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Thread: WSJ: Inside College Sports' Biggest Money Machine

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    Be the ball Roy Tucker's Avatar
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    WSJ: Inside College Sports' Biggest Money Machine

    I thought this a very interesting look at the Ohio State athletic department dollars...

    http://online.wsj.com/article/SB1192...rts_primary_hs

    Inside College Sports' Biggest Money Machine
    What do you get for $109 million a year? Jon Weinbach on Ohio State's record-breaking budget.
    By JON WEINBACH
    October 19, 2007; Page W1

    At $109,382,222 for the current year, Ohio State's athletic budget is the largest in the nation and the biggest in the history of college sports. It allows the school to field 36 varsity teams in everything from baseball and soccer to riflery and synchronized swimming. The school spends about $110,000 on each of its 980 athletes, which is triple the amount the university spends per undergraduate on education.

    The budget for this academic year allots $65,000 in private jet time, or roughly 11 hours, to men's basketball coach Thad Matta for recruiting trips over 200 miles -- and a further 15 hours of jet time for the coach's personal travel. A just-completed $19.5 million renovation of the football team's practice facility, funded with a large donation from Limited Brands Chief Executive Leslie Wexner, added a players-only entrance, a lounge that has six flat-panel TVs, three videogame systems and a juice bar. "There's always a race to get up there after practice," says Jake Ballard, a sophomore tight end for the football team that enters this weekend ranked No. 1 in the country.

    The men's and women's ice-hockey teams train on a $75,000 hockey treadmill that features a lubricated, ice-like surface that tilts at sharp angles and goes as fast as 16 miles per hour. Men's hockey coach John Markell solicited a donor to buy the equipment, which he says has become a key part of players' workouts. It's a machine most college teams -- and even many National Hockey League clubs -- haven't purchased. "We don't have the space or resources for that," says a spokesman for the Anaheim Ducks, last season's Stanley Cup champions.

    Here in Columbus, the OSU athletic department is a gold-plated island in a region getting roiled by harsh economic forces. The lavish program is the most vivid example of how college sports have turned into a humongous business and created a parallel universe of high-living in the world of academia. OSU's athletic budget, which has grown 46% in five years, has expanded despite a prolonged downturn in the Ohio economy and several rounds of public-funding cuts to higher education. The state's median household income fell 9.3% between 2000 and 2005, one of the worst declines for any state during that span.

    Ohio has the nation's highest rates for foreclosures and delinquent mortgages, and during the second quarter of 2007, 22.9% of Ohio homeowners with subprime loans were over 90 days late -- almost twice the national average, according to the Mortgage Bankers Association in Washington, D.C. The state is home to two of the five poorest cities in America -- Cleveland and Cincinnati, both of which had more than 25% of residents living below the poverty line in 2006, according to the U.S. Census Bureau. Ohio has been ravaged by the struggling U.S. auto industry and the forces of globalization. From 2000 to 2006, the state lost about 200,000 manufacturing jobs and added just 40,000 new positions to offset the decline. Companies such as Mr. Coffee, Rubbermaid and Hoover closed plants and shifted production abroad.

    From 2002 to 2005, the Ohio Legislature decreased annual support for the state's universities. In response, OSU instituted its highest annual tuition increases in nearly 40 years, boosting rates nearly 60% from 2002 to 2006.

    Ohio State was one of just 19 schools to turn a profit on athletics in 2006, according to data collected by the NCAA. OSU says its athletic department is self-sufficient -- it uses sports revenues to pay for its teams and operations. It doesn't draw from the same budget that's used to fund academic departments. How much the athletic department spends is determined by how much it brings in, not by how much the university decides to give it. A 2005 economic-impact study, commissioned by OSU, estimated that the school's sports program pumps over $100 million a year into the local economy, with more than a third coming from Buckeyes fans' spending on hotels, food, parking and shopping.

    In a sports-mad country, why Columbus? The alma mater of track star Jesse Owens, golfer Jack Nicklaus and basketball Hall of Famer John Havlicek, Ohio State has a long history of passionately supporting its athletes. OSU's teams are the premier sports attraction in Columbus, Ohio's state capital and biggest city, and the school has the largest enrollment in the country, with more than 52,000 students. TV broadcasts of OSU games routinely attract 60% of all local viewers, and in Columbus, the OSU football coach's Sunday-morning chat show gets better ratings than "Meet the Press."

    Supporting the program is seen as a civic virtue. Over the past five years, giving to the Buckeye Club has increased an average of 12%. The booster club's membership of nearly 3,700 is up 32% from 2003. In addition to Mr. Wexner, a 1959 OSU graduate, prominent donors include Robert Schottenstein, CEO of M/I Homes Inc., one of the country's largest home builders.

    The enormous financial rewards for successful programs have fueled an arms race among schools to build larger, more lavish venues that can ring up millions from luxury suites and sponsors. Over the past five years, schools in the NCAA's top six sports conferences raised more than $3.9 billion for new sports facilities, according to the Chronicle of Higher Education.

    At Oklahoma State, oil and hedge-fund mogul T. Boone Pickens gave $30 million to renovate the football stadium, and put his name on it. He has also committed $165 million more to build an "athletics village" on campus. Nike founder Phil Knight recently donated $100 million to Oregon's athletic department, which plans to use the money as a safety net to cover potential operating losses. The department still plans to ask for public funds to build a $200 million basketball arena.

    Other big spenders include the University of Texas-Austin, which has the nation's second largest sports budget at $107.6 million, although it fields 16 fewer teams than Ohio State. Last year, the Longhorns' athletic department paid $152,585 for nutritional supplements like Gatorade and PowerBars.

    Preserving 'Opportunities'

    The football and men's basketball programs at OSU are the only sports there that turn a profit -- and their revenues support teams other universities have eliminated for lack of funding. "We never want to get into the business of taking opportunities away from students," says Gene Smith, OSU's athletic director.

    Ohio State's varsity synchronized swimming team competes in a two-year-old, $20 million facility, nicknamed the "Taj Mahal," that features seven bodies of water and two whirlpools for athletes to relax in during competitions. A multimillion-dollar renovation of the school's "Scarlet" golf course, completed last year and overseen by Mr. Nicklaus, added a short-game practice area and enlarged the course to over 7,400 yards.

    OSU's pistol team maintains a supply of about 30 firearms for the team's 11 members, and all shooters receive an array of free Nike gear, including polo shirts, a jacket and shoes. "We're a good-looking team," says James Sweeney, OSU's pistol coach since 1999. This year, for the first time ever, OSU's rifle and pistol teams received scholarship money to recruit top competitors.

    At other schools, there is a more Darwinian approach to smaller sports. Last year, Rutgers cited budget shortfalls for its decision to cancel six sports, including swimming, men's tennis and fencing. But the athletic department still gave assistant football coaches a sizable raise, completed a $12.5 million renovation of football's training complex, and is in the midst of a stadium renovation that will add nearly 10,000 seats.

    At Ohio State, "nonrevenue" sports such as men's lacrosse and women's track don't have to worry about earning their funding. Excluding football and basketball, OSU's other 34 teams generate about $1.5 million in revenue. Last year, for example, expenses for the women's hockey team totaled a little over $1.2 million while the sport brought in just $1,642, all of it from arena concessions. Many sports, including rifle, pistol, and women's fencing, don't contribute any revenue at all. "I'm sure my scholarship is possible because of the football team," says Lindsay Quintiliani, a sophomore goalie on the field hockey team.

    Last season, Ohio State's football program generated about $57 million in revenue. The sum included a $4.75 million payment from the NCAA for advancing to the national championship game and $31.65 million in ticket sales from home games at Ohio State's 105,000-seat stadium. Team expenses, which include nearly $2 million for meals and travel, as well as debt payments to cover stadium renovations, subtracted about $21 million. Still, football supplied nearly $36 million in profit to the athletic department's coffers. The University of Florida, which beat OSU for the national championship in January, made about $34 million on football last year.)

    OSU's men's basketball team, which moved into a new, 19,500-seat arena in 1998, advanced to last year's national championship game and turned a record $9 million profit.

    A significant chunk of the athletic department's budget is spent in ways that benefit the school's general fund. This year, the athletic department will spend $12 million on scholarships or "Grant-in-Aid" to pay for athletes' tuitions. A few years ago, the department contributed $5 million to help fund renovations to the campus's main library. OSU's sports program is also among the few that pays for all maintenance, security and operating costs at its facilities. (The utilities bill at the football stadium last year: $731,309.) In addition, the athletic department transfers about $1.7 million to the school's academic-support center to pay for tutors and "life skills" workshops for athletes. "I think we're paying somebody $25 an hour to tutor physics," says Mr. Smith.

    Last year, the issue of swelling athletic-department budgets was taken up in Washington by the House Ways and Means Committee and the Senate Finance Committee. In a strongly worded letter to NCAA President Myles Brand, former Ways and Means Committee Chairman Bill Thomas criticized "highly paid coaches with no academic duties," and wrote that Division I football and men's basketball "more closely resemble professional sports than amateur sports."

    Judy Bunting oversees OSU's 46 cheerleaders and four student mascots. Her team gets about $169,000 from the athletic department, and supplements it with interest income from a special endowment established by a donor a few years go. "We probably have more scholarship money than most," says Ms. Bunting. In contrast to the spirit squads at Notre Dame and UCLA, OSU's cheerleaders get seats on the football's team's chartered jets. "That's a big plus," she says. "We used to drive vans and fly commercial."

    Write to Jon Weinbach at jonathan.weinbach@wsj.com

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    Re: WSJ: Inside College Sports' Biggest Money Machine

    OSU is like the NCAA's version of the New York Yankees.
    "The players make the manager, it's never the other way." - Sparky Anderson

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    The Future GoReds33's Avatar
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    Re: WSJ: Inside College Sports' Biggest Money Machine

    How in the world do they manage to spend that much? That's absolutly redicultious. I agree with NJReds on this one. They are the Yankees of baseball.
    If you can't build a winning team with that core a fire-sale isn't the solution. Selling the franchise, moving them to Nashville and converting GABP into a used car lot is.
    -LTlabner

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    The Boss dougdirt's Avatar
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    Re: WSJ: Inside College Sports' Biggest Money Machine

    Nah, Texas is more like the Yankees than the Buckeyes. The Buckeyes spend 2 million more with 16 MORE sports teams
    Last edited by dougdirt; 10-30-2007 at 03:11 PM. Reason: Typo

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    Re: WSJ: Inside College Sports' Biggest Money Machine

    Quote Originally Posted by dougdirt View Post
    Nah, Texas is more like the Yankees than the Buckeyes. The Buckeyes spend 2 million more with 16 fewer sports teams
    Okay. Texas and OSU are like the Yankees and the Red Sox.

    Edit: To clarify, I never said that this was a bad thing. Just that they are money making (and spending) machines.
    Last edited by NJReds; 10-30-2007 at 03:13 PM.
    "The players make the manager, it's never the other way." - Sparky Anderson

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    REDSBROWNSBUCKEYES
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    Re: WSJ: Inside College Sports' Biggest Money Machine

    Quote Originally Posted by GoReds33 View Post
    How in the world do they manage to spend that much? That's absolutly redicultious. I agree with NJReds on this one. They are the Yankees of baseball.
    Yes they both offer students the opportunity to be part of something special, with strong tradition, and a loyal following. It is amazing to me that they are able to be this strong both on the money side and on the sports side. They have built a powerful machine here and the weather is aweful, imagine if we had weather here like they do down south.

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    Member Highlifeman21's Avatar
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    Re: WSJ: Inside College Sports' Biggest Money Machine

    At $109,382,222 for the current year, Ohio State's athletic budget is the largest in the nation and the biggest in the history of college sports. It allows the school to field 36 varsity teams in everything from baseball and soccer to riflery and synchronized swimming. The school spends about $110,000 on each of its 980 athletes, which is triple the amount the university spends per undergraduate on education.
    Who says college athletes don't get paid?

    That's a lot of coin to spend per athlete...

    The scary part is that tOSU made a profit on top of the $109,382,222 they spent on all their "student-athletes". Impressive. I would love to see those books.

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    Re: WSJ: Inside College Sports' Biggest Money Machine

    The athletic department is self sustaining...so I don't really care what they spend because they're spending their own money, not costing the university a cent. If people are willing to pay their ticket prices and donors are willing to donate ridiculous amounts then that's their choice. The amazing thing is most Div 1-A athletic departments do receive money from their schools. If you take away school money given to athletic departments in Div 1-A, the average school barely breaks even on their athletic budget. OSU is certainly in the minority in being able to have an athletic department that makes money.

    The thing I loved about this article is seeing how much OSU does for the non revenue sports. This is really not the case at most major universities. The fact that OSU will go out and get top flight equipment for the hockey teams that NHL teams don't have is amazing to me. We actually discussed this article in a sports class I'm taking tonight during class. There are quite a few non revenue varsity athletes in the class and they all echoed what a great job OSU does for them making sure they are provided for. One girl in my class in on the women's ice hockey team and hadn't even heard of OSU before coming here (not from the USA). She said she was blown away when she visited by the facilities and what was offered to the team. Not quoting exactly but she said something to the effect of "Finding OSU's hockey program was the best thing that ever happened to me."

    Pretty amazing to see the support the non revenues get, even if it does pale in comparison to the football and basketball teams.
    Last edited by Caseyfan21; 10-30-2007 at 10:41 PM.

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    Pre-tty, pre-tty good!! MWM's Avatar
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    Re: WSJ: Inside College Sports' Biggest Money Machine

    I don't get why Ohio's economic troubles have anything to do with the athletic department at OSU. If it were spending that kind of money from tax dollars, there would be a beef, but the article says they're self-sustaining, so it's paying for itself. Why criticize the athletic department because they're successful? I don't get it.
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    Re: WSJ: Inside College Sports' Biggest Money Machine

    Quote Originally Posted by MWM View Post
    I don't get why Ohio's economic troubles have anything to do with the athletic department at OSU. If it were spending that kind of money from tax dollars, there would be a beef, but the article says they're self-sustaining, so it's paying for itself. Why criticize the athletic department because they're successful? I don't get it.
    We actually discussed this exact point during my class tonight. I just think it's possibly a journalist trying to say that people are having economic troubles because they are spending too much money supporting the university athletics. IMO, this is completely false as I have never heard of anyone selling their house or going into debt just to donate to OSU. I think it's simply a case of a large gap between the "haves" and the "have-nots" in the state. OSU is no doubt being supported by people that have extra income and are willing to donate.

    It could also be a case of the journalist trying to show that the "haves" in the state are giving all their money via donation to OSU when there are other more needy groups such as people below the poverty line in our own state. I think that is a very valid argument and more support should be given to some of those folks.

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    1st pick 2022 B.B. draft George Foster's Avatar
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    Re: WSJ: Inside College Sports' Biggest Money Machine

    hat's off to OSU. They pump millions into the local economy, and give the university 12 million to pay for tuition and books. Oh, they turn a profit too. Maybe the AD should run for governor.
    Not this year...maybe a Wild Card

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    Re: WSJ: Inside College Sports' Biggest Money Machine

    Quote Originally Posted by George Foster View Post
    hat's off to OSU. They pump millions into the local economy, and give the university 12 million to pay for tuition and books. Oh, they turn a profit too. Maybe the AD should run for governor.
    He'd lose to his football coach in that race.

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    This one's for you Edd Heath's Avatar
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    Re: WSJ: Inside College Sports' Biggest Money Machine

    As a public institution, TOSU does need to crack open it's books to the public to show what it makes.

    What the author fails to tell the reader is that all the capital improvements on athletic buildings are funded directly from the Athletic Budget.

    I'm not against anybody making money, or anyone giving money to a cause they feel is worth giving to. The author compares Ohio's Economic Woes to OSU Athletic Department. I have no idea what correlation this has except that in an area of declining population is stark raving mad over a college football team.

    If someone would want to do a socio-economic study of correlations between sports teams and geographical areas, one only needs to look at Pittsburgh and the Steelers in the '70's.

    Congrats to Gene Smith and his staff for keeping everyone afloat without raking more from State funds.
    Some people play baseball. Baseball plays Jay Bruce.


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