Iowa State is implementing a number of budgetary cuts to account for a $5 million shortfall created by the cancellation of the Big 12 and NCAA tournaments due to the coronavirus pandemic, athletic director Jamie Pollard said in a letter to fans published Wednesday.
In the letter, Pollard said the athletic department will address the shortfall mostly through "temporary," one-year pay cuts for coaches and some staffers and the elimination of bonuses and incentives for all coaches.
Pollard said the salary reductions for coaches will save the school $3 million and the elimination of bonuses will save the department another $1 million.
"As we previously shared, it is critical that we take action today so we are as prepared as possible for a new normal when our society can re-engage," Pollard wrote in the letter. "The individuals and organizations who can plan and execute efficiently today are best positioned to be successful tomorrow. I am writing today to share several initiatives that we are implementing in the athletics department to best prepare for, both the known and the unknown, financial challenges that we will be facing soon."
Other Power 5 programs could follow the Cyclones with pay cuts. While the postseason cancellations are projected to hurt non-Power 5 schools more than their richer peers, Iowa State's acknowledgement suggests that the big-budget programs could struggle financially, too.
Like most Power 5 leagues, the Big 12 generates the bulk of its annual revenue from TV contracts attached to football and men's basketball. Last year, the Big 12 reportedly distributed $38.8 million per school. But the postseason men's basketball tournaments also are financially beneficial for the league.
The NCAA tournament determines payouts according to a units system that rewards conferences for its number of berths and overall success. Last week, however, the NCAA announced that it had reduced its projected payout to Division I schools from $600 million to $225 million after the cancellation of its tournament.
According to the Washington Post, the Big 12 earned $307.8 million from 1997 to 2018 based on its performance in the NCAA tournament.
Without the anticipated income from the postseason, Iowa State also announced measures to appease supporters, such as freezing ticket prices in all sports and delaying required donations by big boosters. Per Department of Education data, Iowa State spends nearly $80 million per year on its athletic programs.
"These actions will help us address the [$5 million] shortfall that we face with the cancellation of the NCAA and Big 12 men's basketball tournaments," the letter said. "We can now turn our attention to solving many other issues in the coming months. It was also important to us to provide our loyal ticket holders and donors some relief in regards to ticket prices and donations."