San Diego Union-Tribune (Sunday)
FINANCIAL BLOW WITH NO TOURNAMENT
SDSU will feel pinch with cancellation of premier NCAA event
Assuming San Diego State dispatched a 15 seed in its opening game of the NCAA men’s basketball tournament, the Aztecs would have been playing today for a spot in the Sweet 16.
It would have been a $150,000 game.
The Mountain West, like other conferences, pools money it receives from the NCAA each spring based on how far its teams advance in the tournament. But it also rewards the schools doing the advancing with one-time bonuses: $100,000 to make the main bracket, an additional $150,000 to reach the Sweet 16, another $250,000 for the Final Four.
The chance for $500,000, then, is gone for SDSU with no NCAA Tournament this year. So might more than $1 million in annual payouts from tournament revenues that are redistributed to the Division I membership each spring and are an integral part of athletic budgets.
“It’s a fairly significant piece of the pie,” SDSU Athletic Director John David Wicker said.
March Madness has become April Angst.
We know the NCAA took a big financial hit by not staging the 68-team bracket for the first time in its 80-year history. We don’t yet know how big, as athletic directors, conference commissioners and NCAA executives hold daily teleconferences to mop up the red ink.
“We certainly need to plan to get by without some of our disbursement from the NCAA,” said Wicker, whose total athletic budget last year was $54 million. “But we still don’t know what that looks like. It depends whom you talk to. I talked to one person who thought it would be zero. I talked to another who thought it would be 50 percent. No one knows.”
Either way, they’ll find out soon.
Much of the nearly $600 million that the NCAA distributes to its 350-odd Div. I schools each spring is based on athletic and administrative markers from previous years. But it is paid from the current year’s pot of gold. The men’s championship game is in the first week of April, and shortly after CBS and Turner Sports make the final payment of that year’s television rights fees.
Then the NCAA redis
tributes it in a series of payments scheduled for April 15, May 6, May 20 and June 10.
So what happens when there’s no money to distribute? Do schools swallow hard and absorb the entire loss this spring, knowing things should be back to normal next year? Or do they spread the pain over several years with loans, putting cash-strapped athletic departments deeper into debt?
The first thing to understand is that the NCAA is funded almost exclusively from its men’s basketball tournament, not football. The proceeds from the College Football Playoff and other bowl games are controlled by the conferences and don’t flow through the NCAA.
Instead, $867.5 million of the NCAA’S annual revenue of roughly $1.1 billion comes from the tournament’s media rights contract and another $177.9 million from championship ticket sales, the bulk of which is also from the men’s tournament.
According to NCAA documents, the organization planned to distribute $599,622,705 to Div. I schools and conferences this spring. Another $153.8 million pays for Div. I championship events, flying, feeding and housing teams across 24 sports. Div. II gets $53.3 million, of which 60 percent bankrolls its championship events. Div. III gets $35.2 million. Another $100 million goes to legal, administrative and facility expenses.
“I can’t give you any specific numbers because we don’t know yet,” NCAA President Mark Emmert told the Associated Press last week. “We know that the financial implications are all negative and we’re going to have to deal with those.”
A Mountain West spokesperson said Commissioner Craig Thompson is not ready to comment given the uncertainty of the financial situation but echoed Emmert’s sentiments that shortfalls are expected.
“Most places are lean,” USD Athletic Director Bill Mcgillis said. “Most places are challenged to support all of their programs. Any lost revenue — whether that’s NCAA distributions, ticket sales, fundraising, any revenue stream — is going to have an impact at pretty much every place across the country. There are very few places immune to that.”
The largest payouts typically come from the Basketball Performance Fund. Teams accrue one “unit” for getting into the tournament, then one for each win until the Final Four. The units, worth about $282,000 each this year, continue on a rolling six-year basis and are paid to each conference, which in most cases sprinkles them evenly among its members.
The 2020 distribution is scheduled for April 15 and includes units from 2014 through 2019. The Mountain West has 16, which computes to $410,000 for each of its 11 basketball members (Hawaii plays only football).
That’s about half of what Mountain West schools got as recently as four years ago, when the conference regularly put three, four or five teams into the NCAA Tournament. In 2016, the conference had 33 shares. Next year, when 2014’s four units drop off, it will be down to 12.
Worse, this could have been a big year for the Mountain West. Had seedings held, the Aztecs would have advanced to the Elite Eight and the Mountain West would have earned at least five units — or $8.4 million over their six-year lifespan. If Utah State had won a game, it would have topped $10 million.
Also scheduled to arrive April 15 is the $53.6 million Equal Conference Fund, which is sent to conferences based on basketball units. An NCAA memo says: “Conferences are encouraged, but not required, to distribute the fund equally among all member institutions.
May brings two more lucrative revenue sources, the Sports Sponsorship Fund and the Grants-in-aid Fund. Those are based on the number of varsity sports and scholarships offered at a Div. I school. An athletic department of SDSU’S size was expected to receive $219,000 and $147,500, respectively.
The NCAA hands out another $157 million in June from five more funds. That includes the Academic Enhancement Fund, where schools each received $136,800 in 2018.
In most years, all that amounts to between $1.2 million and $1.6 million for a school like SDSU, and more in a year like this with individual conference bonuses on the line for a 30-2 basketball team.
Now the NCAA is offering seniors in spring sports an extra year of eligibility in 2020-21, which means schools must pay for their scholarships, housing and related costs that often top $100,000 per athlete per year — another unforeseen cost at a time of dwindling revenues.
For mid-major athletic departments, as Wicker says, that is a significant piece of the pie because of their limited revenue streams compared with power conference schools with the safety net of football dollars. The NCAA money is also a constant amid other variables like ticket sales and donor contributions that ebb and flow with win-loss records.
There is some good news, though.
Because a contractor’s convention bumped it a week earlier than usual this year, the Mountain West Tournament in Las Vegas was completed before the coronavirus crisis scrapped most others. And conference officials say ticket sales were up, meaning there might be a surplus that can be returned to the schools.
Canceling all spring sports also will save money, particularly in a conference like the Mountain West where most travel is by airplane instead of van, which in turn often requires more hotel nights.
On a wider scale, the NCAA is said to have business interruption insurance that will mitigate some of the losses from the tournament. Not having to stage some winter and all spring sports championships could save tens of millions of dollars as well.
“It’s understanding how much are we going to save and how much does that offset the revenue we’re not going to have coming in,” Wicker said “But what most people don’t realize is that three weekends in March fund the experiences of (460,000) student-athletes in some way, shape or form. … And that check won’t come this year.”