For many years, the biggest issue polarizing college sports in America was a peculiar arrangement. It saw colleges rake in millions of dollars off the backs of student-athletes who could sometimes barely afford to feed themselves. Clearly, that was a big problem that needed solving. Unfortunately, the way it’s being addressed—NIL (Name, Image, Likeness)—isn’t working out for all parties involved. Just ask Ohio State.
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The Buckeyes are one of many blue blood programs that are hemorrhaging money through this NIL boom. What started as a reasonable initiative has been corrupted, turning into an unsustainable bidding war between the wealthiest institutions in the nation. So much so that this shift has led to a 56 percent increase in recruiting budgets in the Big 10 over the last two years.
However, if they keep this up, they won’t be the richest institutions for long. Former two-time All-American and CBS pundit Adam Breneman broke down the current financial situation in the Big 10 Conference.
“Despite bringing in $2.8 billion in revenue, half the conference departments still lost money. Ohio State, $38 million in the red. UCLA, a staggering $51.9 million deficit. Even Rutgers still paying off Big 10 loans lost $41.5 million,” Breneman candidly detailed.
Those are some of the biggest and most successful programs in the country. The fact that the school that just won the National Championship didn’t even turn a profit definitely raised some alarm bells. However, Ohio State’s financial troubles are more complex and far-reaching than just rising recruitment costs.
Breneman tried to break down why schools are losing money. He mentioned three major areas impacting the finances of these universities: coaching buyouts, recruitment, and facilities upgrades. This evidently is not just an issue caused by ballooning NIL commitments.
“You’d think schools pulling in $75 million a year from TV deals would be rolling in cash, but massive coaching buyouts, skyrocketing recruitment costs, and facilities arms races are eating up every single dollar,” he said.
However, recruitment is undoubtedly one of the major factors here. As Breneman reported, “the cost of winning is higher than ever”, meaning universities with aspirations of a National Title need to spend large amounts to secure the right talent. Additionally, that money must be spent not only on NIL deals but also on overall improvements to entice recruits to sign.
“The cost of winning is higher than ever. Football recruiting expenses in the Big 10 jumped 56 percent in just two years. NIL, facility upgrades, and the fight to land top recruits are driving costs to unsustainable levels… The future of college sports is uncertain,” Breneman continued.
“The NCAA’s new revenue-sharing model means Power Four schools will be paying up to $20 million per year directly to their athletes, adding rising costs and some athletic departments may not survive without major restructuring.”
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So far, it seems the NIL boom has fixed one problem while creating another. The fact that there is a problem at all is peculiar, however. The NCAA and its schools were making money hand over fist when they didn’t have to worry about compensating their workforce.
But now that they do have to pay their workers, their model is falling apart. That is the sign of a failing and poorly managed business. If you can’t pay your workers, should you even have a business at all?
