Steve Berkowitz of USA Today broke the story that the NCAA’s net assets exceeded $500 million for the first time. This led to the predictable outrage that the NCAA is sitting on $500 million while athletes are starving. Obviously the NCAA cannot liquidate and distribute all $500 million in net assets since that would mean steps like selling the NCAA headquarters or auctioning off NCAA logos and trademarks.
The article focuses on a $260 million endowment fund established as a backup plan in case the NCAA’s primary source of revenue, television rights fees for the Division I men’s basketball tournament was ever threatened. This is a smart bit of business; relying on more or less one revenue stream is dangerous and a steady endowment income is one way to diversify.
But it could also help the NCAA either fulfill its mission or the mission its critics would like it to fulfill. Contrary to popular belief, there will be a national governing body of college athletics, whether it is the NCAA or some new organization. And that organization will be larger, more complex and more expensive to run than something like the NAIA or NJCAA.
If the NCAA were to be fully endowed, the operations expenses would be paid for, meaning almost all annual revenue could be distributed, either to schools or to athletes. That’s an additional $309 million per year (less distributions to DII and DIII schools) that would be freed up.