As virtually everything changes in the business of the NCAA, one thing has stayed the same: the organization’s reliance on the men’s basketball tournament to fund its operations.
The Indianapolis-based nonprofit reported a record $1.29 billion in revenue in fiscal 2023, according to its annual audited financial statements. More than 80% of that comes from men’s March Madness, driven primarily by the TV deals with CBS and Turner, but also ticket sales and sponsorship deals.
This is not a new phenomenon. The governing body controls neither the College Football Playoff nor any FBS bowl games, which means the men’s basketball tournament remain its cash cow. First-year president Charlie Baker has discussed the NCAA’s desire to diversify its revenue streams, but that will be a gradual process, and could become increasingly difficult in the wake of the changes underway. My colleague Michael McCann outlined all those changes in a legal column earlier this week.
The NCAA’s $1.29 billion of revenue is comprised primarily of TV rights ($929 million), ticket sales from its championships and postseason tournaments ($222 million), and sponsorships ($16 million). The men’s basketball tournament is an important piece of all three. In media for example, the CBS-Turner deal paid the NCAA $873 million in 2023, accounting for 94% of the total.
The CBS-Turner relationship dates to April 2010, when the three sides agreed to a 14-year deal that will pay the NCAA a total of $10.8 billion (an average of $771 million per year). That deal ends after this year, but it was extended in March 2016. That extension runs from 2025-2032 and will pay the NCAA $8.8 billion (an average of $1.1 billion per year). There are built-in escalators in both deals, so the jump from 2024 to 2025 won’t be quite that stark. The organization says it expects to see $873 million this year in the last year of the original deal, and $995 million in 2025 under the first year of the new one.
There has been some progress in diversifying the NCAA’s business. The organization recently signed a new eight-year, $920 million TV deal with ESPN to cover its 40 other championships, including the women’s basketball tournament, which has seen a significant uptick in ratings and ticket sales. That new deal will pay the NCAA an average of $115 million per year starting next year, up from the current ESPN deal, which paid $45.2 million in 2023. The organization is also starting a new second-tier women’s tournament this year (similar to the men’s NIT, which is quietly a very profitable business for the NCAA), and is looking into possible sports betting opportunities as another way to bring in money via other avenues.
The NCAA distributes the vast majority of its revenue to its 1,200-plus members through a number of different programs and grants. The full list is convoluted, but the three biggest are “unit” payments given to conferences based on their success in the men’s tournament ($171.2 million), scholarship grants ($149.6 million) and payments based on sports sponsorship ($76.5 million).
The tournament comes amid unprecedented pressure on the NCAA and college sports’ longtime business model, which has historically relied on compensating athletes with little more than their scholarships. Earlier this month the Dartmouth men’s basketball team voted to form the first players union in college sports history, and the NCAA is facing a number of legal challenges, including one that the organization has said could be the “death knell” to its business.
More March Madness stories:
- The Last Dance of 'Amateur' March Madness
-UConn Leads Top Seeds in Men’s Basketball Spending: Data Viz
-Women’s Basketball Top Seeds Are Also Dominant Financially: Data Viz
-Women’s Basketball Hosts Get Home Edge While NCAA Keeps the Cash
-Fired NCAA-Bound Coach Won’t Get Job Back, Long Beach State Says
