How the Big Ten Spent Its Way Into a $2 Billion Dilemma

For anyone who has walked through the athletic footprint of a major university in the last decade, there are two natural reactions.

The first: Wow, these facilities are nice.

The second: Who is paying for all this?

The answer to that question might be the University of California Pension System, if the school is in the Big Ten. That conference is nearing a decision on whether to partner with UC Pension System and accept a $2 billion-plus injection of private capital, in exchange for granting it a 10% stake in a new entity, Big Ten Enterprises, which would house the league’s television rights and sponsorship deals.

That’s hardly a risk-free, problem-free deal for universities to make. But adding the new, line-item expense of up to $20.5 million annually in direct payments to athletes has college administrators around the country scrambling for new revenue sources. This is the Big Ten’s preferred panacea of the moment, although there is pushback from league members Michigan and USC.

While waiting to see where the Big Ten will land in what would be a groundbreaking private capital arrangement, it’s fair to wonder how athletic departments got themselves into this position. Especially in a league that entered into a $7 billion media-rights agreement—by far the richest in college sports history—three years ago.

At the risk of oversimplification, the answer is wanton spending and a failure to read where the industry was heading. The player compensation train was roaring down the track toward college athletics for years, and it didn’t seem to discourage administrative spending habits.

One of the primary stated reasons for the Big Ten to enter into the private capital deal is an onerous amount of athletic facility debt on many of its campuses. That’s a real problem—and it’s the product of overextending to compete in the recruiting arms race. For years, when one school added a new bell or whistle, everyone else scrambled to build its own bell or whistle—only bigger and better.

Donors were solicited, with varying degrees of success. But even in instances when big booster money came in, big debt still remained.

Some snapshots from Big Ten schools’ fiscal year 2024 athletic budget reporting forms: Illinois paid roughly $20 million in facility debt service, which was 11.8% of its total expenditures for ’23–24. Ohio State listed $33.7 million in debt service, 11.5% of the budget outlay. Oregon paid $18.3 million, which was 10.9% of its total spending. Penn State checked in at $17.3 million and 8%.

Pending a waving of the UC Pension System magic wand, similar expenditures will be on the books for years to come. A 2023 Illinois audit lists more than $458 million in bond payments between then and 2050—and those numbers would only rise in the extreme likelihood that the department builds anything new in the next quarter century. The audit shows 12 more years of annual payments exceeding $23 million.

(Illinois last month received a $100 million gift from alum Larry Gies, who now has his name on the football stadium. That will buy a few towels to soak up red ink. The adjacent Smith Football Center, which opened in 2019, features a “rooftop terrace,” according to the school’s athletic website, with an “outdoor kitchen and recreational activities, including miniature golf.”)

At Oregon, records list a $14.5 million annual debt payment on 14-year-old Matthew Knight Arena, the Ducks’ basketball venue. The principal owed on the arena is $144.5 million. The interest is another $73 million. Athletics will be paying that off through 2039. The arena bears the name of Nike mogul Phil Knight’s late son, but the Ducks’ largest athletic benefactor appears to have left much of the financing to the school.

So the facility funding issues are real at many schools—and not just in the Big Ten. But the spending runs far deeper than that. It’s probably easier to talk about the cost of the buildings than the biggest expenses for most (if not all) athletic departments: salaries.

At Ohio State, department-wide coaching salaries were a $54.3 million expense in 2023–24. Support staff, administrative compensation, benefits and bonuses were another $50.9 million. That was 35.9% of total expenditures, and it doesn’t include another $8.5 million in severance payments for men’s basketball.

At Oregon, the coaches and support/administrative compensation combined for $65.8 million, 39% of total spending. At Illinois, they were $65.7 million; at Wisconsin $70.2 million; and at Penn State $80.7 million. (The severance item will break the budget at Penn State next year, when the buyout for freshly fired football coach James Franklin is factored in.)

According to recently released salary figures from USA Today, the Big Ten has three head football coaches making more than $10 million—Ohio State’s Ryan Day at $12.6 million, USC’s Lincoln Riley at $11.3 million and Oregon’s Dan Lanning at $10.4 million. Another four are making more than $8 million—Nebraska’s Matt Rhule and Franklin at $8.5 million, Indiana’s Curt Cignetti at $8.3 million and Illinois’s Bret Bielema at $8.2 million. Five more are in the $7 million range.

Per USA Today, at least six schools are paying their football assistant coaches somewhere between $7 million and $11.4 million. The actual number is probably $8M, but neither USC nor Penn State provided information. (The Nittany Lions are paying their defensive coordinator alone $3 million, the most for any assistant coach in the country.)

If anything has grown faster than the buildings, it’s the staff sizes and compensation for coaches and high-level administrators. It’s striking how much bigger those expenses were than the total scholarship payments, which at many schools were fourth or fifth on the cost sheet.

Of course, that item has now changed. Along with revenue sharing, most athletic departments have had to increase total scholarship numbers. That’s the impact of the House v. NCAA lawsuit settlement.

It’s a massive financial impact that College Sports Inc. should have seen coming for years. Or perhaps did see coming, but ignored. The signs were there.

Start in 2014, when Judge Claudia Wilken ruled in the case of O’Bannon v. NCAA that the association violated antitrust laws in barring payments to athletes. Go from there to Alston v. NCAA in 2019, in which Wilken ruled against the association again—a case that was argued up to the Supreme Court, which promptly stuffed the NCAA into a trash can in a 9–0 ruling in ’21. The NIL era began shortly thereafter, but it still didn’t presage what was to come.

Meanwhile, House v. NCAA was filed in 2020. Wilken again was the presiding judge. If there were a betting line on how that was going to turn out, named plaintiff Grant House & Co. would have been a three-touchdown favorite.

Yet throughout the 2020s, athletic departments have spent money like there would never be a reckoning. Even after the doom-and-gloom projections of financial ruin during the pandemic, nothing changed.

Facilities are still being planned, designed and built in many places. Staffs are bigger than ever, with personnel departments exploding to deal with transfer-portal free agency. Coaches are being paid more than ever, with buyouts bigger than ever.

There is a school of thought that the House settlement will force a trend toward smaller salaries and buyouts, with that money being diverted to athletes. We’ll see. A massive football fire-and-hire cycle is underway, and a presumed scarcity of A-list candidates for A-list jobs will likely drive an expensive market.

There isn’t much in the current College Sports Inc. climate to suggest we are entering an era of austerity. That’s why the Big Ten is close to cutting a deal with the UC Pension System. Instead of curtailing spending, the short-term solution is to find more money to blow.