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The NCAA Canceled Its Cash Cow. Now, How Bad Could This Get?

As coronavirus quashes college sports' big moneymaker, an ex-insider looks at the NCAA's unique financials and worries: Will the outfit pay for past mistakes by making the right decision this time?

I lost track of how many mornings I spent in cold conference rooms sipping coffee from Styrofoam cups alongside college presidents. They would congregate at the NCAA’s national office, where I worked as a writer and editor for seven years, to slap backs and shake hands and parse the rules that governed the lives of nearly 500,000 college athletes around the country. Without fail, these chummy quarterly gatherings included skirt steak and a budget review, and one line on those multihued spreadsheets seemed simultaneously simple to gloss over and impossible to ignore: It pertained to the insurance policy that would kick in if the NCAA Division I Men’s Basketball Tournament, which is responsible for more than 80% of the association’s annual revenue, was canceled and the related funds for the event’s TV rights voided.

More often than not, the insurance line went unnoticed as the group pressed on with the day’s business (deciding, say, if extra snacks should be permissible for D-III athletes). Occasionally, though, a president would pull a microphone close, peer over their glasses and ask the room about worst-case scenarios, canceled tournaments and far-reaching financial implications. “If another 9/11 happens and there is no tournament, no TV money, no ticket sales . . . What then?”

Well, what now?


On Thursday the NCAA scuttled the men’s tournament for the first time in its history (as well as the championships for every other winter and spring sport in 2020), not because of a disquieting public spectacle like some feared, but due to invisible microbes leaping from one person to the next to the next, unchecked, across oceans and cultures and borders. The COVID-19 virus, which has infected more than 130,000 people worldwide, pushed the NCAA to cancel its primary revenue driver after its committee of experts and Board of Governors evaluated their options (and, notably, after Duke announced it wouldn't participate in the tournament).

While the NCAA has not yet made details of its shutdown public, it appears the outfit may have to fund its robust operations via that once-obscure insurance policy, and through its hundreds of millions of dollars of reserves, which have been gradually evaporating in recent years thanks to a series of high-profile legal settlements begotten by the NCAA and its member schools’ collective inability to keep pace with changing dynamics in society and sports.

I left the NCAA in December and can attest that I was one of many roaming those halls who disagreed with some of the organization’s overarching policies while simultaneously collecting a paycheck from them. (You’re now muttering “Hypocrite,” which is fair.) Despite those lingering qualms, I would be remiss if I didn’t note that the money generated by the tournament doesn’t all flow into the NCAA’s sleek, glass-walled headquarters or line the pockets of my former colleagues. While the massive check Turner and CBS cut for annual tournament rights does help pay salaries for hundreds of staffers, the overwhelming majority of that money is used to subsidize the NCAA’s other 89 championships across all three divisions; distributed to schools to help pay for scholarships; and allocated to fund a litany of other programs, including scholarships awarded to promising former athletes bound for graduate school and the student-assistance fund, which offers money to athletes in times of need.

Will the combination of the insurance money—which only covers a portion of the revenue presumed to be lost from a canceled tournament—and those reserves be enough together to keep those important programs fully funded? A glance at the numbers suggest it’s likely, but coronavirus could exact a very serious toll. As of the NCAA’s last public tax filing, from 2018, the organization listed $425 million in net assets, down from $700 million in '14, while annual expenses eclipsed $1 billion. (When I asked a former colleague in the NCAA’s public relations shop for specifics on those financial dynamics, she offered a kind “no comment” as the several-hundred-strong staff at the national office scrambled to answer complex and unprecedented questions about the future.)

What happened to those reserves? In 2017 the NCAA dipped into them to create a $208 million fund resulting from a class-action lawsuit related to paying for athletes’ full cost of attendance. In ’19, another $70 million was allocated to medical monitoring for former athletes, the result of a separate concussion settlement. Now the association and its schools are caught in what is poised to be a protracted—and costly—fight over name, image and likeness payments for athletes. In a vacuum, with healthy reserves and an insurance policy, the coronavirus and a lost tournament might simply be a $900 million blip. But, thanks to some costly mistakes, the virus’s impact on the NCAA could be more profound.

March Madness is also routinely a boon for smaller schools that earn berths. Not only do universities receive funds for making the tournament, but a deep run for the likes of Florida Gulf Coast, Butler or Loyola Chicago can have a lasting impact on enrollment and donations. What sort of windfall did Dayton, for instance, miss out on because the Flyers won’t get to play in front of millions this month? While the likes of Duke could weather a year without a tournament, and thus were able to make early public proclamations about not participating, the calculus was more complex for their less-heralded peers, and for the NCAA itself.

My empathy lies with the players who will miss out on what might have been one of their lives’ most meaningful moments, with my former colleagues tossed into a maelstrom beyond their control, and with the decision-makers faced with a dilemma that had no satisfactory answer. The NCAA made the right decision in an impossibly difficult situation and should be lauded for it, but the right decision has been rendered potentially more painful because of so many wrong ones made in the past, often over coffee in cold conference rooms.