[Washington Post] - “The [NCAA] has prepared for a financial catastrophic event like the one we face now,” Ohio State President Michael Drake, chair of the NCAA’s board of governors, said in a news release. “We would be in a far worse position had it not been for this long-standing, forward-focused planning.”
But according to interviews with several former NCAA employees, the organization was much better prepared for a canceled tournament several years ago, when it built up savings of nearly $500 million to help mitigate the financial impact of a lost tournament. Then, in 2015, new NCAA leadership decided to spend more than $400 million of those savings without increasing the NCAA’s insurance coverage, following a questionable theory about the risk of saving that much money.
“It was a managerial error,” said one former NCAA employee who, like others interviewed for this story, spoke on the condition of anonymity to discuss private financial matters. “They made a decision to be exposed. … This didn’t have to happen.”
I was sitting here thinking what would be the peak NCAA story that would come out during quarantine and what do you know? This is it. The NCAA had built up a rainy day fund from 2004-2014 of nearly $500 million. The reasoning was they wanted to be protected in case the fight against amateurism really came up and guys sat out resulting in a loss of the NCAA Tournament. Makes sense. They had this in savings plus insurance.
The reasoning? Well, the NCAA Tournament makes them a shit ton of money - not shocking, I know. A lot of athletic departments rely on this sort of money coming in. We'e now seeing the fallout of not having this - Cincinnati cancelling its soccer program and Old Dominion getting rid of wrestling. So what happened?
The NCAA (or if you ask the NCAA, university presidents and board of governors) decided to spend all the money in 2015. They were pressured to spend it all because they were nervous that much money would entice lawyers to sue the NCAA as players were trying to fight back. Think about that for a second. They didn't want to have a reason to pay players in the court of law they just spent hundreds of millions of dollars.
And now here we are. If football is delayed or canceled or changed at all we're going to see more money out the window and more programs getting cut. It's wild how this happened, but the NCAA was in a position to be okay with minimal cuts. Now we're barely seeing a coaching carousel because no one wants to pay two salaries with furloughs coming. We're seeing major conference college hoops teams be willing to get paid to play other major conference teams. That's typically reserved for mid-majors.
I'm shocked it took 5 weeks for a 'wow, the NCAA is really dumb as shit' story to come out. Would have hammered the under.