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Entertainment NCAA and college sports part 2: the business behind it all

Jan. 9, 2018
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Yesterday, we delved into the specifics of the debate over whether or not student athletes deserve compensation. But let’s not lose track of what sparked this debate in the first place: many people are critical of the way the NCAA treats student athletes. Today, we’ll discuss the NCAA’s relationship with student players.

NCAA Involvement 

NCAA describes their general purpose in one sentence on their about page: “The National Collegiate Athletic Association is a member-led organization dedicated to providing a pathway to opportunity for college athletes.” According to this mission statement, the NCAA’s top focus is to help create opportunities for college athletes. There is no specification as to whether the opportunities should be geared towards either sports or education. Thus, this “pathway” must encompass any opportunity positively benefiting the future of these athletes. That notion is solidified in another statement made on the their “What is the NCAA?” page: “The National Collegiate Athletic Association is a member-led organization dedicated to the well-being and lifelong success of college athletes.”

The problem is this: just as many people are not who they say they are, critics allege that the NCAA is not keeping up with those proclamations.

via: NCAA 

The NCAA handles funds, enforces standards, and regulates community relations within intercollegiate sports. The organization splits funds to pay for coaches and facilities, provide grants and scholarships, provide injury coverage, and more. Education requirements are set by NCAA as well. In this way, the NCAA helps maintain an order of its own devising.

Origin of Revenue

In the case of sports, people come out in hordes to show support for their team and enjoy themselves. An incentive has to exist for the way sports fans proactively spend money; for most sports, that force of appeal lies in the community that exists around the game and between the athletes.

The bond between athletes; the bond between the team and its fans; the players’ personal stories; a shared love for the game—all these things attract the supportive fan base. The culture of intercollegiate sports keeps the fan base engaged as a community and encourages loyalty. Creating excitement for fans leads to higher participation, like attending games and buying merchandise.

According to the NCAA, most revenue comes from television and marketing rights, followed by championship ticketing sales. Profits are divided into a funding plan split among sectors and sub-sectors. As an example, the NCAA has published their Men’s Basketball-focused 2017 Division I Revenue Distribution Plan online.

Use of Revenue

Like any budget, the distribution is not split evenly but in correlation to need and performance. Committee members decide which sector deserves a certain portion.  These sectors are divided into sub-sectors. The NCAA does not regulate how sectors are divided once the initial amounts are handed over. Out of seven sectors, the largest percentage of revenue is given to Basketball (28%), Grants-in-Aid (25%), and Sports Sponsorship (13%). The entire fund does not directly impact student athletes’ welfare, but each one of these sectors uses funds in a way that will impact their environment.

For example: the "Basketball Fund" is distributed to conferences. (Conferences are groups of colleges.)  The conference will then distribute a portion of its share to each member/college team, to be allocated at the college’s discretion. These funds are split based on performance in tournaments over a six-year period (2011-2016 for the 2017 budget). Active conferences receive funds to be split among each member institute. The standards of NCAA encourage, but do not require, conferences to distribute among their member institutes evenly.

Revising and Reviewing the System

There is nothing particularly wrong with this method.  Let's look at this as competitive pay. In retail jobs, all employees are paid one amount to fulfill the same job.  Employees receive higher wages if they go beyond their ordinary work, which is viewed as being more beneficial to the retailer. Similarly, it makes sense that a conference may choose to give their top/best-performing college more funding.

However, an academic-based distribution method is coming down the pipeline. Academic-based distribution, wherein financial distribution is dependent on players’ academic achievement, will grant more conferences an opportunity at more funding. The distributions are “unrestricted funds”, which means they can be used for purposes outside academics. This distribution model is set to begin in spring of 2020.

As the debate over whether or not athletes should be paid reaches a fever pitch, the NCAA is trying hard to display advocacy for their players and personnel, mostly to dispel the notion that the organization is strictly concerned with the business of intercollegiate sports. Even the copy on their site is written to clearly emphasize their focus on caring for the college athletics community. But the NCAA cannot fully commit to helping athletes without considering the input of those athletes and their universities. The NCAA, universities, and athletes—current and former—should continue to work on improving the future of intercollegiate sports.