The health and well being of the student-athlete should be the primary component when it comes to the decision on whether to hold intercollegiate athletic competitions this fall in the face of COVID-19.
There’s no ignoring the fact, though, that the play or no-play choice also comes with major financial implications.
No matter what, the West Virginia University athletic department is going to take a huge financial hit this fiscal year, even if it is able to play all 10 games in its altered football schedule. Fewer games will increase the deficit, and a complete cancellation of both the football and basketball seasons would cost WVU in the neighborhood of $65 million for the 2020-21 fiscal year, according to West Virginia director of athletic Shane Lyons, who had previously been working with a $93 million annual budget.
“Certainly our concern is first and foremost for the health of our student-athletes, but there’s no ignoring the fact that the issues we’re facing financially are huge; it’s catastrophic,” stated Lyons in an exclusive interview with the Blue & Gold News. “We will be in the red by $18 million, but even that’s based on us playing football and getting in all 10 games. That loss climbs by another $4 or $5 million for each football game we don’t play.
“Some others around the country have given even higher numbers, but those are worst-case scenarios. I’ve tried to be a little more optimistic and give you what it is today,” he continued. “Even if we play football, we’re down from a $93 million budget to roughly $75 million. If we don’t play football and don’t play basketball, that number changes considerably.
“Even if we play, that number will change. Do we have fans, do we not have fans? Fifty percent, 25 percent? There are a lot of moving parts,” explained Lyons, who took over as WVU’s A.D. in 2015. “Not only ticket sales but also sponsorships. You lose parking, you lose concessions, you lose TV revenue. At times, it’s like throwing a dart in the dark. You make projections, but you never really know until it’s over.”
Few revenue streams for the Mountaineer athletic department are safe this year, as much of the nation’s economy is in turmoil as it tries to deal with the pandemic.
Tickets, donations, TV money — almost everything is impacted. Even West Virginia’s multimedia rights contract with Learfield IMG College is not stable. With nearly 150 college properties in its portfolio, Learfield IMG College, which previously were two competing companies but merged two years ago, is struggling to meet the guarantees it is contracted to pay to athletic departments across the country. As a result of its economic struggles, Learfield IMG is attempting to renegotiate many of its contracts, at least in the short term, including the one with WVU, which was just extended its Learfield IMG contract eight months ago. It now runs until 2035 with an annual value of $7.8 million, or at least that’s the amount that was previously guaranteed.
“They are like everyone else. It’s across all their properties, from Maine to California,” noted Lyons of Learfield IMG College’s problems. “We’ve gone back and looked at that contract, and hopefully in the coming weeks we can get it solidified and move forward. They are going to every campus and looking at their contracts. We’re getting close to finalizing that agreement and hopefully can get that completed by mid-September.”
The money for WVU’s multimedia rights deal is part of its $93 million athletic department budget. Of that budget, approximately $60 million are fixed costs for things like scholarships, salaries for contract employees, utilities and all the other day-to-day bills that must be paid by the Mountaineers.
Lyons is hoping for the best financially for his department this year, but he also must be prepared for the worst. Even if there is no football or men’s basketball in 2020-21, West Virginia’s athletic department has to find a way to meet its financial obligations. If it doesn’t have enough money coming in, though, it may have to turn to another revenue source.
Reportedly the Pac-12 is looking at taking out a $1 billion loan to help keep the athletic departments in that conference afloat through these troubled times.
Big 12 schools are also exploring similar lending options, noted Lyons.
“Our CEOs have had conversations with the league office and the CFO there along with legal council. There are some things that are being explored,” said West Virginia’s director of athletics. “We’ve kind of taken that out of the hands of the athletic directors and kept that at the CEO level. We’re aware of what is happening with the Pac-12. We certainly know how catastrophic it would be for athletic departments across the country if we don’t have football, considering that the tickets, sponsorships and TV revenue directly tied to football make up about 80 percent of our budget. It’s a big number we’re all looking at, and we’re looking at resources that could help us move forward.
“We used up pretty much all our reserve last year, so we don’t really have any rainy day fund left,” said Lyons, referring to the $5 million hit WVU took when spring sports were cancelled. The Big 12 Men’s Basketball Tournament and the NCAA Men’s Basketball Tournament were by far the two biggest financial losses. “We’re working with the University, and the league’s presidents are working with the Big 12 office. There is no resolution yet.
“It’s a revenue stream for our department, yes, but it also means something to this community,” he concluded about the financial impact of Mountaineer football. “All the businesses in Morgantown will take a hit if we’re not bringing 60,000 fans here on games days. We’ll survive – I know that – but it will take us a long time to get out of the hole if we don’t have football and we’re at basically a $60 million deficit.”
The finances are just one piece, albeit a very big piece, of the problems facing college athletics in general and West Virginia University in particular as a result of the global pandemic.
That financial piece is one of many balls Lyons is currently juggling.
“From the outside, it may seem simple, but there are a lot of complex parts to this,” the 1987 WVU grad said. “There are a lot of people making decisions from a health and safety standpoint and others are working on the financial standpoint.”
All those issues have their own unique but incredibly important challenges.
(This was part 3 in a multi-part series from our interview with Shane Lyons. In part 4 we’ll look at how WVU is conducting its testing for COVID-19, as well as a player’s ability to opt out of the season if he/she has safety concerns.)