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Penn State Athletics: Where Can Sandy Barbour Cut?

by on June 30, 2020 6:00 PM

Penn State athletics finishes up its 2019-20 fiscal year on Tuesday.

Even before the pandemic hit, the numbers were not trending in the right direction for Sandy Barbour & Co.

In 2017-18, Penn State Intercollegiate Athletics reported profits of $10.12 million on revenues of $165.37 million.

In 2018-19, profits dropped to $4.16 million and overall revenues fell about $840,000. That’s a dip of $6 million — which may look like small change by the time the next fiscal year is over.

The final 2019-20 budget numbers shouldn’t be too bad, however, given that the spring sports season is not a money-maker for Penn State, which did receive a smaller NCAA disbursement in the spring than expected.

The real challenge will the year ahead.

Like every other college sports program, revenues for Penn State’s 2020-21 season are seriously in doubt.

And — no surprise — football is the big money-maker for Penn State. In its last report to the NCAA, Penn State’s numbers showed that 61% of Penn State’s athletics revenues came from football ($100.505 million of $164.5 million overall revenue).

To be precise, 43 cents out of every dollar that Penn State athletics took in came from football ticket sales (22%) and football media rights (21%). Without football, Penn State athletics — and nearly every other major college football program — is in a big hole.

By program, Penn State’s Top 5 gross revenue-earning teams in 2018-19 were: football, $100.5 million; men’s basketball, $11.3 million; men’s ice hockey, $4.7 million; wrestling, $2.1 million; and women’s ice hockey, $1.47 million.

What can Barbour do to offset what is sure to be a precipitous drop in football — and overall — revenue in the year ahead? First, let's look at where the money usually flows in.

TOP 20 REVENUE STREAMS

Here is where Penn State athletics most recently received the bulk of its money, according to its most recent report submitted to the NCAA for 2018-19:

1. Football Tickets — $36.83 million

2. Football Media Rights — $34.2 million

3. Non-football Contributions — $20.7 million

4. Royalties, Licensing, Ads, Sponsorships — $14.9 million

5. Football Contributions — $10.8 million  

6. Non-specified Operating Revenue — $8.2 million 

7. Football Concessions, Parking, Souvenirs — $6.8 million

8. Football, Big Ten Non-Media — $6.6 million

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9. Men’s Basketball Media Rights — $6 million

10. Non-football, Non-Men’s Ice Hockey Endowment — $3.4 million

11. Men’s Basketball/ NCAA — $2.3 million 

12. Football, Big Ten Bowl Share — $2.1 million

13. Men’s Ice Hockey Tickets — $1.8 million

14. Men’s Ice Hockey Endowment — $1.7 million

15. Football Endowment — $1.3 million

16. Men’s Basketball Tickets — $965,773

17. Wrestling Tickets — $928,690

18. Men’s Basketball / Big Ten Non-Media — $841,024

19. Men’s Ice Hockey Concessions, Parking, Souvenirs — $372,014

20. Football / NCAA — $330,259

THE NO. 1 EXPENSE

Labor costs are the No. 1 expense for Penn State athletics — far and away, at $62.1 million. And that’s not counting the athletes. Coaches’ salaries and benefits in 2018-19 were $32.4 million, while salaries and benefits for administrators and support staff were $29.7 million.

(Over the past five years, Penn State’s expenditures on coaches and staff compensation, including new additional hires, has increased 42%, going back to 2014-15, when the combined figure was $43.3 million.)

In 2018-19, Penn State athletics spent $20.86 million on athletic student aid.

Those numbers will come into clearer focus on Wednesday as Barbour, Penn State’s VP for Intercollegiate Athletics, will meet with the media via Zoom. The timing is no coincidence: July 1 is the start of Penn State’s new fiscal year.

It would not be a surprise for her to announce cuts to the Penn State athletics payroll. On Monday, Michigan was the latest Big Ten Conference athletic program to announce salary cuts, as U-M athletics announced that it projects a $26.1 million loss in 2020-21.

Michigan athletic director Warde Manuel, football coach Jim Harbaugh, men’s basketball coach Juwan Howard and selected senior-level administrators will take 10% salary cuts. Fulltime U-M athletic department staff earning between $50,000 and $100,000 will have salaries reduced by 5%. Employees earning $100,000 to $150,000 will see a 7.5% cut, while those earning under $50,000 will not be affected.

Penn State athletics’ highest-earners begin with football coach James Franklin, who signed a six-year contract extension in December 2019 that takes him through the 2025 season. In 2020, his base compensation is slated to be $5.4 million, plus access to the earning potential of a $1 million insurance policy, in addition to a $300,000 Dec. 31 retention bonus, as well as other financial incentives and the use of a private aircraft for 50 hours.

Also in football, defensive coordinator Brent Pry earns approximately $1.5 million, while new offensive coordinator Kirk Ciarrocca is close to a million, and longtime cornerback coach Terry Smith — who, with Pry, has been at Penn State with Franklin since 2014 — makes approximately $750,000.

Men’s basketball coach Pat Chambers is paid in the neighborhood of $1 million, while three veteran highly successful coaches — Russ Rose, women’s volleyball; Cael Sanderson, wrestling; and Guy Gadowsky, men’s ice hockey — make about half that.

Barbour, who was named athletics director at Penn State in August 2014, signed a new contract in February 2019 that paid her $1.219 million in 2019-20, plus $240,000 annually in a benefit plan, as well as the potential for another $260,000 annually in “performance bonus opportunities.”

(On the contracts of its five highest-paid employees who make over $1 million, Penn State also pays a 21% federal excise on all annual compensation beyond the $1 million threshold. Thus, for Franklin, Penn State pays an additional 21% in taxes on $4.4 million of his base $5.4 million salary, or $924,000. Tax details are here.)

TOP 15 EXPENSES 

Here is where Penn State athletics spends the bulk of its money, according to its most recent report submitted to the NCAA for 2018-19. We'll see what areas Barbour addresses, in addition to the first two on the list:

1. Coaches Salaries, Benefits, Bonus — $32.4 million

2. Administrators/Staff Salaries, Benefits, Bonus — $29.71 million

3. Athletic Student Aid — $20.86 million

4. Facilities Debt Service, Leases, Rental — $16.2 million

5. Direct Overhead and Administrative — $13.5 million

6. Non-specified Operating Expenses — $11.6 million

7. Game Expenses (non-travel) — $10 million

8. Team Travel — $8.2 million

9. Equipment, Uniforms, Supplies — $3.2 million

10. Recruiting — $3.1 million

11. Opponent Guarantees — $2.8 million

12. Bowl expenses — $2.2 million

13. Fundraising, Marketing, Promotions — $1.9 million

14. Student-Athlete Meals — $1.82 million

15. Medical Expenses, Insurance — $1.8 million



Mike Poorman has covered Penn State football since 1979, and for StateCollege.com since the 2009 season. His column appears on Mondays and Fridays. Follow him on Twitter at http://twitter.com/PSUPoorman. His views and opinions do not necessarily reflect those of Penn State University.
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