Ohio State’s Big Win Doesn’t Mean Big Money

Ohio State’s 42-to-20 victory over Oregon last night in the first ever College Football Playoff National Championship may have pumped up millions of Buckeye fans, but it could do surprisingly little to pump up the university’s bottom line, according to sports economists.

“The marginal gains to economic powerhouse football factories like Ohio State and Oregon are minimal,” Vanderbilt University sports economist John Vrooman said in an email. “Although playing in the championship game increases the visibility of both schools and in turn increases the quantity and quality of prospective student applications for admissions, it is more likely that the on‐field success of both teams is more a result of hefty booster donations rather than the cause.”

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Neither Ohio State nor Oregon, which are both among the major conference powerhouses that have profitable football teams, will receive an added bonus for making the big game, though they will get $2 million to cover travel expenses. Beyond the championship trophy and maybe some added sales of school gear, exactly what kind of spoils the Ohio State victors will enjoy is hard to say.

Still, Ohio State and other schools in the five major conferences will emerge as clear winners from the new College Football Playoff (CFP) system to determine a national champion, along with the likes of ESPN and Nike. “Most of the direct gains of the CFP accrue to the power five conferences whose payouts have more than doubled under the new ESPN CFP format,” Vrooman said.

That could further the split between the haves and have-nots in college sports. Just over half of the 128 teams in the NCAA Football Bowl Subdivision turned profits on their football programs in the 2013-4 season, according to data provided by Vrooman. That includes the teams in the five top conferences: the ACC, Big 12, Big Ten, PAC-12 and SEC, as well as independents Notre Dame and Brigham Young.

Outside of the five major athletic conferences, though, colleges tend to lose money on football and sports more generally, which has led some colleges, such as the University of Alabama - Birmingham and Philadelphia’s Temple University, to pare back on the number of teams that they field in order to save money. 

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Sports economist Victor Matheson of the College of the Holy Cross estimates that Ohio State University’s athletic department overall earned about $24 million in profit in the last school year. That figure, derived by subtracting the athletic program’s $120 million in costs from its $143.7 million in revenue, equals less than 1 percent of the Columbus, Ohio-based college’s $2.7 billion budget, excluding the Ohio State University Wexner Medical Center.

Most of that profit comes from football. The Buckeyes football team generated $63 million in revenue while incurring $43 million in expenses, according to data published by the school. Ohio State’s men’s basketball program, which is ranked 22nd in the country, also is profitable, though the rest of the teams fielded by Ohio State lose money, as they do in most colleges. Moreover, Matheson recommends taking the university’s data with a “grain of salt” because it probably includes subsidies which wouldn’t be counted as revenue it most businesses.

“There is no doubt that athletics are a very expensive amenity for students,” says Matheson, adding that when a college enjoys surprising success — such as a “Cinderella” team reaching the Final Four of the NCAA men’s basketball tournament — “we definitely see a temporary increase in applications when that happens. There also is some evidence that there is an increase in alumni donations.”

All figures for 2013-4 school year . Source: John Vrooman, Vanderbilt University

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