The NCAA announced the financial hit Thursday in a news release: After winter and spring championships had been canceled because of the coronavirus, the board of governors had “voted unanimously to distribute $225 million in June to Division I members to specifically focus on supporting college athletes.”
The real news came in the second paragraph, that the distribution had been budgeted for $600 million. The NCAA had insurance for lost NCAA basketball tournament revenue, but the policy isn’t paying off dollar-for-dollar. The NCAA still hopes to pay off the rest of the distribution using a loan.
However that plays out, lost tournament dollars are just the tip of the iceberg. Most cuts won’t be announced in news releases. Interviews with more than a dozen conference and school administrators and coaches led to the same conclusion: The economic climate in college sports that existed pre-coronavirus, even just a month ago, was vastly different from the one that will emerge post-coronavirus.
The ramifications will be endless. Assume the facilities arms race that consumed big-time college sports for more than two decades could slow to a crawl. Athletic department budgets will be trimmed across divisions. Schools trying to stay open might question the importance of having an athletics program at all.
“If you’re losing money everywhere on campus and can’t make up the difference in enrollment numbers and retention -- if you can’t do it because of the changing state of our lives right now -- there’s not a lot of promise in there for athletics," said Drexel sports management professor Karen Weaver, former athletic director at Penn State Abington.
“As students ask for room and board refunds we are talking tens of million per school,” said one Division III athletic director.
Weaver noted that demographics show there will be fewer high school students graduating over the next 10 years, so this singular event comes at an especially tough time.
Experts also note that with less disposable income out there, revenue from ticket sales will suffer along with donations.
In the NCAA release announcing the revenue distribution cut, it said the board of governors “stressed the importance of using the distributions to aid college athletes during the uncertainty of the current environment, along with the importance of planning carefully with less revenue.”
Of the $225 million distribution, the NCAA said $50 million will come from NCAA reserves. The NCAA said it had a $270 million event cancellation insurance policy, “and the proceeds when received will be used to pay off a line of credit that will cover the remaining distribution within 12 months.”
Lost conference tournament revenue also is a major issue. Do the venues demand full payment? That’s an unknown, one veteran administrator said. “I’m sure there are some outs on both sides.” Also, longtime partners might handle such issues differently, wishing to maintain the partnership.
For most schools, the conference share isn’t the biggest bucket of revenue. Fund-raising, marketing and sponsorships, ticket sales, merchandising, all are buckets in addition to conference revenue. All will be affected.
“Say you’re in a fund-raising campaign right now," said a longtime athletic director. “Very sensitive. Sponsorships come open. People might be looking at the world very differently now. Next year’s marketing budgets might take a hit.”
Colleges aren’t waiting to trim budgets. Temple already announced 5% cuts across all departments. The University of Bridgeport in Connecticut, a Division II school, announced it was laying off many of its athletics staffers, including some coaches. The school said it hoped the layoffs are temporary.
Moody’s, the investment rating service, this month revised its outlook of the higher-education sector from stable to negative, citing “unprecedented enrollment uncertainty” and “risks to multiple revenue streams.” It noted that more than 30% of public universities and nearly 30% of privates were already running operating deficits.
Atlantic 10 commissioner Bernadette McGlade thinks the potential cost of funding another year of spring sports “will be significant.” Combined with the loss of post-season basketball revenue, all the schools will feel that hit. She also noted that loss of 2020 men’s basketball, if greatly reduced, “represents a deduction in revenue for a rolling six-year period!”
To absorb that loss, McGlade said, a conference will need to rely on its own investment reserve funds “to make up what could be a large deficit.”
American Athletic Conference commissioner Mike Aresco, whose membership includes Temple, also listed the suspension or cancellation of the 2020 football season as the potential event that would have the most impact. Beyond operational revenue losses from not having a conference tournament and NCAA tournament, and the cancellation of the spring season, Aresco mentioned, “the uncertainty surrounding sponsorship revenue, donations to the schools, etc.”
The NCAA said Division II will receive 4.37% of actual revenues, currently projected to be $13.9 million for the division, which is a $30 million decrease from last year. Division III 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. “These amounts will be used to fund national programs," the NCAA said in a release.
In other words, there is no trickle-down to the schools themselves. In Division I, there is some trickle-down, with schools receiving shares of conference revenue from the NCAA basketball tournament profits.
“For us, a million dollars, that’s huge," Atlantic Sun commissioner Ted Gumbart told the Associated Press.
Sharing tournament revenues varies between conferences. It’s not uncommon for schools to keep a portion of NCAA revenue, units accumulated as a team advances in the NCAA Tournament, while part of that share is distributed around the league. So if Dayton, for instance, had made a deep run in the NCAA Tournament, all the Atlantic 10 schools would in time have benefited from that run.
“Mid-majors will suffer most from loss to NCAA basketball tournament revenues," predicted Bill Bradshaw, former athletic director at La Salle, DePaul, Temple, and La Salle again. “Power 5 [schools] would be significantly impacted if football is canceled in the fall.”
“For an athletic program like Drexel this could mean a reduction of revenues in the six-figure range," Drexel athletic director Eric Zillmer said of lost tournament revenue.
“As colleges reimburse students for prorated dormitory and meal plans, there will be a substantial cost," said Tom Shirley, Jefferson University athletic director and women’s basketball coach, wondering about the to-be-determined trickle-down to athletic budgets.
Assuming the NCAA allows spring sports athletes to come back next year, “there will be costs associated with renewing their scholarships for an extra year," Shirley said. “Plus squad sizes grow, as do travel and equipment costs. Meanwhile, the freshmen who thought they were going to play right away, sit behind a fifth- or sixth-year senior. Do they transfer at Christmas break?”
“Smaller institutions that required rentals and fund-raised for scholarships may need to cut budgets or scholarships in an effort to stay solvent," said West Chester men’s basketball coach Damien Blair.
With enrollment goals being challenged, impacting budgets, and the fund-raising impact as there is less disposable income, Delaware Valley athletic director Dave Duda said he thought colleges would be affected “across the board.”
“The first anyone will worry about -- the number of sports opportunities will be reduced, either squad sizes or teams," Weaver said. “Employee levels are based on [overall] squad sizes.”
Weaver added that rules have changed, allowing schools to keep making admissions offers after May 1, so more poaching will go on as everyone tries to make their numbers, which will trickle down to athletics.
On a list of concerns, a Division I college administrator who didn’t want to be identified said (1) no college football; (2) no college football; (3) no college football; (4) no 2020 NCAA basketball tournament revenue stream.
Maybe there’s actually a droplet of hope in that thought: If the games go on and the stadiums are open for football season, the impact at many schools will be less severe.
“What football means to a university goes way beyond athletic revenue," said that same administrator, referring to alumni returning to campus, donations tied to such gatherings, and overall feelings toward the alma mater, as the very identity of so many Division I colleges is tied to football. “It’s more than a front porch.”
Athletic directors naturally are prioritizing what concerns need most immediate attention.
“I am currently focusing on the financial implications related to the potential year of eligibility for spring sports student-athletes," said St. Joseph’s athletic director Jill Bodensteiner, making it clear that she’s also looking at “the multiple sources of potential impact on our revenue.”
Locally, you can find-small college coaches who are privately worried their full-time job will be made part-time, with benefits cut. A contractor who films games and practices for local schools already found his work and income dried up, with no way to make up the money.
Bradshaw also pointed out that schools with low endowments, whose overall budgets are tuition-driven, will be further affected, “and may have to drop sports, drop athletics, or close its doors.”
Non-revenue male sports could be most impacted, Bradshaw said, because Division I football, Division I basketball, and women’s sports will be the highest priorities, “in that order.”
“Colleges will close, drop athletics entirely or cut considerably the number of sports they offer," said Joe Giunta, former athletic director at Cabrini and Dickinson and former associate athletic director at Temple.
To be clear, these people weren’t asked about their worst fears for the economic impact, only what they thought the largest economic impacts would be.
Tuition-driven institutions might take the biggest hit, said Wilmington University basketball coach Dan Burke. “Many families will hit tough times,” meaning, he said, that high school seniors without scholarship offers might choose to go to junior college instead of the Division III non-scholarship route right away.
There is a consensus on the areas that will be hit across the landscape. Rowan athletic director John Giannini, the former La Salle basketball coach, listed the loss of NCAA basketball revenue along with campus-wide cutbacks on university allocations because of budget strains, and loss of corporate sponsorships for canceled events.
Big East associate commissioner Vince Nicastro had a similar list, starting with the NCAA Tournament lost revenue. “Those revenues are crucial, particularly for conferences that rely on that money to fund basic operations,” he said.
Villanova athletic director Mark Jackson listed conference tournament revenue even ahead of NCAA Tournament revenue and corporate-partnership support as being most impactful on the whole landscape.
With student fees going toward operating budgets at many schools, “the debt service has been predicated on having a consistent level of student fees," said Weaver, the Drexel sports management professor. “That is one of the [lenses] you have to look at this through.”
So, for instance, Temple might be very lucky that the school didn’t move on building an on-campus football stadium.
“Oh, my gosh," Weaver said of that potential scenario.
Going farther back, Villanova also might have been lucky when it looked at moving up to the top division of college football but ultimately wasn’t invited to join Big East football before the league splintered.
“Depending on how long it lasts, the big-time programs may face the prospects of paying for bloated athletic budgets [including athletic administration] with depressed revenues," said Villanova sociology professor Rick Eckstein, who has written books on how sports stadiums have been funded with public dollars, and the impact of college athletics on girls sports.
“I’m not sure this is purely economic, but with the youth sport pipelines all but shut down, it’s going to be harder [and possibly more expensive] for schools to recruit in the traditional manner,” Eckstein said, adding that the traditional manner is often “pay to play.”
This might not affect big-time football and men’s basketball as much, Eckstein said. “But it will affect most of the other sports at every divisional level.”