MGoOhNo

March 8th, 2018 at 9:56 AM ^

$47,129,872: Net investment income

The NCAA says its investments are in debt and equity securities, mutual funds, and “U.S. government obligations having a maturity of more than three months.” The NCAA’s in the stock market, not unlike many other old, wealthy entities in the United States.

$26,338,166: “Gain — other”

Based on a reading of the NCAA’s statement, this appears to mostly be from the sail of ArbiterSports, LLC, a “game management solutions” provider that the NCAA notes, apparently seriously, helps teams and conferences with the process of “paying all participants.” The NCAA sold its 68 percent stake in ArbiterSports for about $25.3 million.

$19,958,458: “Sales and services”

The smaller, non-TV things the NCAA sells, not including ArtiberSports, which brought in nearly $11 million in its own LLC (and which the NCAA recently sold).

$6,738,688: “Contributions — facilities — net”

This is money that comes from the NCAA’s various property and office-space deals. The organization operates out of a big complex in Indianapolis, and it got a sweetheart deal to set up there just before the turn of the century. The NCAA thus makes a couple million dollars per year on real estate, which doesn’t hurt.

$2,000: “Contributions — other”

This is the money the NCAA finds in its couch cushions’ couch cushions.

And that’s not even all the money the NCAA gets.

It had another $16 million or so flow through various LLCs that it’s set up, including one for the NIT, one for college football officiating, and one for ArbiterSports.

The NCAA spent all but about $103 million of this revenue.

Its expense sheet, which is consolidated like its revenue sheet, includes:

$560,034,866 in distribution payments to Division I schools

$93,552,478 in expenses for Division I championships, NITs, and programs

$42,232,549 in Division II distributions and championship and program expenses

$28,169,295 on Division III championships and programs

$181,007,972 on “association-wide programs”

$38,027,735 for “management and general” costss

The NCAA says “association-wide programs” include costs for “student-athlete programs and services,” member education, legal services, and governance committees. (That includes the Division I Council, which makes major college sports’ rules, and the Committee on Infractions, which punishes schools that get caught paying their players.)

The NCAA is a 501 (c) (3) organization, so it doesn’t pay federal income taxes.

The government considers it a nonprofit, a la the Red Cross or Amnesty International.

Pepto Bismol

March 8th, 2018 at 10:10 AM ^

Here's the link to the story that he should have included in the OP.

http://www.espn.com/college-sports/story/_/id/22678988/ncaa-tops-1-billion-revenue-first

$1.06 billion in revenue

$956 million in expenses, which includes $560MM back to the 1,100 schools and close to $300MM in legal settlements relating to scholarships and concussions.

     (If he says they "CLEARED" $1 billion dollars, doesn't that imply net?)

 

But I digress. When you're virtue signalling, there's no time for details or context. Priority 1 is to get people angry. $1 BILLION!!!!!!!!

WestQuad

March 8th, 2018 at 10:24 AM ^

This is sort of silly.  While the NCAA is ridiculous in their uneven and lack of rule enforcement their role as a clearinghouse/aggregator has value.  The fact that the aggregation adds up to a lot doesn't mean anything.

Pepto Bismol

March 8th, 2018 at 10:40 AM ^

Get mad about amateurism. Be frustrated by their toothless bite. I get it. But you can't be angry about gross revenue.

You know who else is seeing more gross annual revenue than ever before? Pretty much every company on the planet in order to keep up with the rate of inflation.

 

 

canzior

March 8th, 2018 at 1:00 PM ^

people were enraged because the NFL was previously didn't pay taxes as a 501(c)6 (non-profit, trade organization.)  The NFL offices don't generate revenue though, the teams do. The teams pay taxes on their income, which is collectively accumulated, then distributed by the NFL, leaving only money to put on events, charity, and pay salaries. 

Steeveebr

March 8th, 2018 at 8:02 PM ^

That's not really a fair explanation of why people considered that a misuse of non-profit status. 

I'd think a more accurate representation was the concern, that any big coorporation could follow the model of the NFL, which was the headquarters for a major coorporation operating as non-profit by burying their income and profits into shareholder payouts and excessive employee salaries.

Steeveebr

March 9th, 2018 at 3:35 PM ^

And Ford or Intel or any other organization could theoretically do the same thing with their parent orgs by moving all revenue generating entities one level below on the hierarchy and effectively hide income in a tax exempt structure of excessive coorporate salaries.  Negotiation fees, management and oversight fees or other things of that nature are generally a cost of doing business so what the organization does is irrelevant to the concern.

 

The money lost by the 32 teams to the tax exempt organization is not taxed exactly the same as if the teams were paying the salaries directly.  It's about a 10-12 million dollar a year difference in favor of the NFL.

ijohnb

March 8th, 2018 at 9:59 AM ^

just do this via summary:

One half of the blog - How can players not be paid?  This is an outrage.  The NCAA is exploiting youth and making a killing off unpaid labor.  This cannot stand!

Other half of the blog - They are paid, they get a college education and access to the best coaching in the country to prep them for the next level.  And paying athletes would be a logistical impossibility and only create more problems than it solves. 

There, that saves about 200 responses.

ska4punkkid

March 8th, 2018 at 10:47 AM ^

Let's crunch the numbers:

# of schools - 1,100

# of athletes per school- I have no clue but lets say 300 and just know it's a low guesstimate

NCAA revenue - $1 Billion

If the NCAA had no other expenses, and all they did was pay the athletes, each athlete would get $3,030 ($1 billion/(1,100*300))

buddha

March 8th, 2018 at 1:23 PM ^

One additional thing that (may) impact your analysis is I believe a non-profit cannot pay out revenue shares or dividends or the like. Meaning, for the NCAA to even consider the type of approach you outlined, they would need to convert themselves into a for-profit model and pay income taxes, which they don't do today.

Obviously, they may choose to eliminate much of their "community benefit" activities; however, I doubt they'd be able to shed the equivalent of their tax bill. Essentially, they would only be able to pay out less than the $3K you calculated...

(I could be wrong though about the ability of a non-profit to distribute funds in that way)

Hill.FootballR…

March 8th, 2018 at 1:55 PM ^

Not trying to be "that guy," because I don't think we need to have this discussion on the blog every week, but you do realize this doesn't include many large sums of money and most importantly football revenues which go directly to the school right? Also, I don't think anyone wants to split up the money evenly to every athlete; the large majority of people that want to pay the players think it should be given to Football and Basketball players (maybe some smaller amount to hockey/baseball up north vs down south), and I've never heard anyone say that Div 2 or 3 athletes would be included in this. Again, this would be for profitable sports.

There are ~350 Div 1 schools, but more importantly there are 65 Power 5 schools in football, and there are additional schools which only thrive in basketball. So, let's assume 100 schools for this calculation. 

I believe that makes 85 football players and 13 basketball players; so 98 scholarship profitable players.

Next, I quickly googled Power 5 revenue last year and it was ~$6 billion total...and this only includes ~$560 million of what the NCAA gave back to the schools, so we will just accept that the NCAA costs $400 million to run and pay legal fees for this calculation.

So, let's just say the player's got 50% of the profits...like in other leagues CBA's with owners Lets also assume the costs of running these 100 programs is $20 million on average per school (remember 35 of these only have basketball).  This includes paying coaches in just the profitable sports, free tuition, recruiting, and other costs.

My math:

+$6,000,000,000 (Revenue) -$2,000,000,000 (Costs) = $ 4 Billion (Profit)

$4 Billion * 50% = $2 Billion (For the Players)

$2 Billion / 9,800 players = ~$204,000 per player

 

It is weird how math/finance can be construed to tell whatever message you want...

When I do this, I find it very hard to believe that schools can't run their non-profit sports for the remaining $2 Billion, and I definitely see zero explanation for why the players can't at least get $20,000 per year put into a 401k like system that they can access once they graduate or leave the school.

$20,000 a year would be ~$200 million total, but then Alabama might not be able to have a waterfall, and Michigan's field hockey facilities might not have been able to cost $13.5 million...but I digress.

 

 

 

 

mickblue

March 8th, 2018 at 10:04 AM ^

That they still can't provide quality officiating. Especially for football. Specifically in Columbus Ohio on the last Saturday in November in even numbered years.

LSAClassOf2000

March 8th, 2018 at 10:17 AM ^

The Sporting News summary is here - LINK

The report cited increases from TV and marketing fees, in addition to investment income and increased revenue from championship events, as reasons for the growth. The remaining $26 million came from the NCAA's sale into an enterprise that aids athletic departments with various payments including scheduling and referee assignments.

So, in summary, nothing at all shocking or unexpected. 

I mean, we're coming up on a tournament where the broadcasting rights alone account for a big chunk of their income. 

charblue.

March 8th, 2018 at 10:24 AM ^

basketball tournament and investments. Not surprising. The rights, licensing and commercial fees associated with the tournament make it the most lucrative sporting event as a one-time revenue funder. I mean that is the way the organization figured put a long time ago that it can meet its expenses and still serve in whatever role it claims in augmenting college sports oversight.

I am personally familiar with ArbiterSports because I use it extensively for my work as a high school sports official. It's a fantastic sport scheduling, payment and information system. The system controls all aspects of game assignment nofification and direct payment in addition to providing preseason training and testing.

buddha

March 8th, 2018 at 11:39 AM ^

Ugh...Revenue is not the same as profit. Before criticizing an organization for their "non-profit status," you may wanna check out their expense sheet. 

 

The Fan in Fargo

March 8th, 2018 at 2:10 PM ^

This is just wrong. This is what's wrong with America. Where's this money going? Does anyone truthfully know? Someone is getting their hefty cut and it isn't the ones that are truthfully making the money. Student athletes are so getting the shaft. Add up all of the years that the NCAA has been around guys. This is a fucked up situation.