Coping with Financial Fallout of Canceled Tourney

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The NCAA tournament is a huge moneymaker for Division-I athletics programs, and with the unprecedented decision to cancel it due to the coronavirus outbreak, some programs are bracing for a financial hit. 

SB Nation reports that smaller programs in particular could be hardest hit. 

“A Big Ten or a Big 12 team, they have the college football playoff revenue stream coming in, they have major broadcast contracts with Fox and ESPN and ABC … they are diversified enough that they could take a hit, since the NCAA tournament is a relatively low percentage of most of their athletic budgets,” Brett Albert of the Isenberg School of Management at UMass Amherst told SB Nation. “But we get down to those mid-majors and low-majors, their exposure to financial risk grows.”

NCAA tournament revenue is distributed in “units” to each conference. Each unit is worth about $300,000, and each game a team appears in represents a unit. Conferences that send multiple teams to the tournament, or teams that make deep tournament runs, net more units for their conference. 

According to SB Nation, conferences that don’t sponsor football are missing out on their biggest payday of the sports calendar by not having a shot at the tournament. Meanwhile, specific programs and conferences in the midst of historic seasons will miss out not just on the chance to make tournament history, but also a chance at a multiple-unit payout.

SB Nation cited the example of Dayton University, which was heading into the tournament with a record of 29-2 and likely looking at either a No. 1 or No. 2 seed. The Flyers appeared poised for a deep run, but with the tournament canceled, the Flyers and the Atlantic 10 Conference won’t get tournament revenue. 

The canceled tournament also negates the possibility of a Cinderella-program taking advantage of the so-called “Flutie Effect,” wherein athletic success translates into increased interest from student applicants, boosted enrollment and more engaged and generous alumni. 

“So in this sense, it’s not just that these mid- and low-majors are losing out on a budgetary item this year,” Albert said. “You just see these kind of positive spillover effects all across the board for these schools. And no matter how the NCAA figures out their payment structure for this year, there’s no way of getting that without actually staging a tournament.”

How and whether the NCAA will compensate programs for lost revenue opportunities remains to be seen.

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