Will the Cancellation of March Madness Affect Funding to Support Student Athletes’ Educational Needs?

Amidst global concern about the coronavirus pandemic, the NCAA reluctantly cancelled the Division I Men’s and Women’s basketball tournaments set to start this week. With March Madness accounting for 80 percent of the NCAA’s $1 billion annual revenue, there are serious economic implications for the interruption of this major enterprise.

One in particular is the Academic Based Revenue Distribution -- the NCAA’s latest funding mechanism to support student athletes’ educational needs. Using revenue from their media rights agreement with CBS Sports/Turner, Division I athletes’ have access to funds for scholarships, as well as personal and educational needs. Yet, with an unprecedented cancellation of the Big Dance – a major contributor to the NCAA’s media rights revenue – will the NCAA move forward with this particular allocation?

In light of this question, it is important to gather an idea of which schools are in good academic standing to receive such funds. Specializing in research at the intersection of collegiate athletics, race, and education -- I have evaluated NCAA data and reveal a first-of-its kind estimate on which schools are in jeopardy of not receiving the funds this summer and potential implications of canceling the tournaments on the Academic Based Revenue Distribution.

Academic Based Revenue Distribution

This June, for the first time in history, the NCAA is scheduled to disburse a portion of Division I revenue only to schools where student athletes meet specified academic metrics. This funding mechanism is supposed to distribute millions of dollars in estimated media rights revenue as unrestricted funds – meaning schools can use the money however they deem most appropriate.

In the coming months, the NCAA plans to notify all Division I institutions of their conformity to the new academic standards. If the NCAA continues forward with this allocation, they will not publicly publish which colleges and universities do or do not make the cut.

Nonetheless, the NCAA expects that 34 percent (about 120) of Division I schools will not qualify this year and each subsequent year, as this particular funding mechanism has built in losers into the distribution formula.

So which schools are among the anticipated losers? While Historically Black Colleges and Universities (HBCUs) have traditionally bore the brunt of the NCAA’s changes to academic standards, this go around it is the schools among the Power 5 conferences (ACC, Big 10, Big 12, Pac-12, SEC) – household favorites of March Madness are at risk of losing out on NCAA funding.

While some of these major athletic programs may be financially stable to comfortably miss out on funding this 2020 cycle, the stakes will only get higher each passing year with the pot of money estimated to grow to over $60 million within the next 5 years. For the 2019-20 academic year, the NCAA estimated they would distribute over $12 million to institutions that qualify for this particular funding. However, it is unclear what this allocation may look like for this first distribution given the COVID-19 pandemic.

Yet, even with one-third of schools anticipated to miss out on this funding, will the NCAA have the funds to move forward with this particular allocation? With the majority of athletic departments lacking financial self-sufficiency, forgoing a portion of revenue from the NCAA could put some colleges and universities in a financial bind – making it harder to provide academic support to student athletes (e.g. hiring academic support staff, computer labs for student athletes, career and internship services, etc.).

Should the NCAA Moving Forward with the Allocation, Here is the Criteria

The NCAA will determine recipients of the revenue based upon meeting one of the criteria from the following three metrics:

Graduation Success Rate (GSR):

● Institution’s GSR for the most recent academic year is greater than or equal to 90 percent (six-year graduation rate calculated specifically for student athletes);

Federal Graduation Rate (FGR):

● Institution’s FGR for student athletes is at least 13 percentage points greater than the institution’s FGR for the student-body (six-year graduation rate calculated and reported to the federal government); or

Academic Progress Rate (APR):

● Institution’s APR for the previous year is greater than or equal to 985 (single-year score based on the metrics of retention and academic eligibility).

Institutions that fail to meet at least one of the criteria will forgo this particular funding from the NCAA – where waivers are not an option. Schools that do not meet any of the metrics must wait until the following year to earn funds from this particular stream of revenue.

Schools in Jeopardy of Missing Out

Schools became aware this past October whether they were in the clear of meeting the Academic Based Revenue Distribution based on GSR and FGR outcomes. Institutions that met neither the GSR nor FGR metrics have to wait in uncertainty until this spring when APR scores are released, to know if they will make the cut.

Evaluating publicly available data on all 352 Division I institutions’ GSR and FGR from the most recent 2018-19 academic year, I find that of the 68 teams vetted to play in March Madness this week, almost half (43%) of those schools are in jeopardy of not receiving the 2020 distribution. The irony that the very schools whose athletes would have contributed to the multi-million dollar media rights revenue garnered from March Madness, are among the schools that may actually not see a penny from this particular revenue stream this year.

Overall, 41 percent of all Division I schools are in limbo of potentially missing out on the media rights revenue this June – where 1 in every 5 of these schools are among the Power 5 conferences. These schools’ APR scores will make the final decision.

Eventually, this particular allocation will account for 1/5th of the NCAA’s overall revenue distribution to Division I schools. Given that their athletes would have directly contributed to this particular revenue stream, it is especially important for schools participating in March Madness to think strategically on ways to improve their student athletes’ academic outcomes.

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