In NCAA College Sports, These Two Powerful Forces Can’t Be Ignored

Should college sports be left out of the financial run up for 10 more years? It’s an important question, as more demands and decisions face the organization after their January convention. Currently, the NCAA’s March Madness tournament is locked into their media contract with CBS/TNT until 2032, and generates almost $900 million annually. Is it time to renegotiate?

There are many good reasons to ask this question in 2022, but here are two: the value of sports and their organizations keeps rising; and there are more media outlets wanting to lock them in than ever before.

It used to be there was a finite amount of money to be spent on paying for media rights to leagues and events. Once the NFL got their piece of the money pie, the saying went, it was time for everyone else to fight over what was left.

That is no longer the case, despite the NFL signing a $110 billion media deal last year. There is more money than ever to pay for live sports.

Daniel Cohen, head of Octagon’s media group, told the Indianapolis Business Journal last year when asked about the possibility of the NCAA renegotiating its primary revenue source, “Who knows? We might be watching March Madness in our new Tesla TVs in our cars in 2032.” March Madness deals have gone from $1.73 billion over seven years, to $10.8 billion in 2010, and a $8.8 billion extension for 16 more years was added in 2016. What would these rights be worth if they went out to market in 2022? Likely a lot more.

In August 2021, the NCAA commissioned the Kaplan Report to look at the deficiencies in women’s basketball and other sports. The media rights analysis, done by Desser Sports Media, recommended:

“Because of the way the NCAA has packaged and sold the WBBC historically, and the extensive changes in the market since the package was last bid two decades ago, the WBBC, as part of ESPN’s NCAA Other Championships package (which also includes the rights to 28 other NCAA Championships other than the MBBC), has not achieved its full marketplace potential value.”

To unlock this value, the NCAA should:

“Break out and bid parts of the Other Championships package separately in future rights negotiations – starting with the WBBC. This way, the NCAA would likely attract multiple media entities, in addition to ESPN, to bid to telecast the events. Sample smaller packages include the WBBC by itself, Men’s & Women’s College World Series as a package, etc. We believe these packages will collectively generate far more total value for each Championship than the present approach.”

Here’s the kicker-Desser believes the women’s basketball championship alone is worth $81-$112 million annually beginning in 2025.

The NCAA is a 501(c)(3) non-profit organization and has been around since 1906. There are very few restrictions on the kinds of revenues and donations the organization can accept. In return, they are granted tax exempt status, protecting as much as 40% of their annual revenues.

Should an argument be made that the NCAA is not truly following its mission to the benefit of all members? Title IX has been around since 1972. Divisions II and III have been around since 1973. After hearing some of the comments from Division II and III presidents and athletics directors on the Convention floor last week, some feel they are definitely not receiving their due.

If the financial landscape is changing fast, it is the Board of Governors’ fiduciary responsibility to respond and to protect the interests of all stakeholders. If you look at the explosion in the last 18 months of women’s sports across all platforms, why is the NCAA not acting on moving many of the championships to established media entities? They have reworked contracts before; the selected women’s sports were “add-ons” to the ESPN promise to televise the women’s basketball championship. Today, there are more options than ESPN+. True, they have placed championship brackets, full replays and summaries on the NCAA website for on-demand viewing. The marketplace (and their consultants) are saying “there is more you can do”.

The Kaplan report focused primarily on the Women’s Basketball Tournament and received a lot of attention at the Convention. Promises were made to make changes. Senior Vice President of Championships Joni Comstock stated, “We (also) take all three divisions very seriously, and we’ll be engaging with all three at a greater extent to make sure that they are meeting everyone’s expectations and that they are equitable.”

Why do the NCAA and its leaders continue to kick the can down the road, missing out on the opportunities to capitalize on an accelerating landscape? Stakeholders have pointed out a number of serious mission deficiencies in areas affecting a substantial subset of the membership, lasting 50 years. Many are about the association’s priorities, but some have to do with financial resources as well.

Today, investment money is pouring into the media and technology sectors. Now is the time to capitalize on the growing demand for content across all college sports. I’m certain college sports administrators could find plenty of ways to spend an extra $100 million (football coaching salaries are doing quite well, I would say). The question is-what else is being left on the table?