IU athletics boasts $13 million surplus in 2019

For the third year in a row, Indiana’s athletic department surpassed revenues of $100 million, hitting a new record of $127.8 million for the 2019 fiscal year.

Expenses, however, shrunk by nearly $1.5 million from 2018, from just under $116.3 million to $114.8 million. That created, on the surface, a $13 million surplus in the report IU recently filed with the NCAA.

On the other hand, IU athletic director Fred Glass cautions that the department’s reported revenues and expenditures — nearly double its best surplus dating back to 2005 — doesn’t equate to an actual excess of cash on hand. That money will be spent on existing debt obligations related to facility improvements, including a long list from the past decade, whether that be Cook Hall, Simon Skjodt Assembly Hall, Memorial Stadium, or others.

“The vast majority of that $13 million, I’d say probably at least $10 million, gets eaten up in our expenditures on capital projects,” Glass said, adding the department isn’t in a position to create a “rainy day fund” with that money.

“In essence, there is no surplus,” Glass added. “We’re pretty much spending all the revenue and the resources we accumulate.”

Nevertheless, the athletic department is generating operating revenue to put toward those debts.

In the 2018 fiscal year, IU brought in $122.9 million in operating revenue and reported itself in the black by $6.6 million. It was just the second “surplus” of more than $6 million dating back to 2005. The other came in 2008, when the department raised $57.2 million to $50.9 million in reported operating expenses.

In that period, IU athletics’ operating expenses exceeded revenues only once (2005) and there were three other years (2017, ’15, ’06) where the difference between revenues and expenses was less than seven figures. A trend line — from a modest difference of plus-$31,891 in ’15 to the $6.6 million generated over expenses in 2018 — continued in a positive direction in the 2019 fiscal year.

As has been the case for many years, media rights were a major driver of revenue. That sum increased by nearly $2.8 million over last year to a grand total of $43.6 million in 2019, including $32.7 million for football and $10.9 million for men’s basketball.

There was an almost equivalent jump in donor contributions, from $25.5 million to $28.3 million. Ticket sales saw a more modest increase, from $17.7 million to $18.4 million.

Men’s basketball ticket sales continued to outpace football, $11.2 million to $6.8 million, which continues the Hoosiers’ outlier status in the Big Ten. Last fiscal year, IU’s football program was the only one in the conference to make less in ticket revenues than its basketball counterpart.

This is the first time basketball’s ticket sales eclipsed $11 million, and this was the fifth consecutive year that total has been above $10 million.

The university’s 2019 fiscal year ran from July 2018 to June 2019, so these numbers do not speak to IU’s most recent football season, which featured an eight-win record and a bowl appearance. But a lack of football ticket revenue compared to the Big Ten’s perennial powers — for example, Ohio State, Michigan, Penn State, and Nebraska each generated $30 million or more in the 2018 fiscal year — does constrain IU’s budget.

“We’re not the kind of department that runs big surpluses and puts it in reserve funds,” Glass said. “I’d love to be able to do that, but because we have a small football stadium that we don’t fill, we just don’t generate the kind of monies that other schools do that are able to have extensive reserve funds, which is part of the reason we’ve tried to be really aggressive in philanthropy to even the playing field.”

In early December, IU announced that it had surpassed a $215 million goal for its bicentennial fundraising campaign, which was first announced in 2016. Its previous campaign, which ended in 2010, had a goal of $80 million.

On the expense side of the 2019 financial report, IU’s continued investments in football were reflected. Coaching salaries accounted for about $20.4 million, which was an increase from nearly $18.9 million in 2018. The biggest jump came in football, from $6.4 million to just over $7 million.

Most of that increase went to assistants, in part thanks to the record contract former offensive coordinator Kalen DeBoer commanded going into his lone season with the program. Tom Allen’s new head-coaching contract, which came well into the 2020 fiscal year, would not be reflected in these figures.

In the 2019 fiscal year, IU also spent more for support staff and administration ($20.7 million to $21.9 million), team travel ($5.8 million to $6.7 million), and recruiting ($2.1 million to $2.5 million).

IU football saw the bigger increase in the recruiting expense category, from $692,972 in the ’18 fiscal year to $859,046 in ’19. Men’s basketball recruiting expenses, which have ranked atop the Big Ten, increased from $739,722 to $782,757 over the year.

On the other hand, the department saw a drastic reduction in expenses on facilities debt service, leases and rental fees, down to $8.9 million from $13.8 million in 2018. That category just records the interest paid on those debts in a given year and not the principal, Glass said.

IU’s severance burden also decreased to just $229,540 in 2019 after paying out $1.9 million in 2018. Men’s basketball, which accounted for $1.2 million of those severance costs in ’18, went to zero in 2019.

While expenses reported to the NCAA went down in the 2019 fiscal year, Glass reiterated that IU’s athletic department still has years to pay off its debts from previous capital projects, and even if those debts were paid off, there are likely to be new investments that crop up before a “rainy day fund” could be established.

“In reality, there will be more to follow as you continue to be competitive and coaches’ salaries go up and would eat into what would otherwise be a perceived surplus,” Glass said. “I would think our fans would want us to spend what we have and not put it away, if we need it. It’s been a goal of mine to build a reserve, but we just haven’t been able to get there because of the expenditures I’ve felt we needed to make on facilities, competitive coaches salaries, and so forth.”

13 comments

  1. Well, you know, when student athletes are generating over an eight of a billion dollars a year, it’s just hard to figure out ways to spend it all.

    1. NHIV,

      Which explains why the athletes who are actually putting their bodies at risk to generate those sums want a piece of the pie.

      1. Agreed.
        Not sure how to accomplish a different and more equitable model.
        No easy answers from me.
        But it appears to me that something is clearly out of whack here.

  2. “Last year, IU’s football program was the only one in the conference to make less in ticket revenues than its basketball counterpart.” That’s embarrassing!

    “We’re not the kind of department that runs big surpluses and puts it in reserve funds,” Glass said. “I’d love to be able to do that, but because we have a small football stadium that we don’t fill, we just don’t generate the kind of monies that other schools do that are able to have extensive reserve funds.” In other words, the Hoosier Nation needs to start buying FB tickets and going to the games.

  3. I wonder if those varsity athletes who want “a piece of the pie” will be willing to pay the cost of their tuition, room & board, books, food, etc? As employees, they would be treated just like any other employee working for any other enterprise. Don’t perform, you lose your job. Break the employer’s rules, lose your job. What I believe they want is to have their cake and eat it too. Meaning a free education and more money.

    I believe student athletes deserve to get more financial support and that scholarships should be redefined. But paying varsity athletes would be an absolute disaster for college sports and for many college athletes. Only a relatively small number of players could justify getting paid, and that would come at the expense of other varsity athletes and their coaching staffs.

    Everybody looks at these revenues and thinks it’s obvious that the athletes should be getting more of it, but they don’t acknowledge that they already are. The truth is, they simply want more of it. And companies can’t pay employees based on revenues unless those revenues are profitable. When a company’s revenues stop generating profits, employees get laid off. If it goes on long enough, the company goes bankrupt. So, look at the surpluses, not the revenues. And as Glass made clear, in IU’s case, their ain’t no surplus.

    IU fans better hope that paying athletes more never happens. If it does, as the financially weakest FB school in the Big Ten, IU Athletics would be in big trouble. Unless all the Big Ten teams’ revenues are combined and thrown into a pool that is then split equally amongst the 14 schools, I could see a lot of non-revenue producing sports getting eliminated so that football and men’s basketball players get paid.

    1. Po,
      Your last sentence speaks to my overriding concern when we speak of paying athletes. You said, “I could see a lot of non-revenue producing sports getting eliminated so that football and men’s basketball players get paid.” Where I think there will be a flash point in all of this is when the athlete payment movement collides with Title IX concerns. It could get really interesting when he carry this entire issue to its logical conclusion.

      As for the athletes paying for their room and board, truth of the matter is, they are bringing in far more revenue to the university than their scholarships. When you do the math on the media rights alone, IU is receiving nearly 400k per FB scholarship awarded per year. Even after reasonable expenses, that represents a significant variance between the value of an IU scholarship and what the FB players are bringing in to the university while placing their physical well being on the line for the glory of old IU.

      Speaking to 123’s comments, where this starting becoming an issue is when you see athletes suffer career ending injuries, especially if they have high professional potential. While the value of a diploma is important for those who do not have professional potential, it pales in comparison to the dollars which can be earned by the high performing athlete in either FB or men’s BB.

      I was curious about one other thing, the report states the media rights was worth about 42.7 million. I thought it was reported the new B1G tv deal was worth considerably more than this amount to each school.

      Reply

      1. Pay off my kid’s college loans and the parent-plus loans nearing the price of a new home. Or just lower the damn interest rates ….and then pay the scholarship athlete.

        Sorry, I can’t and won’t get on board for paying student athletes above the value(with comfortable expenses) of a scholarship. Not when half the nation’s college attendees are facing debts for education that will take decades to payoff(most likely going into default while many have credit ratings killing their prospects of living an American dream).

        If you want to share profits with athletes….then share with the fan/student broke on their ass but still cheering the coveted and specially regarded athlete. There is no college experience without the student in the stands. The cost of education is eating them alive….and profits should also be used to lower their burden. What are super-rich professional athletes doing to lower the cost of education? What are the super-rich coaches doing? Answer: NOTHING.

  4. A lot of athletes would not qualify for admittance if not for their athletic talent. Often, the value of the scholarship isn’t just a free education but access to an education that would have otherwise gone to a more accomplished student. The same practice occurs in the arts where students are admitted based on talent more so than academics. But in the arts, the school doesn’t own their work. Nevertheless, the value of admittance should be considered when so many careers require a college degree and the more prestigious the school, the more valuable the diploma.

    1. 123- Thank you. Exactly. It’s often a form of affirmative action for many athletes less academically qualified who are taking a chair in a classroom from a more qualified applicant. That’s fine. I have no problem with it….But lower the cost of education as an equal and offsetting counter measure in paying a college athlete given the privilege to attend a university. Not to mention how the “one-and-done”…or even the “two-and-done” spits in the face of such a privilege.

  5. A good try at an informed discussion. However, the reality of the situation is so much more complex than our information. For instance the attempt to show the value of a football scholarship was infantile. First you need the total number of full scholarships for all sports, men’s and women’s; then a formula for breaking down the contribution of each sport to total revenue, including the philanthropic. How much of this $1 million gift came due to football? Men’s basketball? Lilly King? Men’s soccer? Women’s basketball? The same calculation for TV revenues. It is very complex! If you are a third team OL who does not make the travel roster do you count for any portion of the TV money? I am a modest donor. However, if Indiana does not compete in the Olympic and non-revenue sports, then I would not donate at all! Nor buy tickets. Golf, travel, concerts and the arts would claim my interest (maybe a better plan anyway)! How many professional football players are now active, maybe 10? How many professional basketball players, including G League and international, maybe 20? How many soccer players, 20? How many swimmers and divers, maybe 20? You get the point. Get them all good insurance for career loss or diminishment. Let each athlete cut their best deal on appearance and likeness agreements. But pay is not either good nor possible in a fair manner!

    1. BP,

      You and Po missed it totally and this is the point which is driving the athletes demands. You said, “For instance the attempt to show the value of a football scholarship was infantile. First you need the total number of full scholarships for all sports, men’s and women’s; then a formula for breaking down the contribution of each sport to total revenue, including the philanthropic.” You are incorrect!

      First, in the eyes of for instance the football players, they have no desire to share the wealth of the known (see the article ) 43.6 mil per year in media rights for football. In their eyes, why would they? They are bringing the bucks and taking the injury risks at a higher rate than other sports. FBS schools are allowed 85 scholarships, do the math. The article gave you the breakdown of revenues coming in.

      1. No you are wrong! First learn to read. The TV revenue was “a grand total of $43.6 million”; only “$32.7 million” of which was for football; donations, which as I pointed out can not be allocated by sport or by gender, were $28.3 million; ticket revenues were $11.2 million for basketball and $6.8 million for football. Also your injury argument is 100% covered by my suggestion for the university to pay for full career ending or diminishing injury. As I pointed out, no one can “do the math” because we do not have enough information! However, based upon your logic, why would the top 20 or so football players at OSU, WI, MI, PSU want to share their football revenues with the Indiana players? As I said, there is no fair way to pay college athletes! I fully agree with PO’s comments!

  6. Great post, BP. I don’t want to see a University like my alma mater without the non-revenue producing sports, or women’s sports. I don’t want to see 19 or 20-year old kids getting paid for playing a for college team. I’d rather see the NFL be forced to “hire” high potential football players right out of High School and put them in a developmental league until they were 21, and I’d rather see the NBA forced to eliminate the one-and-done rule so that high potential kids could go direct from HS to the NBA.

    Career-ending injuries happen all the time, at all level of sports. My daughter broke bones in her back in two locations as a college goal-keeper. I had a compound fracture of my throwing arm and two concussions in High School (goodbye to playing college football). My neighbor was a left handed pitcher throwing 90-mile heat as a sophomore on a his HS’s varsity baseball team when one day his shoulder erupted and his dreams of major league baseball ended instantaneously. That’s life, and it involves risk. Make scholarships cover the full cost of a college education and give the the athlete’s immediate family embers some additional benefits.

    Paying college athletes advances the “entitlement mentality” in our society, and that’s reason enough to oppose it.

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