The National Collegiate Athletic Association (NCAA), which runs the NCAA men’s and women’s yearly basketball tournaments, has announced that it’s going to only be able to distribute $225 million to schools after the events were canceled due to concerns over the coronavirus, according to a report by Bloomberg.
The men’s tournament is the organization’s main source of revenue, and the amount given is about 37 percent of the $600 million that was originally projected. That amount was a mix of both payouts and grants calculated with athletic and academic performance and scholarship money.
Every year, schools around the U.S. use projected NCAA money to help balance budgets, and they were waiting for the NCAA to decide what they were going to do. The NCAA board of governors made the decision Thursday (March 26).
The tournament makes up over 85 percent of the organization’s revenue every year, and almost all of that comes from TV rights from CBS and Turner.
In 2019, the NCAA saw revenues that exceeded $1.2 billion, and it sent $610 million back to members. Although this year’s exact total is still unknown, it is going to be much less.
Although the organization is losing the revenue, it’s also cutting expenses by not running the tournament, as well as any other collegiate sporting events.
Earlier this week, a Moody’s report said the decline in revenue would be around $475 million, which would mean revenue in the neighborhood of $700 million.
Out of a $225 million payout, $50 million is going to come from the organization’s reserves. The NCAA also has a line of credit that it will use, and it will pay that off with a $270 million insurance payment that comes from the cancellation of the event.
The 68-team men’s tournament is one of the most popular sporting events of the year, commonly known as March Madness.