The NCAA says it lost more than $800 million in revenue from the cancellation of the men’s basketball tournament last year.
Revenue for the college sports governing body was $519 million in the 12 months ending Aug. 31, according to audited financial statements. That’s a 54% drop from the $1.12 billion that the NCAA brought in the prior year.
The $800 million loss was offset partially by a $270 million insurance payment the NCAA received because of the canceled event. The group also has loss-of-revenue insurance in place for the upcoming 2021 tournament, which it is planning to hold entirely in Indiana.
One thing that helped the NCAA avoid a bigger financial hole: the strength of the market during the pandemic. The NCAA’s net investment income increased nearly $26 million over the year before, the document shows.
The NCAA makes the bulk of its money from media payments, and that’s where it took the biggest hit. In 2019, it received $804 million from its TV agreements with CBS and Turner. In 2020, those payments were reduced to $113.1 million. (The NCAA has separate media deals with ESPN, which carries championships in other sports, plus the women’s basketball tournament).
Revenue from all the championship tournaments, such as ticket sales, also fell dramatically, to $16 million from $178 million.
The financial statements also detail a $125 million loan that the NCAA took out from PNC Bank on May 1. That loan has an annual interest rate equal to the prime rate plus 1.65% and must be paid back by May 1, 2021. (The NCAA had previously referenced a line of credit that would be used to cover 2020 member payouts, to be partially paid off by the $270 million insurance policy).
A majority of NCAA revenue is distributed back to its members, so the losses on the governing body’s balance sheet are felt most acutely at individual schools. The NCAA originally planned to distribute around $600 million to its members in connection to the 2020 March Madness tournament, but ended up giving out $225 million.
That number is expected to bounce back up this year, should the tournament be held successfully in March and April. The NCAA says it is due $850 million from its media partners for the event and plans to distribute $613 million for 2021.
That’s good news for athletic departments across the country, which are dealing with bigger losses this year than they took in 2019-20. The arrival of the pandemic, in early 2020, disrupted the end of winter sports and all spring sports, but came after the football season had already been completed. Football is the main revenue driver at most major athletic departments, so the dip in ticket sales and sponsorship related to football will be primarily realized in 2021 budgets.
The NCAA is nearing the end of a 14-year, $10.8 billion TV agreement with CBS and Turner. In 2025 it will start on an already-negotiated extension of that deal, which will pay $8.8 billion over eight years.
(This article has been corrected in the second paragraph to reflect that 2019 revenues were $1.12 billion.)