In June, the NCAA is distributing $225 million to Division I schools. That sounds like a big number, but member institutions were counting on about $600 million.
The NCAA gets most of its revenue from its men’s basketball tournament’s broadcast deal. The tournament’s cancelation means not nearly as much money to pass along to membership. Without the NCAA tournament, conference tournaments, or any spring sports, everybody is staring down a large drop in revenue.
That’s bad enough. But if the coronavirus pandemic cuts into ticket sales, booster donations, and university budgets, the losses could go from manageable to less than manageable. How bad it might get depends on the type of school you’re looking at.
The smallest members of the NCAA – Division II and III schools — might be at the highest risk.
According to the NCAA, DII institutions will get “4.37% of actual revenues, currently projected to be $13.9 million for the division, which is a $30 million decrease from last year,” while DIII schools will “receive 3.18% of actual revenues, currently projected to be $10.7 million for the division, which is a $22 million decrease from last year.”
That’s five figures per school, which makes a difference in a shoestring budget. DII and DIII schools often use that money to help host championship events and run their conference-specific programming, like educational initiatives.
These schools don’t have fat broadcasting contracts. NCAA, conference and internal distributions often are some of their largest revenue sources.
According to the NCAA, the median DII school that sponsors football spends about $6.5 million a year, and a DII school without football spends around $5 million.
In DIII, it’s about $3.3 million with football, and $1.7 million without football. The loss here doesn’t amount to a huge check for each school (DII has 169 football teams), but with revenues so much smaller than at DI schools, even small decreases can be meaningful.
One DII school, Notre Dame de Namur University, shut down their athletic department and may close the entire school. Another DII school, the University of Bridgeport, is laying off athletic staff. Don’t be surprised if others cut staff, sports, or more.
Smaller Division I schools will take their own hit, and much of that will come in the form of uncertainty.
Earlier in March, I asked a few professors which types of schools were most at risk in the event of a canceled March Madness. They all agreed that DI schools that don’t sponsor football or have lucrative TV deals were most at risk.
Right now, it isn’t totally clear how this $225 million payout will be distributed, because there isn’t a tournament bracket to guide “unit” distribution. The SoCon’s commissioner told CBS Sports there was “a lot of speculation with no real history to fall back on.”
That uncertainty around a large revenue source will make financial planning difficult. Smaller private schools could be at particular risk, because like their counterparts in DII and DIII, they’re more likely to generate more of their revenue from tuition.
These schools may also a financial double-whammy if spring-sport athletes who lost their 2020 seasons get additional eligibility from the NCAA or conferences. A tiny school like Presbyterian wouldn’t be able to absorb those new costs the same way Texas A&M could.
It is unlikely anybody but the most destitute schools in DI would drop down a division for budgetary reasons, but we’re already seeing a basketball coaching carousel freeze almost completely. If times are likely to be tight, nobody wants to be saddled paying an expensive buyout right now. The smaller schools in DI, including potentially some FBS Group of 5 programs, are going to need to pinch even more pennies.
As an example, Wyoming is already projecting they’ll “be down about $1 million”, which AD Tom Burman described to Sports Illustrated as “scary”.
The biggest schools are, unsurprisingly, the best equipped to adjust.
The biggest conferences typically make more money in March Madness distributions than the smallest, and their conference tournaments are usually bigger moneymakers, too. Many of these schools could lose more money in an absolute sense. The Big 12, for example, expects to lose $6.6 million on its conference tourney and $14 million on the NCAA’s.
That loss matters, but if your school has an athletic budget of $80 million or so, it’s manageable. Still, don’t be surprised if your favorite school ends up postponing some facility improvements, or finds other ways to cut back.
Several schools have already indicated as much. Take Indiana, whose AD said they were “working to mitigate the financial impact of the anticipated reductions in the distributions we traditionally receive from the NCAA and the Big Ten.”
In the past, many of the largest schools in FBS have framed themselves as poor as a rationale for not paying athletes. We should be skeptical of that framing. All but the most loaded athletic departments will need to engage in some level of belt-tightening, but if a school is getting $30 million a year from ESPN, they’ll probably scrape up enough pennies to still offer soccer and track. They might do that by laying off a few administrators, or by scheduling only nearby opponents, but they can probably make it work.
But the big schools (and everybody else) could have massive problems anyway, because these changes aren’t happening in a vacuum.
NCAA distribution cuts probably won’t be the only financial pain point from this pandemic. If unemployment remains high, booster donations and ticket sales may decrease. Many schools rely on student fees, and if enrollment drops, so does that revenue. A school might not “bail out” an athletic department if it’s facing all these other headwinds.
A decline in NCAA tournament revenue, in isolation, would be a problem, but not an insurmountable one for DI schools. But taken together with a slew of other potential cuts the situation gets more dicey.
And if there is no college football in the fall of 2020, the financial problems become much more dire.
Most money for FBS athletics comes from football, in some capacity.
The massive ESPN deal that brings in up to $40 or $50 million a year? The money that comes from selling 100,000 tickets every home game? The money from parking, from $12 beers, from requiring alumni donations to get good seats, from selling polo shirts with the university logo on it? The $1 million guarantee check a smaller school gets to be the road team and get crushed in September?
That’s all connected to football. Without it, virtually everybody — from the biggest schools to the smallest — will need to make difficult decisions.
My guess? The ensuing budget cuts will probably fall everywhere but on football programs for as long as schools can get away with it. That means staff layoffs and travel cuts. That means Olympic sport eliminations. Even a delay to football season puts those things in play.
And the smaller the program, the more drastic those measures could be.
Listen to an episode of Podcast Ain’t Played Nobody on this topic.