Knight Commission to Seek Changes to How NCAA Distributes March Madness Revenue

[TODAY: Commission to discuss new analysis that highlights inequities in the annual NCAA distribution formula]

The Knight Commission on Intercollegiate Athletics today will propose in a virtual public session changes to the NCAA’s March Madness revenue distribution, which sends nearly $600 million to its 351 Division I schools every year. In addition to this direct funding to Division I schools, March Madness revenues support both NCAA operations and 90 national championships for 24 sports across all three membership divisions, which include more than 1,000 colleges and universities.

A new Knight Commission-sponsored study by CliftonLarsonAllen (CLA), a national professional services firm, analyzes the NCAA’s distribution of revenues from the NCAA Division I Men’s Basketball Tournament, focusing on schools that field Football Bowl Subdivision (FBS) football teams. Based on CLA’s report, along with the Knight Commission’s longtime analysis of related issues, the Commission concludes that the current NCAA distribution methodology disproportionately rewards FBS schools.

Largely contrary to public perception, FBS football’s lucrative postseason revenues are not controlled at all by the NCAA. The more than $460 million from FBS football’s national championship, the College Football Playoff (CFP), are controlled entirely by the FBS schools, outside the NCAA structure.

At today’s virtual session, the second of a four-part series titled “Transforming the D-I Model,” the Knight Commission will urge the NCAA to significantly alter its formula for distributing March Madness revenues to schools. The Commission will propose that the NCAA eliminate the exemption allowing FBS football to count in the distribution, even though the sport does not meet the NCAA’s qualifying criterion — namely, that the NCAA operate a sport’s postseason championship. This change would mean that FBS football would no longer be part of the NCAA’s formula for calculating its March Madness revenue distribution. FBS schools would still receive significant distributions from the NCAA, just not based on counting FBS football in the formula.

“The NCAA formula for distributing tournament revenues was created decades ago in a very different era of college athletics,” said Commission Co-Chair Arne Duncan, former U.S. Secretary of Education. “It’s time to update that formula to make sure it advances educational values and encourages more accountability for postseason revenues.” Duncan will co-host today’s virtual meeting, A New Analysis of the D-I Revenue Distribution Formula Inequities, at 1 p.m. ET.

The effect of the Commission’s proposed change is assessed in CLA’s report, which estimates the impact of FBS football scholarships and other FBS football factors on the NCAA’s annual distribution.

The NCAA’s current formula distributes some funding equally to Division I schools and their conferences. However, the bulk of funding is not apportioned equally but rather distributed based on a series of measures and incentives, including wins in the March Madness tournament, the number of NCAA sports an institution offers, and the number of athletics scholarships provided in those sports.

FBS football programs receive the lion’s share of the money from the NCAA’s scholarship incentives because the NCAA rewards the large size of FBS football teams in two important ways. First, the NCAA allows FBS schools to provide up to 85 scholarships in this sport — far more than most other college sports teams, which usually reach the NCAA-mandated limit at less than 15 scholarships. Second, under an escalating multiplier in the NCAA’s formula, a school receives 20 times the distribution rate for every scholarship over 150. It is difficult for schools without FBS football programs to offer 150 scholarships given the NCAA limits in other sports.

The only other teams permitted by NCAA rules to have a large number of scholarships are those in the Division I Football Championships Subdivision (FCS), with a maximum of 63. (The NCAA manages the football championship for FCS, as well as the football championships in Divisions II and III).

CLA’s report estimates that $61 million to $66 million in distribution funds could be reallocated annually if the NCAA formula did not consider FBS football an NCAA sport for revenue distribution purposes.

NCAA-designated sports receive substantial financial and administrative support from the NCAA, which handles all national operational costs, including player eligibility, health and safety, insurance, litigation and legal settlements.

“The Commission will continue to press for a better balanced distribution of lucrative championship revenues to reinforce critical values for college sports programs,” said the commission’s other co-chair, Carol Cartwright, President Emeritus, Kent State University and Bowling Green State University.

The Knight Commission also reiterated its recommendation, first made in 2017, that the College Football Playoff commit to investing a modest amount — just 2 percent of its more than $460 million in annual revenues — on national initiatives to boost diversity among college football coaches and to support the health and safety of football players.

The Commission has a legacy of propelling improvements to the postseason distribution formulas to promote academic success for both the CFP and the NCAA’s March Madness tournament. The CFP adopted the Knight Commission recommendations to incorporate academic success incentives in 2012 and the NCAA followed suit with more expansive reforms to its own distribution in 2016. The NCAA’s academic success distribution component for March Madness revenues is being phased in, with the first distributions due in 2020-21.

Today’s virtual meeting runs from 1-2 p.m. ET today. To register, click here.

About the Knight Commission on Intercollegiate Athletics

The Knight Commission was formed by the John S. and James L. Knight Foundation in October 1989 to promote reforms that lead transformational change to prioritize college athletes’ education, health, safety and success. To preserve the Commission’s independence, the foundation continues to be its sole supporter, but does not control, or attempt to control, the Commission’s opinions or pronouncements. The Commission recently launched an important review of college sports, “Transforming the NCAA D-I Model: A 4-Part Series.” Over the years, the NCAA has adopted a number of the Commission’s recommendations, including the rule that requires teams to be on track to graduate at least 50 percent of their players to be eligible for postseason competition. The Commission provides financial data about Division I college sports to enhance financial transparency and accountability. For more, visit www.knightcommission.org.

About the John S. and James L. Knight Foundation

Knight Foundation is a national foundation with strong local roots. We invest in journalism, in the arts, and in the success of cities where brothers John S. and James L. Knight once published newspapers. Our goal is to foster informed and engaged communities, which we believe are essential for a healthy democracy. For more, visit kf.org.

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