Ever since the NCAA tournament was canceled due to the COVID-19 pandemic, officials and administrators have been bracing for a significant decrease in revenue distributions from college sports’ central governing body. Now they know what those numbers are.
The NCAA will directly distribute just $225 million to Division I conferences and schools for 2020, the association announced on Thursday. It was initially scheduled to distribute about $600 million directly to conferences and schools starting in April, according to the NCAA’s 2020 Division I Revenue Distribution Plan document.
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The massive cut will affect Division I athletic departments in myriad ways, likely starting with staffing reductions or salary freezes and eventually causing schools to reduce scholarships and potentially cut sports entirely. Facility projects, depending on how far along they are, will be put on the back burner.
“This is the next wave of financial impact to college athletic departments,” one high-level Division I administrator told The Athletic on Thursday. “You’re already seeing schools refunding student fees, room and board. Some schools have athletics fees that they’re refunding. You’re already starting to lose revenue across campuses and across athletic departments, if they relied on athletics fees.
“This is now an additional financial impact that schools are facing.”
Of the $225 million distribution, the association said that $50 million will come from NCAA reserves. The NCAA also has a $270 million event cancellation insurance policy, and the proceeds when received will be used to pay off a line of credit that will cover the remainder of the $225 million within 12 months. Most of the NCAA’s annual revenue comes from the television and marketing rights tied to the Division I men’s basketball tournament, as well as championship ticket sales.
The Division I Board of Governors decided how the revenue would be distributed for 2020. Of the $225 million, $53.6 million will be distributed as originally planned through the Equal Conference Fund, which is split equally among all Division I basketball-playing conferences eligible for the NCAA tournament. The remainder will be split proportionally through the rest of the funds: the Basketball Performance Fund, Sports Sponsorship Fund, Grants-in-Aid Fund, Academic Enhancement Fund, Academic Performance Fund, Conference Grants, Special Assistance Fund and the Student Athlete Opportunity Fund. Money from some of those funds goes directly to providing scholarships for athletes at a majority of Division I schools. Other funds help pay for athletes’ travel home for holidays, summer school costs and the like.
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“We are living in unprecedented times not only for higher education, but for the entire nation and around the globe as we face the COVID-19 public health crisis,” Michael V. Drake, chair of the board and Ohio State president, said in a statement. “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.”
Within hours of the news breaking on Thursday, schools had already begun adapting to a new financial reality. Indiana’s athletic department announced that it would defer any non-essential building and maintenance projects and purchases. The department is also now under a university-wide hiring, promotion and bonus freeze, the school said.
“As is the case with so many other organizations in our community, across the country and around the world, the Coronavirus pandemic is having and will continue to have a significant negative financial impact on our department and all of intercollegiate athletics,” Indiana athletic director Fred Glass said in a statement. “In addition to pursuing our number one priority of helping to protect the health and safety of our students, coaches, staff and fans, we have also been working to mitigate the financial impact of the anticipated reductions in the distributions we traditionally receive from the NCAA and the Big Ten.”
Other schools will have to make similar calculations, if they haven’t made them already, and their decisions may be much harder than shutting down a construction project. What happens if a deep recession hits? What does that mean for donors and endowments?
Big 12 commissioner Bob Bowlsby said Thursday that he’s prepared to dip into the conference’s reserves to help make up for the lower-than-expected NCAA distributions. (Each Division I conference likely has reserves, but the amount varies, as does the potential financial boost.) He said he hopes to make his member schools “whole” for 2020, but “how much we spread the pain and how long the pain lasts is another matter all together.” Bowlsby also spoke about the lost revenue from the Big 12 basketball tournaments as well as the fear that many administrators, particularly those in the Power 5, share: What happens if there’s no football this fall?
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“It’s a whole new ballgame if we find ourselves not playing football, because it affects everything we do,” Bowlsby said. “It affects the largest portion of our TV contract. It affects the largest source of campus revenue, which is live gate. Anything that I say regarding finances, we have to make the assumption that we’re going to be back to playing football in the fall. And if that doesn’t happen, then the underpinning of what we’ve known as normal goes away and we’ll have major changes to make.”
(Photo: Thomas J. Russo / USA Today)
