'A catastrophe': Iowa athletics forecasts $100 million in lost revenue after cancellation of fall football
The Iowa athletics department is bracing for a budget deficit of between $60 million and $75 million, a direct result of the Big Ten Conference’s cancellation last week of fall football.
Iowa athletics director Gary Barta outlined the gloomy financial forecast in a letter to season ticket holders on Monday.
In the letter, Barta says Hawkeye athletics — which in the 2019 fiscal year had operating expenses of $146.3 million — stands to lose roughly $100 million in revenue in the current academic year (fiscal year 2021).
“We recognize the conference’s decision will have a major financial impact on not only our athletic department,” Barta wrote, “but the many businesses that rely on Hawkeye events to support their livelihoods.”
That reality won't surprise anyone who knows how football affects budget bottom lines, but it doesn’t make the dollar amounts any less staggering.
Andy Zimbalist, an economics professor at Smith College in Massachusetts, called Iowa's budget crisis a “catastrophe,” just as student-athletes are on the path to cashing in with name, image and likeness legislation.
Zimbalist, who has written 28 books (many of them about sports finances), said the COVID-19 pandemic “is like dropping a bomb on the system that was kind of tearing apart anyway.”
Football-specific revenues for FY2019 at Iowa were nearly $82 million, with the bulk coming from media-rights fees and ticket sales. That figure doesn’t include $34 million in nonsport-specific contributions that are typically associated with the football team. How well Iowa can navigate its FY2021 budget will be partially affected by what the athletics department can secure in charitable donations as we experience a 2020 largely without college sports.
In Barta's letter, Iowa continues to offer fans the option of a full refund for their football tickets. Fans seeking a refund are asked to send an email to email@example.com. That same address should be used for fans seeking refunds for their annual per-seat contributions.
Barta told season ticket holders that their “priority and seat locations are guaranteed for next year. If you would like to keep your investment with us, it will be applied to the 2021 season. Fans who roll their payments to 2021 would boost Iowa's cash-on-hand during a difficult financial year.
Barta said the athletics department is "working hard to find solutions. These decisions will be very challenging."
In a Register analysis of four years of Iowa's athletics finances last month, the cutting of sports programs is likely to be on the table. Of Iowa's 24 sports, only two (football and men's basketball) bring in more money than they spend. Even so, cutting a few sports programs would only fractionally slice into a potential $75 million budget shortfall, which means a combination of deep cuts and borrowing is likely.
Iowa would have to add to its athletics debt — already at $227 million, according to its FY2019 figures — but Zimbalist sees other savings coming through the elimination of sports programs and administrative jobs and salary cuts for coaches. He also predicts that future travel and food budgets would be reduced.
"They’ll have to make a variety of cuts," he said. "Those will be determined politically. But I can assure you there’s fat and excess and waste all through the system."
A developing factor in budgets at all Big Ten schools will be the viability of a spring football season. The Big Ten is open to the possibility, and some coaches have already assembled ideas about how that could work amid the COVID-19 pandemic.
If Big Ten teams are able to play an eight-game spring schedule, as Purdue’s Jeff Brohm and Ohio State’s Ryan Day have proposed, it would salvage some of their media-rights fees from Fox and ESPN. Big Ten per-team distributions had been projected in the $55 million range, had this been a typical sports year.
But no matter what, as was outlined Monday, the financial reality of the cancellation of fall football will cut deep. And those cuts will have a ripple effect for years to come.
“The interesting question that comes out of the predicament," Zimbalist said, "is where are we going to be in two years or five years from now?
"At the end of the day, I think the bifurcation between the upper half and the lower half of the Power Five is going to get deeper and wider."