In addition to the impacts of athletes, coaches and school communities, the financial loss that colleges around the county, including Northwestern, will face is one of the biggest concerns following the Big Ten’s cancelation of the football season.
Northwestern is set to experience a multimillion dollar loss the fiscal year of 2020 due to football, but even more so, these losses from football come without reference to all other university-related expected financial losses in 2020 due to COVID-19.
Still, in the midst of the country’s worst recession since 2008, there is a certain sense of reality and privilege required when thinking about the financial implications of a football season for a private university whose endowment fund hovers above $10 billion.
According to the USA Today, Northwestern made an estimated $54 million in 2018 from the Big Ten’s total revenue distribution which equals roughly $759 million. The original members of the conference receive an equal percentage of this figure while newer Big Ten schools like Maryland, Rutgers and Nebraska receive a smaller percentage of the conference’s fiscal-year total revenue split.
According to a source from Sports Business Journal, Northwestern’s financial gains from the Big Ten revenue split exclude all game-day, licensing and at-venue profits/losses. In essence, Northwestern received 54 million dollars from the Big Ten primarily due to the conference’s television deals.
From the fiscal year 2018-2019, USA Today released nearly every university’s revenue gains from athletics. Of the 14 schools in the Big Ten, Northwestern was the only university whose financial figures from athletics were not included on the report, likely because it is the only private school.
Either way, Northwestern’s financial gains from athletics will likely fall along the bottom of the Big Ten. Rutgers, who created the least amount of revenue of any Big Ten program on the USA Today’s list, generated $103,251,280 in revenue from athletics. Granted, Rutgers’ total athletic expenses amount to $103,167,344 leaving the university with a net profit of just under $85,000. No Big Ten university made a net profit over $15 million via athletics from 2018-2019.
So, what does this all mean?
Without sports being played in the fall of 2020, Northwestern will not be able to capitalize on whatever profit the university has grown accustomed to turning from athletics in prior years. It is possible, of course, that the university has been running a deficit on athletics. Ohio State, for example, lost a net total of $10 million from athletics, according to the same report from USA Today.
If Northwestern has historically generated a profit from athletics, a greater question arises as to whether or not the university will attempt to compensate for these losses.
For most schools cutting back financially due to COVID-19, the answer of compensation comes by eliminating non-revenue sports (sports besides football and basketball). Stanford, whose endowment fund sits around $27 billion, nearly tripling that of Northwestern, has already cut 11 non-revenue varsity sports teams.
In reference to the Big Ten, Michigan State expects to lose roughly $80-85 million in revenue without sports.
Still, MSU will recoup a lot of its lost revenue money by not having to pay many of the university’s normal athletic expenses. In 2018-2019, Michigan State generated nearly $140 million in athletics revenue, but also totaled approximately $135 million in expenses.
MSU’s athletic director Bill Beekman has already said the university is considering both staff layoffs and cutting non-revenue sports teams. Back in May, Northwestern’s athletic department mentioned it planed to take part in similar budget cuts like furloughing employees as a part of the university-wide response to COVID-19. This happened long before college football was even canceled.
According to Northwestern’s 2019 financial statement, the university’s total assets are worth $15 billion. As stated earlier, the university also has an endowment system worth over $10 billion. However, it is wishful thinking to believe Northwestern can easily take out whatever money it is losing from COVID-19 simply by accessing its endowment fund.
But, if Northwestern believes in operating in a moral and ethical way, then its endowment fund alone should hopefully be enough of a reason for the university not to cut its non-revenue sports teams.