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UC winning on the field, but losing money at sports

Can Big 12 entry reduce UC sports subsidies?
UC football ranked No. 5 after beating Notre Dame
Posted at 5:00 AM, Jan 10, 2022
and last updated 2022-01-10 12:04:42-05

CINCINNATI — The University of Cincinnati lost $27.6 million on its sports offerings in the 12 months ending June 30, 2021. The deficits were the result of the COVID-19 pandemic, which robbed football and basketball teams of ticket revenue and university subsidies having to cover 43% of expenses.

The numbers are disclosed in a membership financial report to the NCAA, which the WCPO 9 I-Team obtained in a public record request. The report shows UC’s athletic program spent $62.6 million on 12 sports with 561 participants in the 2021 fiscal year, while generating revenue of $62.1 million. Revenue declined 24% from the prior year while expenses declined 15%.

As in past years, UC’s “direct institutional support” was the biggest revenue generator for UC athletics, with $27.1 million flowing to the program from student tuition and fees. Last year’s results reversed a two-year trend toward decreasing reliance on the subsidy, which represented less than 40% of UC athletics revenue in 2019 and 2020.

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“That’s always a goal of an athletic department to become fully funded and self-sufficient,” said UC Athletic Director John Cunningham. “But a lot of things have to happen for that to happen. And there’s very few programs that have been able to do that, very few.”

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UC Athletic Director John Cunningham sat down with I-Team reporter Dan Monk on Jan. 5 to discuss the financial ramifications of UC's football success.

The I-Team has looked into the financial prospects of UC’s athletic program because of its rise to national prominence in the 2021 football season and its commitment to join the Big 12 athletic conference by 2024.

The Big 12 is expected to increase UC’s media revenue by roughly $20 million but it will also lead to higher coaching salaries, increased travel expenses and a tougher schedule. This makes last year’s undefeated season less likely in the future.

“We’re concerned about moving into the Big 12,” said John McNay, a history professor at UC’s Blue Ash college. “It isn’t going to solve any financial problems for the university. They’re going to spend more.”

McNay has been criticizing UC sports subsidies for years because the numbers keep rising as the university spends less on research and student instruction.

“When I first arrived at UC, the athletic department was running like a four-to-five-million-dollar deficit," he said. "That was 20 years ago. That would be nice if we could get back to that."

UC’s $27.1 million contribution to athletics in the 2021 fiscal year was a 10.8 reduction from the prior year, in which UC set a record by contributing $30.4 million to athletics.

“What we don’t talk about is where money is not being spent,” McNay said. “Money is not being spent on the students. It’s not being spent on the faculty. It’s not being spent on the academic mission of the university.”

UC ranked fourth in the nation in direct institutional support for the 2020 fiscal year, according to a November analysis by Sportico, an online sports business publication. UC’s $30.4 million contribution that year was exceeded by Central Michigan University’s $55 million contribution to its sports program. The University of Houston ranked second in Sportico’s analysis with a $38 million subsidy, followed by the University of Connecticut with $36 million.

Six of the Big 12’s current members received no subsidy from their universities in 2020, while Kansas and Texas Tech got a combined $1.3 million. But the Big 12 will be a different conference by the time UC joins, which will happen no later than 2024. The Big-12 by then will have lost its top revenue generators, the University of Texas and Oklahoma. Joining with UC will be Houston and Brigham Young University, which did not disclose its financial data to Sportico.

Media rights fees ranged from $22 million to $32 million for the current members of the Big 12 in 2020, according to Sportico. But those numbers are also in flux. The conference faces a 2025 expiration date on its media contracts with ESPN and Fox. It will lose some leverage when its two biggest programs leave for the Southeast Conference.

“You might see almost no increase in media rights as those teams shift out and the University of Cincinnati and a couple of other teams shift in,” said Joe Cobbs, professor of sports business and event planning at Northern Kentucky University. “But I don’t think you’ll see it go down, or if it does go down, I don’t think it’s going to be very much.”

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Joe Cobbs, professor of sports business and event management at Northern Kentucky University

At the same time, UC should be able to grow ticket revenue by playing higher-profile rivals that draw bigger crowds. The six schools that will stay with the conference generated between $13 million and $20 million from ticket sales in 2020, compared to UC’s $8 million.

Donations are already on the rise, thanks to UC’s Big 12 future. Cunningham said the Day One Ready Campaign, launched in November, has raised about 25% of its $100 million goal to pay for an indoor practice facility and improved nutrition and wellness programs for its athletes. UC reported $10 million in donations for the 2021 fiscal year, an increase from its $8 million average in the three years prior.

“I know that getting in the Big 12 is going to make a significant difference for us,” Cunningham said. “Having success in football and men’s basketball is going to make a significant financial difference for us. How that all plays out is yet to be determined.”

In the meantime, Cunningham points to the intangible benefits of UC’s rise to national prominence in sports, including media coverage of its football team and an 11% increase in new applications for enrollment.

“You cannot buy the exposure that we got this year,” Cunningham said. “It’s so important that we have young people that want to come to Cincinnati. Sometimes their first exposure is through athletics.”

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