Why Michigan's athletic department was third-highest spender in 2018-19

Orion Sang
Detroit Free Press

Michigan's athletic department was the third-highest spender in the country and second-highest spender in the Big Ten during the 2019 fiscal year, according to a database of financial reports compiled by USA TODAY Sports in partnership with Syracuse University’s S.I. Newhouse School of Public Communications.

Released on Thursday, the database compiled revenue and expense reports that public universities annually submit to the NCAA and showed U-M's total operating expenses for the 2019 fiscal year were $190.95 million. U-M's total revenue was $197.82 million, ranking fourth in the nation after Texas ($223.88 million), Texas A&M ($212.75 million) and Ohio State ($210.55 million). 

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Ohio State was the only Big Ten School to outspend U-M, with total operating expenses of $220.57 million — the most in the nation by a large margin (Texas was second with $204.23 million).

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U-M's total revenue during the 2019 fiscal year continued a recent trend. After a $5.4 million decrease in revenue between the 2014 and 2015 fiscal years, the athletic department reported an increase in revenue over the following four fiscal years. U-M's total revenue was $195.77 million in 2018, $185.17 million in 2017 and $163.85 million in 2016. 

Over the 2019 fiscal year, U-M's total revenue was mostly derived from rights and licensing, which generated $88.23 million. Ticket sales made up $53.79 million, contributions accounted for $35.77 million and school funds accounted for $293,097. $19.74 million in revenue was listed under 'other.'

Michigan Stadium in Ann Arbor, Friday, April 3, 2020.

U-M's total expenses rose for the 10th consecutive fiscal year. Coaching and staff salaries accounted for the largest percentage of expenses, costing $72.89 million. Scholarships accounted for $27.83 million. Facilities and overhead costs totaled $37.63 million, while $52.61 million worth of expenses was listed under 'other.'

More:Michigan athletics projects $26.1 million deficit in 2021 fiscal year

Of the Big Ten, nine schools were among the nation's top-25 revenue-generating athletic departments — Ohio State (No. 3), U-M (No. 4), Penn State (No. 6; $164.53 million), Wisconsin (No. 11; $157.66 million), Iowa (No. 14; $151.98 million), Michigan State (No. 18; $140.01 million), Nebraska (No. 21; $136.23 million), Minnesota (No. 24; $130.46 million) and Indiana (No. 25; $127.83 million).

Illinois, Purdue, Maryland and Rutgers all fell within the top 50. Northwestern, a private university, was not subject to open-records requests. 

The Big Ten also featured some of the nation's highest expenses. After Ohio State and U-M (first and third, respectively, in total expenses), Penn State ($160.37 million), Wisconsin ($154.62 million), Iowa ($146.28 million), Michigan State ($135.66 million) and Minnesota ($129.45 million) were all among the nation's top-25 spenders. Only the SEC featured more high-spending schools.

Each Big Ten athletic department generated over $100 million in total revenue and had over $100 million in expenses. Two schools, Ohio State and Illinois, reported a budget shortfall to the NCAA. 

While U-M's revenues and expenses have only climbed throughout the years, both will likely take a dip in the near future due to the COVID-19 pandemic.

Revenue and expense reports from the 2020 fiscal year are not yet available, but the pandemic was anticipated to affect both U-M's total revenue and expenses, according to athletic director Warde Manuel.

Manuel, who spoke during the university's board of regents meeting June 25, said the athletic department still anticipated a surplus for the 2020 fiscal year.

"We're projecting, as we close out this month, an operating surplus for this fiscal year," Manuel said.

That may not be the case for the upcoming fiscal year, though. 

Based on Manuel's proposed budget, the athletic department projects a $26.1 million deficit for the 2021 fiscal year. The athletic department projected the deficit based on operating revenues of $135.8 million and operating expenses of $161.9 million. 

If the projection holds, it would be the first time U-M's athletic department experiences a deficit in the history of USA Today's database, which lists expenses and revenues dating back to 2005.

Contact Orion Sang at osang@freepress.com. Follow him on Twitter @orion_sang. Read more on the Michigan Wolverines and sign up for our Wolverines newsletter.