The cancellation of the 2020 NCAA Men’s Basketball Tournament due to the COVID-19 pandemic will cost the University of Alabama men’s basketball team at least $1.1 million, according to distribution figures announced by the NCAA Board of Governors on Thursday.
The basketball tournament, the primary source of NCAA revenue since the organization does not control football revenue, returned $600 million (approximately $1.699 million per school) to each of the 353 Division I member institutions in 2019. This season’s distribution of $225 million would be approximately $637,393 per school. Because of variations due to the unit rule, which increases payouts based on number of games (units) a team plays in the tournament, Alabama’s figure will vary somewhat in the final calculations. (All unit-based revenue is pooled by the Southeastern Conference and distributed evenly after expenses.) Alabama and the SEC are in the process of calculating exact final payouts, which will be received in June and will likely reflect a slightly higher figure than $1.1 million.
That amount, while significant, represents a small fraction of Alabama’s overall $164 million athletic budget of 2019. That figure could be as high as $190 million in 2020 due to an accounting-based deferral of $24.5 million last year. The impact will be far heavier at Division I schools that rely on men’s basketball as their primary source of non-contributed revenue.
The NCAA receives most of its revenue from the Division I Men’s Basketball Championship television and marketing rights, as well as championship ticket sales.
In its decision, according to the NCAA’s Thursday release, 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. The decision also allows membership to engage in planning while the NCAA continues to work with its contractual partners.
“We are living in unprecedented times not only for higher education, but for the entire nation and around the globe as we face the COVID-19 public health crisis,” said Michael V. Drake, chair of the board and president of The Ohio State University. “As an Association, we must acknowledge the uncertainties of our financial situation and continue to make thoughtful and prudent decisions on how we can assist conferences and campuses in supporting student-athletes now and into the future.”
Of the $225 million distribution, $50 million will come from NCAA reserves. The NCAA also has 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.
To further assist with the reduction in revenue this year, Drake emphasized the NCAA is undertaking a variety of cost-cutting budget measures that will be determined in the upcoming weeks.
“The Association has prepared for a financial catastrophic event like the one we face now,” Drake said. “While we certainly have challenges ahead, we would be in a far worse position had it not been for this long-standing, forward-focused planning.”
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