Purdue Athletics Financials: Rock Bottom?

Here in the offseason we often look at the financials of the athletic department as kind of a way to take the temperature of Purdue Sports. After all, both President Mitch Daniels and former athletic director Morgan Burke prided themselves on running a program in the black. For years all we have heard is how wonderful it is to be self-sustaining. It is to the point that we have often questioned if that was valued more than winning.

It is also why the release of revenue and expense figures for the 2015-16 fiscal year yesterday by the Lafayette Journal & Courier were so damning. First, let’s look at operating revenue:

OPERATING REVENUE

1. Ohio State $170,789,765

2. Michigan $163,850,615

3. Penn State $132,248,076

4. Wisconsin $132,788,726

5. Michigan State $123,034,495

6. Minnesota $113,506,279

7. Iowa $113,249,020

8. Nebraska $112,142,961

9. Illinois $96,249,500

10. Indiana $95,216,762

11. Maryland $94,101,697

12. Rutgers $83,974,159

13. Purdue $78,699,976

14. Northwestern $77,906,464

Note: Conference average - $113.4 million. Purdue is nearly $40 million from the middle. Increased football tickets sales will help close the gap.

This is a concern, as close to half of that $78.7 million comes from the $32.4 million check Purdue got as a member of the Big Ten. Now, let’s look at the operating expenses:

OPERATING EXPENSES

1. Ohio State $166,811,018

2. Michigan $157,872,099

3. Wisconsin $130,433,373

4. Penn State $129,349,149

5. Michigan State $121,892,394

6. Iowa $116,168,740

7. Minnesota $110,673,824

8. Nebraska $103,745,775

9. Illinois $102,912,910

10. Indiana $94,190,256

11. Maryland $94,101,697

12. Rutgers $83,974,159

13. Purdue $78,778,953

14. Northwestern $77,906,464*

Here this makes sense. Purdue has one of the smallest athletic departments in the Big Ten. We sponsor 20 sports, 10 each for men and women. Only Northwestern, with 10 women’s sports and 8 men’s sports, has less. Of course that means Purdue is going to have fewer expenses than the 28 sport behemoth that is Ohio State.

Now for the really bad news:

EXCESS/DEFICIT

1. Nebraska +$8,397,186

2. Michigan +$5,978,516

3. Ohio State +$3,978,747

4. Wisconsin +$2,355,926

5. Penn State +$2,898,926

6. Minnesota +2,832,455

7. Michigan State +$1,142,101

8. Indiana +$1,026,506

9. Maryland $0

10. Northwestern $0*

11. Rutgers $0

12. Purdue -$78,977

13. Iowa -$2,919,720

14. Illinois -$6,663,410

*Information from EADA report

Yes, in Morgan Burke’s final season at the helm the poster child for always being in the black ran an athletic department in the red.

Now, to his credit, it was only slightly in the red. $79,000 is a pittance compared to the money that the Big Ten throws around, especially when the new media rights deal jumps from $32.4 million in 2015-16 to $35.5 million this year (the final year of the old deal). Starting in 2017-18 the rights will jump even further, as Fox and ESPN have a joint deal with $2.64 billion over the next six years. This is before you factor in a single cent from the Big Ten Network or any money from CBS for NCAA basketball. How much of an impact will it have?

When its new deals kick in next fall, the conference's annual media rights payout will have tripled.

Ourand hailed the Big Ten's negotiations as a "clear win" for the league, and the numbers speak for themselves. If you divide the $444 million the conference will pull in annually across its 14 schools, each will receive a yearly $31.7 million—and that's before adding in additional revenue from the Big Ten Network, bowl games or appearances in the College Football Playoff.

So yes, we’re about to get a fire hose of cash and Mike Bobinski will have an even easier time keeping the department in the black. It is still very telling that the one achievement that Burke praised himself over everything else wasn’t even an achievement in his final full year. There were cash reserves that covered it, sure, but even with the advantage of having one of the richest media deals in all the land at the time he couldn’t keep the department in the black.

The biggest reason was football, something Bobinski immediately corrected. When his retirement was announced Burke said he had full confidence in Darrell Hazel and that he felt he would get a contract extension instead of being released. I know he was only giving it a “media spin”, but at the time it came off as very tone deaf. It should have been more of a statement of “I know we’re struggling but we’ll evaluate after the season” as opposed to a blind, “yep! No problem here!”, which is what it came off as. Bobinski rightfully fired Hazell after just six games, but the damage was done.

During the 2015-16 fiscal year Purdue averaged only 37,508 people per game at Ross-Ade Stadium, above only Northwestern in the league standings. At 20,000 empty seats per game for 7 games you could charge almost 50 cents per ticket for those empty seats and make up the deficit of $79,000. That attendance number dipped to 34,798 over seven games for the average attendance in 2016, but the increase in the media payout should cover it for Bobinski’s first year. It is to the point it really can’t get much worse in terms of football attendance.

The good news is that hopefully we’re through the worst of it. As noted above, Purdue is going to get about $3 million more this year over last. That covers a good portion of a certain mistake’s buyout. The excitement of Jeff Brohm will hopefully lead to an initial increase in ticket sales. Purdue only has 6 home football games this coming season, but it will get some revenue from the Lucas Oil game against Louisville (Purdue gets half the allotment for the 62,421 seat stadium, unlike the last Lucas Oil game against Notre Dame in 2014).

There are also a lot of bigger things on the horizon. The new performance facility will open in a few months and finally get Purdue on par with the rest of the conference in terms of facilities. That was at least started by Burke, so I will give him credit there. Ross-Ade is also finally getting its lights, another move made by Bobinski early in his tenure. Between that and the financial windfall coming in 2017-18 things are looking up for the athletic department as a whole.

The thing is, we’re not the only ones getting this. There are 13 other conference members getting this increase too. Rutgers and Maryland will have to wait a bit for a full media share, but Nebraska will soon be getting theirs. Everyone else has already out-spent us too. It is up to Bobinski and Co. to spend more, but also spend wisely. They also must tap more sources of revenue beginning with football. Burke once called it a $5 million opportunity, but in reality it needs to be viewed as a $25 million opportunity to get anywhere even close to the rest of the conference. If you get to the point of selling out Ross-Ade every game (and let’s face it, you’re nothing in the Big Ten unless you’re close to a sellout every game) that’s $6.44 million more per season (23,000 empty seats times $40 a seat times 7 games). That’s before any concession, parking, or any other ancillary revenue.

A rising tide is coming, so it is up to Bobinski to make it even higher.