Athletic directors planning for NCAA being unable to cover financial losses of canceled March Madness
Major-college athletics directors are planning on the NCAA not being able to cover all of the revenue it will lose because of the cancellation of the Division I men’s basketball tournament due to the coronavirus outbreak, six ADs and college sports administrators have told USA TODAY.
That is likely to result in a reduction of the association’s scheduled distribution of $600 million to Division I schools and conferences this spring, the ADs and adminiadastrators said. How much of a reduction is still to be determined, and that will depend on the association’s ability to tap its reserves and borrow money.
The ADs and administrators spoke on the condition of anonymity because the financial details are still being worked out.
“The economics of all this could definitely be extensive,” one AD said.
The association has $250 million to $275 million in business-interruption insurance connected to the tournament, the ADs and administrators have been told, but it is unclear how quickly that money would come to the NCAA – or how much. These types of insurance claims can bog down in a variety of disputes, and catastrophic-event insurance markets are likely to be under stress because of the global pandemic.
The association depends on the basketball tournament for nearly all of its roughly $1.1 billion in normal annual revenue.
During a fiscal year ending Aug. 31, 2020, the NCAA had been scheduled to collect $827 million just from its long-term multimedia and marketing rights agreement with CBS and Turner, according to the association’s recently released audited financial statement. That statement attributed $170 million in non-CBS/Turner revenue for fiscal 2019 to “championships and NIT tournaments,” with a sizable portion of that likely coming from the men’s basketball tournament.
The NCAA’s 2020 Revenue Distribution Plan calls for the association to make payouts to Division I schools from April 15 through June 10. Just over $220 million in payments are scheduled for April 15, but those may be delayed.
One AD said it will take a long time for the finances to be fully determined and sorted out legally.
NCAA spokeswoman Stacey Osburn on Tuesday referred to a statement the association issued last week that said: "NCAA leadership and membership committees are identifying and working through the considerable implications related to the decision to cancel remaining winter and all spring championships in response to the COVID-19 pandemic. While some decisions can be made quickly like the suspension of recruiting activity, others may take time to reach conclusion. As details become available, we will share with our membership and the public."
Division I public-school athletics departments generally received 2% to 5% of their total operating revenue in fiscal 2019 from the NCAA, including reimbursements and payments for hosting championships, schools’ annual financial reports to the association showed.
For California, for example, that translated to about $4.1 million of $87.5 million in total operating revenue. For Florida A&M, it was $380,000 of $11.2 million. USA TODAY compiled the schools’ financial reports in partnership with Syracuse University’s S.I. Newhouse School of Public Communications.
From 2004 through 2014, the NCAA accumulated nearly $400 million in a fund that was created as a reserve against the possibility of a massive loss of revenue from the tournament. However, at the direction of its governing board of college presidents, the NCAA distributed that money to schools to help them with increasing costs and spent it on their behalf in other ways, including a $208.7 million legal settlement.