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March Madness, Big Money

March 18, 2008 - 5:26am

It's March, and for any basketball fan, this means three glorious weeks of watching the premier teams in the nation battle it out in a single-elimination, high-stakes, high-pressure tournament. March also means big money for the NCAA, which cashed in on the popularity of March Madness by giving CBS the rights to broadcast the tournament for $6 billion over 11 years.

One team you aren't going to hear anything about during the tournament is Alcorn State, a small, historically black college that finished the season 7-24, at the bottom of the Southwestern Conference (SWAC). As we at Higher Ed Watch discussed last week, there is a growing college sports spending gap between schools like Alcorn State that are struggling to sustain athletics programs and elite sports schools that are rolling in millions of dollars of revenue.

The NCAA has the power to do something about college sports gap, in the form of around $500 million in revenue it makes each year from its contract with CBS. But instead of devoting all of this money towards a positive end—helping, for example, less wealthy schools like Alcorn State—the NCAA provides a substantial share of this bounty to big-time sports programs, thus further encouraging the profit-driven commercialization of college sports.

Schools like Ohio State—which brings in its own $109 million in revenue each year—don't need the NCAA's money. But those like Alcorn State desperately do. The NCAA needs to modify its allocation formulas and actively help sustain sports teams at these schools, so that all college athletes can enjoy the educational benefits of healthy athletics participation.

At present, only one of the NCAA’s revenue distribution formulas takes into account the relative need of individual schools and conferences—the Special Assistance Fund. Of the $332 million given directly to Division I institutions in 2006-07, the Special Assistance Fund represented $12.3 million, or four percent. In addition, only part of its formula is need-based.

So what about the other 96 percent? Well, $133 million, or 40 percent of the 2006-07 total, was distributed based on how teams performed in the NCAA men’s basketball tournament (total appearances in the tournament for each conference, over rolling six-year periods, determine the pay-outs). This means that conferences like the Big Ten and the Big East received between $13 and $14 million in 2006-07, while the SWAC received only $1.06 million.

The other 56 percent of the revenue ($187 million) was allocated either evenly among conferences and institutions or based on the size of each school’s athletics program (the number of teams and number of scholarship players). Thus if Alcorn State had the same number of sports teams and players receiving athletic scholarships as Ohio State, they would each receive the same amount of money under these formulas.

This allocation system makes the big-time programs richer and contributes to the commercialization of college sports by emphasizing performance on the field and court. The elite basketball and football programs are raking in more and more money and becoming less and less associated with the academic life of universities, trends being subsidized by the NCAA.

The NCAA has the power to narrow—or at least stop the rapid widening of—the athletics spending gap. It should target a much larger portion of its revenue to schools based on financial need (using factors such as Pell Grants per institution and spending per athlete), and eliminate revenue distribution based on performance. In addition, the NCAA should require that schools that receive the funds spend a portion of them on providing more and better academic support to their student-athletes.

Not only would the additional money help sustain athletics programs at places like Alcorn State (while the lost money would matter little to places like Ohio State), the NCAA has a chance to prove that it is actively working to reign in commercialization and keep sports integrated with the educational mission of universities.

In addition to being good policy, this just might be a good strategic move. Congress is paying attention to the NCAA's use of its tax-exempt status...