Text by Jake Dexter and Joshua Reiss
Feature graphic by Amro Hwary
The NCAA earned $1.1 billion in revenue in 2019, which is a huge amount of money for any organization, let alone an amateur sports association. There are also many moving parts that handle this money. With more than one thousand member schools, three different divisions, countless revenue streams, and having to balance student financial aid and employees’ compensation, understanding the finances of college sports becomes a laborious task. So where does that money come from, and how is it handled? The NCAA seems to be fairly open about this topic.
The NCAA has an entire page of their website titled “Where Does the Money Go?” dedicated to their finances. The page has official financial statements, finance pages for each division, and some highlights of how they allocate spending. There is also a page dedicated to research and data analysis on NCAA finances which provides accurate statistics. For example, there is a paragraph that discusses how the NCAA spent $18 billion on athletics in 2018, with $3.5 billion going towards financial aid and $3.4 billion going towards coaches’ paychecks.
While this page has accurate information, it only scratches the surface of how money flows through the NCAA. Most organizations are fairly straightforward in how they generate revenue. The NCAA, however, is not. The NCAA is a non-profit organization, meaning that the owners donate a large sum of money towards the organization’s objectives rather than taking it for themselves. The NCAA’s mission is to equip student-athletes for success, and they do that by financing various opportunities for them such as scholarships, travel, equipment, coaches, and other staff such as medical workers.
While these assets do not seem like too much to control for one team, it becomes a lot when all of these opportunities are financed for thousands of schools each with dozens of teams. Even Apple, one of the biggest corporations in the world, has a relatively uncomplicated system of revenue. They sell very specific technology products and services for profit. The specific details regarding how services generate money for Apple are complex, but overall the money generated by Apple flows in a much simpler way than it does in the NCAA. All Apple stores, products, and services generate money for the workers and the advancement of the same products. The NCAA generates revenue as a whole organization and by individual schools or divisions. It also allocates money to these schools and divisions differently, all while being a non-profit organization.
Why is the NCAA Even a Thing?
by Marcus Meade
So how exactly is money made and spent? To what degree do student-athletes benefit from this money? How does a non-profit organization make so much money? Why is there a controversy surrounding paying athletes if the NCAA makes so much money? The answers are complicated. A base knowledge of NCAA history can help to answer some of these questions.
Rodney Smith, a former member of the NCAA Infractions Appeals Committee, wrote an essay describing the NCAA’s role in regulating intercollegiate athletics. NCAA history begins around 1840 when Harvard and Yale participated in regatta competitions. Harvard cheated by allowing a non-student to participate on the team. As collegiate sports grew in popularity, seeking unfair advantages such as Harvard did and poor regulation of football injuries became a problem. Thus, President Roosevelt called for change. He created the Intercollegiate Athletics Association, which was renamed the NCAA in 1910. The NCAA was initially created to manage regulations for all collegiate sports; however, the NCAA soon had to oversee commercialization as well. The goal of intercollegiate sports was to promote opportunity for amateur athletes. However, the desire to win and the popularity of sports turned this association into a money factory. Now with a committee of regulators to pay, recruiting to manage, and partnerships to deal with, the NCAA has evolved from simply being an organization that manages rules to a financial conundrum.
Collegiate sports are immensely popular. According to the NCAA, there are more than 460,000 college athletes active right now. There are 1,098 member institutions of the NCAA across 24 men’s and women’s sports in 102 athletic conferences. The NCAA employs 500 people at its headquarters in Indianapolis, Indiana, and these are not the only personnel working under the umbrella of the NCAA. School presidents, athletic directors and athletic department staff, coaches, and health and safety personnel, who aren't employed through the NCAA directly, but rather by institutions, are still personnel that work under the regulations of the NCAA.
Being a huge organization that encompasses almost all collegiate athletics, the NCAA brings in a huge amount of money each year. This money is generated primarily through the Division 1 Men’s Basketball Championship marketing and television rights and national championship ticket sales across many different sports. These sources make up the majority of the NCAA’s revenues each year, but revenue is also generated through things like membership dues. The NCAA then distributes a portion of these revenues to its member institutions (schools and conferences) in various forms. The redistribution of revenues to schools and conferences is then spent on things like scholarships for Division I athletes and medical and academic resources for NCAA athletes. In short, collegiate athletics under the NCAA umbrella (primarily football and basketball) generate a lot of money for the NCAA, and the NCAA uses a portion of these revenues to cover their own expenses and uses a portion to redistribute to school’s athletic departments so they can fund their athletic programs.
Once the money is distributed to the NCAA member institutions, the athletic departments at each school then chooses how to best appropriate these funds to build and maintain their athletic programs. Generally, the money is spent on things like grants and aid for students, salaries for coaches, costs for maintaining and building new facilities, and expenses for sports that do not generate enough revenue to cover their expenses.
While these are typical ways in which athletic departments spend their money, there is a large controversy over the extent to which the money generated by the NCAA and by individual athletic departments really benefits the athletes that generate it. Who makes these decisions on how the money is spent, and which interests are the most valuable when these decisions on how to spend the money are made? This project hopes to add to the personal anecdotes of athletic spending and the judgements made on those individual stories to provide clarity to a complicated system. We can look at the system and the breakdown of the finances and hope to better understand where the money goes, and whether or not there is a more fair and efficient way to use these funds.
Where does it come from?
College sports generate a river of cash with multiple streams feeding teams, conferences, and the NCAA. But where exactly does the money come from?
Where does it go?
Technically, the NCAA is a non-profit institution like most colleges in America. So, what do the NCAA, conferences, and athletics programs do with all that money?
Pay for play has a history
The conversation around paying college athletes typically focuses on the last 40 years or so. But teams were paying athletes in the earliest days of college sports, as well.