The cancellation of March Madness because of the coronavirus pandemic has dealt a costly blow to college sports programs, the National Collegiate Athletic Association indicated on Thursday.
The NCAA said that financial distributions to Division I member institutions at the end of the 2019-20 academic year would be $225 million—just 37.5% of the expected $600 million amount. The reason for the big drop is the cancellation of winter and spring championships, especially the NCAA men’s basketball tournament, the organization’s marquee event and biggest moneymaker.
The much-lower payment stands to put a big pinch on college sports programs—especially at schools that don’t have huge money-spinning football programs. It could hurt women’s sports programs that typically generate much less revenue. And the retrenchment comes as the NCAA is under pressure to provide more compensation to athletes.
March Madness is the NCAA’s primary moneymaker each year, accounting for almost 80% of total revenue. While ticket sales and marketing rights are a lucrative component of March Madness, the NCAA benefits most from the 14-year, $10.8 billion television-rights deal it has with CBS Sports and Turner Sports, which was extended to 2032 for an additional $8.8 billion in 2016.
Most of the money generated from March Madness, however, doesn’t stay in the NCAA’s pockets. The organization divides that money proportionately between athletic conferences across all divisions. For most of the more-than-1,200 schools in the NCAA, these annual multimillion-dollar financial distributions are the foundation of athletic department budgets.
“I think we will have to see a lot of sacrifices being made just to compensate for the budget impacts we’re going to see for this year,” said Jane McGill, a college-sports consultant at Church Church Hittle & Antrim in Indianapolis that used to work at the NCAA. “All that money gets redistributed to institutions so that they can fund their field-hockey programs…This is going to be felt by all student athletes, all coaches, all institutions.”
Financial distributions in Division II and Division III also will take a significant hit, with the former receiving $13.9 million, $30 million less than 2019, and the latter receiving $10.7 million, $22 million less than 2019. The NCAA said it is also “undertaking a variety of cost-cutting budget measures that will be determined in the upcoming weeks.”
“As an Association, we must acknowledge the uncertainties of our financial situation and continue to make thoughtful and prudent decisions on how we can assist conferences and campuses in supporting student-athletes now and into the future,” said Michael V. Drake, chair of the NCAA Board of Governors and president of the Ohio State University.
Division I schools will receive the $225 million distribution in June. The NCAA will pay for $50 million of the distribution from its reserves. The balance will be paid with a line of credit, which the NCAA expects to pay off by June 2021, after it receives the expected proceeds from its $270 million event-cancellation insurance policy.
The diminished revenue stands to suppress athletic-department budgets across the country, but it may take a smaller toll on universities where football programs bring in hundreds of millions of dollars each fall. At the University of Alabama, for instance, the football team generated $111.1 million in revenue compared with $10.3 million brought in by the basketball program during the 2018 fiscal year, the most recent year for which data is available from the Education Department.
The story likely will be different in conferences such as the Big East, where basketball plays an outsize role and football teams compete in the smaller-tier Football Championship Subdivision. The difference in revenue streams is particularly stark at Villanova University. Football accounted for $6.9 million in revenue in the 2018 fiscal year while the men’s basketball program, which won NCAA championships in 2016 and 2018, generated $16.9 million.
The diminished distributions could be especially damaging to women’s sports. With a few notable exceptions, most women’s sports teams spend more than they take in each season. As athletic departments deal with less money to fund all sports, it is possible that some schools may make the painful decision to reduce roster sizes or cut programs. Due to provisions in Title IX that require schools to have a relatively equal number of men and women athletes, men’s sports teams could be on the chopping block as well.
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