How will the university support Purdue Athletics in revenue sharing?

President Mung Chiang and the Board of Trustees have agreed to fill any shortfalls in the athletic department during the next three years

More than 105,000 regularly pack Michigan Stadium, providing a bounty of revenue to the school’s athletic department, which supports 29 varsity sports and is projected to generate $266 million during the 2025-26 fiscal year.

But even that won’t be enough to support the current financial landscape in college athletics. If Michigan achieves a balanced budget, it will lean on $15 million in assistance from the university, according to the budget presented to the Board of Regents last month.

If Michigan requires help from the university side, what does it mean for every other athletic department that’s about to deal with increased expenses due to the House settlement?

The days of athletic departments touting themselves as self-sufficient are likely over.

“Michigan … they’ve been one of those, like us, never took a $1 and now they’re in a position where they’re getting support,” Purdue athletic director Mike Bobinski said.

Michigan isn’t alone. The Florida Board of Governors approved the temporary use of up to $22.5 million in auxiliary funds to support athletics and help its state schools manage revenue sharing for athletes. According to POLITICO Pro, Florida State was the first school to shift $22.5 million to athletics.

PURDUE’S PLAN “ISN’T BLACK AND WHITE”

What about Purdue? How will the university financially help the athletic department?

Bobinski said the university’s plan isn’t “black and white - here's a specific identification of dollars.”

The revenue sharing cap is $20.5 million - and Purdue will spend up to the limit. This amount is withheld by the Big Ten from the school’s media rights share. The Big Ten will compensate athletes through PayPal, a third-party vendor.

If the athletic department has a shortfall at the end of the fiscal year, the university is prepared to fill the gap. How the university makes ends meet is up to Christopher Rule, Purdue’s chief financial officer and treasurer.

The agreement is for three years.

“It was important to the university that we be able to participate fully in the cap for a lot of reasons - success in athletics is a really important vehicle for the university,” Bobinski said.

“We don't want to do it halfway. It was clear that our peers around the country were all going to be at the cap. So, why would we do less? I said, ‘If you're halfway in, you're out.’ ”

Purdue President Mung Chiang (Chad Krockover Photography)

Purdue President Mung Chiang and the Board of Trustees appear to be all in. During new football coach Barry Odom’s introductory press conference in December, Chiang said:

"Athletics is such an important part of what Purdue stands for, what it means to all the Boilermakers out there. The Board of Trustees, myself, we're going to invest more than ever before in athletics.”

Chiang’s last statement warrants follow-up questions, but an attempt to schedule an interview to learn more about the plan was denied in the spring.

“At this time, he’s not available, but maybe check back in the fall during football season,” wrote Erin Murphy, senior director for media and public relations and the university’s chief spokesperson, in an email.

Although Bobinski and the athletic department have a financial cushion, thanks to the university, generating new revenue and managing expenses remain a priority.

“We have tried to be really smart, and trim where we could without affecting competitive realities. We haven't put any sports on the table, and everybody agreed that’s not a strategy that we want to go forward with,” Bobinski said. “We want to support the programs that we have for as long as we possibly can.

“We have tried to massage some non-conference schedules, to manage travel a little bit smarter, and things that have helped us keep the expenses in some reasonable control. But it hasn't been any slashing, and get rid of this. We haven't had to go to extreme steps at this point.”

Bobinski used the women’s soccer program as an example. Four of the team’s eight non-conference matches are on the road, and each one is within driving distance to Ball State, Evansville, Loyola (Chicago), and Dayton.

JPC’S ROLE

The John Purdue Club will continue to play a vital role in supporting the athletic department financially, not just for scholarships, which are funded through the JPC, but also for the overall operating budget.

In the 2023-24 academic year, the latest figures available, the athletic department incurred $12.8 million in scholarship costs. Salaries, benefits, and bonuses are the No. 1 expense for the athletic department. Debt service ($14.5 million) is a line item that the university could absorb to help the athletic department navigate the new expense of revenue sharing.

More expenses: Purdue must pay former football coach Ryan Walters the remaining $9.5 million of his contract - spread out over three years - after he was fired in December. Also, the school handled Odom’s $3 million buyout at UNLV.

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Bobinski arrived at Purdue at the start of the 2016-17 school year, and the JPC annual fund was between $6.3 and $6.4 million.

“This year, we're going to be about 17 million,” Bobinski said. “It's really continued to become a much more important operating resource for us, and that's not changing. That's going to get even stronger as we move into this new world for us to try to keep that gap as small as possible.

“I'm not comfortable just sitting back and saying, ‘Well, we got this guarantee from the university.’ Our agreement is we're going to continue to push, and we need to push and to be able to do the things on the margins. The university is going to help us where we need help, but this is not a complete sea change, and all of a sudden, they're just going to give you whatever you need, which I would never expect, nor is it the right thing to do. We need to stand on our own two feet to the best of our ability.”

But Bobinski added that the $17 million “needs to become $20 (million) and that needs to become $24 (million). It needs to continue to grow in order to meet our operating budget going forward.”

Bobinski made it clear private equity isn’t an option, at least at the local level.

“There are control issues. There are returns that are expected. There's lots of things,” Bobinski said. “It's all got to be paid back - it's just a loan. If you're going to borrow money, the university can borrow money at favorable rates and do that internally. We're not in that world at this point and time.”

Most universities and athletic departments have traditionally maintained a distance in terms of finances. The perception of any university funneling money, either from the state or through student fees, to the athletic department to support big salaries for coaches and facility projects will never be well received.

However, university presidents have recognized over the last 5-10 years that the value of athletics in exposure, fundraising, and attracting students and events to campus can no longer be ignored. Just look at the impact of Purdue’s trip to the Final Four in 2024. The university is still riding that wave, making the investment in athletics a wise decision.

“I like where we are right now,” Bobinski said. “We struck a let's go the first three years with this understanding that we will fill the gap that you can’t manage yourself. We’ll fill the gap and reevaluate in three years and see what the going-forward plan is from there.

“But certainly, once you're in the rev share world, you can't not be in it, or else you're going to cut the legs off your programs.”