Gophers athletic budget facing uphill battle amid House v. NCAA settlement

The new era of paying college athletes is taking a big toll on the University of Minnesota’s athletic budget. Citing “dramatic change in college athletics,” Gophers athletic director Mark Coyle presented a budget to the university’s Board of Regents on Wednesday that projects a $8.75 million deficit.

The reason for that shortfall is being felt by athletic departments nationwide. The recently approved House v. NCAA settlement allows schools to distribute $20.5 million annually to athletes in direct compensation. That landmark decision cleared the way for schools to start paying athletes on July 1.

“There’s no doubt it’s going to be a stretch to get there as we start this new fiscal year,” Coyle said in a recent interview.

With the exception of the COVID-19 pandemic years, Coyle has operated with a balanced budget. He has his work cut out for him to close that gap between revenue and expenses over the coming year.

Coyle noted to regents that his department projected a $3.5 million deficit last year but managed to come in right at budget by the end of the fiscal year.

The new shortfall didn’t appear to cause sticker shock with regents. Coyle received only one question about it, with co-vice chair Penny Wheeler inquiring about future issues in this new era of college sports.

Coyle committed to pay the full amount of that $20.5 million cap, meaning revenue sharing will account for 12% of expenses this year. He said his department will work with the university to manage the deficit.

“We feel comfortable that we will be able to navigate [it],” he said.

Coyle’s presentation included a slide about new men’s basketball coach Niko Medved, who replaced Ben Johnson in a coaching change after the season. The Gophers are banking on Medved’s arrival sparking more success on the court and thus renewed excitement around the program to help improve sagging ticket sales.

That alone won’t be enough to offset new revenue-sharing costs.

Universities across the country are searching for creative solutions while also making difficult choices in incorporating athlete compensation into their budgets. Even leaders of the wealthiest athletic departments are grappling with this expense.

“Everybody is having the same stressful conversations,” Coyle said.

Eliminating more sports programs is not included in his conversations, Coyle said. In 2020, he dropped men’s gymnastics, men’s tennis and men’s indoor track and field. Coyle said cost savings tied to that decision helped prepare for the House settlement, but he added: “I don’t want to go through that again. I think we’re at the right sports offerings right now.”

His plan includes belt-tightening on budgets, an uptick in media rights revenue distribution from the Big Ten and a new student fee. Coyle said he began preparing for this financial eventuality a few years ago.

Pre-pandemic, their budget ranked eighth out of 14 schools in the Big Ten. The budget this past year ranked 14th out of 18 schools (post-expansion). Coyle expects to be 14th or 15th this fiscal year.

“We have been operating very lean and thin since COVID,” he said.

Deputy athletic director Tim McCleary told regents that around 40 positions within the department have not been filled one-to-one since the pandemic or “not at all.”

Staff reduction has become a trend within the industry. The University of Southern California recently eliminated a dozen jobs in its athletic department, according to the Los Angeles Times.

Coyle reduced operating budgets for different departments and asked coaches to identify more regional nonconference games to cut down on travel costs. The athletic department also restructured some debt service.

The university recently approved a student fee of $100 per semester earmarked for athletics. Schools are increasingly implementing student fees as a revenue generator for athletics and other campus initiatives.

Revenue sources this fiscal year also include hosting the Farm Aid festival at Huntington Bank Stadium in September and World Junior Hockey Championship games at 3M Arena at Mariucci in December.

Coyle said in a recent interview that the quest to secure naming rights for Williams Arena has led to productive conversations with interested parties, but nothing near finalization.

“Our staff has gotten a lot more intentional about: How can we generate revenue outside of traditional revenue streams?” Coyle said.

Other highlights from Coyle’s presentation: