The NCAA men’s basketball tournament makes up more than 85% of the organization’s $1.1 billion annual revenue, and as the governing body assumes new leadership, it is facing increased pressure to diversify the business.
It’s an imbalance that has been in place for years. While college football is a much bigger commercial property than basketball, the NCAA neither controls nor profits off the FBS postseason. That leaves the men’s basketball tournament, which each year accounts for hundreds of millions in ticket sales, sponsorship deals and, most significantly, TV money.
There’s a growing belief, however, that increased investment in NCAA-controlled events such as the women’s basketball tournament could lead to more revenue and a healthier balance sheet for the Indianapolis-based organization. Earlier this year a group tasked with helping the NCAA modernize its business wrote that finding new sources of media and sponsorship revenue from other championships was an “immediate and long-term priority.”
“To further modernize, elevate and, in some cases, finance the enhanced Division I championship experience,” the Division I Transformation committee wrote in its January report, “[the committee] recommends that each sport should be evaluated for revenue generation potential, including additional sport-specific sponsorship and partnership opportunities.”
For now, however, the men’s basketball tournament is the cash cow, and its business appears to have rightsized in the wake of the COVID-19 pandemic. The NCAA reported revenue of $1.14 billion for fiscal 2022, a number that, while down from 2021, included record revenue from men’s March Madness.
The governing body’s income from media rights jumped to $940 million from $916 million, largely a result of escalators in the group’s main contract with CBS and Turner, which will pay the NCAA at least $10.3 billion over the next decade. Non-media championship revenue more than tripled, to $199 million from $61 million, as the basketball tournaments returned to full attendance and ticket sales.
That money is largely distributed to the NCAA’s members through a complex series of nine different funds. The three biggest are payments based on men’s tournament performance ($170.3 million this year), scholarship grants ($148.8 million), and payments based on sports sponsorship ($76.1 million).
In addition to calls to overhaul the income streams, the NCAA is also facing pushback on those distributions—more specifically its decision to base that largest payout solely on men’s team success. The transformation committee’s report suggested that the formula for that distribution also consider success in other championships, including women’s sports. That recommendation was endorsed by the Division I board at the NCAA’s convention shortly afterward, but specifics are still under review.
One change that was approved during the convention—the NCAA’s finance committee green lit the creation of a second women’s basketball postseason tournament. The 32-team event will be similar to the NCAA-owned and operated men’s NIT (a very profitable business for the organization), and won’t debut until next year at the earliest.
This March Madness is also the first under the tenure of new NCAA president Charlie Baker. The former Massachusetts governor took over from Mark Emmert earlier this month, and has been outspoken about his interest in shepherding some change. Baker told Sportico in a February interview that he’s wary of the growing gap between “big time college sports” and “traditional college sports,” and perhaps most notably, hinted at an openness to consider compensation for at least some college athletes.
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