Eye on the Money: Let’s get straight to the point: The NCAA’s 14-year, $10.8 billion media agreement with CBS and Turner is a lot of money. The $10.8 billion figure certainly is top of mind in the sports writing community, where it is often used as a symbol for excesses surrounding college sports. MORE »
In most years, rights fees have accounted for about 85 percent of all NCAA revenue. In 2009-10, the media agreements constituted 86 percent of NCAA revenue. Most of the remaining 14 percent in 2009-10 came from championships (mostly ticket sales).
Each year, about 60 percent of NCAA revenue (that’s all revenue, not just money from rights agreement) is distributed to Division I members. For 2009-10, the total was a little more than $433 million. Some of that distribution is earmarked for particular uses, such as funds that directly support academics or those that meet special student-athlete needs away from the field of play.
Most of the money, however, is distributed through funds that recognize long-term competitive success and that support the Division I tenets of athletically related financial aid and broad sports sponsorship. Those funds (the Basketball, Grants-in-Aid and Sports Sponsorship Funds) are paid to conference offices and divided among conference institutions according to their own agreements. At a typical Division I Football Bowl Subdivision institution, the most common uses of the money would be for salaries, financial aid for student-athletes, facility maintenance and rental, and travel.
West Virginia men’s basketball coach Bob Huggins indirectly highlighted these expenditures in February when he claimed that the NCAA annually “steals” more than $200 million from Association resources (he also zinged conference offices for how they use their 60 percent distribution).
Huggins’ choice of words may have been overheated, but his observations point to philosophical differences within the membership. Should the institutions that are perceived to generate the money be permitted to keep more of it? Also, what level of NCAA programming is appropriate?
The questions seem complicated, but the answers are simple: The NCAA Executive Committee determines the allocation of the money, and it authorizes all Association-wide programming. Presidential leaders in Divisions I, II and III approve division-specific expenditures.
The NCAA has operated for decades with the understanding that about 40 percent of its resources support Association championships, programs and services. The only constitutional requirement is that 7.55 percent of NCAA revenue is to fund Divisions II (4.37 percent) and III (3.18 percent) championships and programs.
The 96 percent figure includes:
• Division I distributions (60 percent)
• Championships (13 percent)
• Programs and national office services (19 percent)
• Other services (such as the Eligibility Center) (4 percent)
To be clear, the 96 percent includes much of the national office’s expenses (including salaries), which are housed in programmatic budgets. The 4 percent that remains is for central services, such as building operations and salaries not related to particular programs.
The NCAA research staff estimates that college athletics programs collectively spend about $10.5 billion annually. NCAA total expenses for 2009-10 were $707.2 million.
(Overall annual revenue for college athletics programs was estimated for 2008-09 at about $10.6 billion. That includes about $5.6 billion in generated revenues, which is income from ticket sales, radio and television receipts, alumni contributions, guarantees, royalties and NCAA distributions. The remainder of the revenue is considered allocated revenue, which comes from student fees directly allocated to athletics, direct and indirect institutional support, and direct government support.)
The largest NCAA distribution ($36.7million) for 2009-10 went to the Big Ten Conference, based on its historically strong performance in the Division I Men’s Basketball Championship, its commitment to athletically related financial aid and its broad sports sponsorship. However, athletics budgets at some Big Ten institutions approach or exceed $100 million, meaning that direct NCAA distributions (an average of about $3.3 million per institution) make up only a small portion of their budgets.
Several important NCAA programs provide indirect support for conferences and institutional athletics programs.
One example: Travel and per diem expenses are covered for any team competing in any round of NCAA championship competition. Of course, the overall national championship structure itself ($92 million in 2009-10) is central to the intercollegiate athletics experience.
Another example: The NCAA catastrophic-injury insurance program spreads risk across a national pool, making institutional insurance purchases much more affordable than they would otherwise be. Other national programs, such as NCAA drug testing and rules-compliance services, help ensure fair competition across the nation at no cost to conferences or member institutions.