. A trend that could potentially come out of the fall cancelations is the shrinking of athletic departments, Logan said.
With this potential downsizing of Big Ten athletic departments, Ohio State, which holds one of the largest athletic departments in the nation, may just have to follow the trends.
“If what we’re going to see on the other side of this is just structurally smaller athletic departments, then it would make no sense to be the largest,” Logan said. “If two or three of the other members of your conference simultaneously drop that same sport, it gives you a disincentive to continue in that same sport.”
In terms of being able to recoup some of its losses from the fall sports, Logan said that there are multiple ways Ohio State can make it up. If a spring season is played, Logan said that Ohio State could potentially make up for lost ticket sales in the fall; however it’ll be much more difficult for it to rectify the losses from the Big Ten’s TV deals.
“As of today, the [Southeastern Conference] and the Big 12 are still going to play seasons in the fall,” Logan said. “If they kick off and have a partial season then that would actually probably decrease the size of any deal you’d receive in the Big Ten.”
Logan said the financial impact of the cancelation doesn’t just end at Ohio State’s athletic department, but it could also leave an impact on the city of Columbus, adding that Columbus local businesses would potentially not have the same economic success as they would have in previous years.
“When you think about the things that football Saturdays bring to local businesses — the hotels that are sold, etc. — that would be a loss,” Logan said. “It’s not the case that if you brought the sport back, they would have 100 percent of the revenue they had in 2019. That certainly isn’t going to be guaranteed. Fewer people will be traveling, fewer people would probably want to go to restaurants and go out because of the pandemic.”
Despite the difficult situation Ohio State is in, Logan said it is still faring much better than its in-state counterparts in the Mid-American Conference — including Ohio University, University of Toledo, Bowling Green State University, Miami University, Kent State University and University of Akron — which was the first Division I Football Bowl Subdivision conference to cancel its season Aug. 8.
“It gets even more pessimistic when you turn to the MAC because those schools are smaller, those schools don’t generate the same amount of revenue, and they’re funding their athletic departments,” Logan said.
Although Logan said that he expects most athletic departments to survive through their losses, he is unsure of what college athletics may look like following this crisis.
“I do believe that athletic departments will survive and come out on the other end of this,” Logan said. “The question is, what will they look like on the other end of this? Will they have and field as many sports as they currently do? Will they play, for example, as long of seasons? There’s a lot of different ways to try and get this right.”