National Collegiate Athletic Association

The NCAA News - News and Features

January 13, 1997

Financial report: revenue 4.12 percent over projection

The NCAA exceeded revenue projections by 4.12 percent for the most recent fiscal year, according to the 1995-96 final budget report.

The Association took in $229,749,414 in operating revenue, compared to the budgeted amount of $220,650,000. Operating expenses were $215,263,886, which exceeded the budget of $214,783,000 by 0.22 percent.

As of August 31, the NCAA had $19.6 million in excess revenue available for operations. In December, the NCAA Executive Committee voted to distribute $15 million of that $19.6 million to the Division I membership. That $15 million includes $1.8 million in investment income from the one-time $50 million payment received from CBS in January 1996.

Checks for that supplemental distribution were mailed January 10.

The Executive Committee also approved transferring $1.3 million to the funded operating reserve and authorized a transfer of $1 million to the investment reserve as part of its commitment to build a quasi-endowment fund. The actions left a total of $2.3 million unallocated.

The funded operating reserve, the purpose of which is to provide funds to operate the Association for one year, now contains $28 million. The investment reserve, established in May 1995 to provide the Association with a better investment yield by using a more diversified portfolio, contains $6 million.

Revenue

Total operating revenue exceeded the budgeted amount by $9.1 million. The following items were primary contributors.

  • Championships. Revenue for both Division I basketball championships far exceeded projections. The men's event generated $13.9 million, which was more than $2.2 million over the budgeted amount. The Division I women's championship exceeded projections by $752,000. Other championships significantly exceeding revenue projections included
    I-AA football, $275,000; men's lacrosse, $192,000; and baseball, $81,500. In all, championships revenue exceeded the amount budgeted by about $3.5 million.

  • The Association received $15.7 million in royalties in 1995-96, about $2 million more than projected. Host Communications, Inc., paid $1.7 million in additional royalties as a result of its contract with the NCAA.

  • Investments. The actual revenue of $5.9 million includes $1.8 million of investment income generated on the $50 million received from CBS in January 1996, which was not in the budget. The actual income from other NCAA investment activity exceeded the budgeted amount by slightly more than $1 million because of ongoing cash management efforts and the lack of any significant or prolonged downturns in the investment market.

  • Sales and services. Actual revenue from the sale of rules books exceeded the budget by $220,000. Classified advertising in The NCAA News exceeded the budgeted amount by $168,000.

    Expense

    Operating expense was very close to the budgeted amount, both in the aggregate and within most specific areas of the budget. There were a few significant variations, which follow:

  • Championships. In Division I men's basketball, total expenses were $12.2 million, which is about 12.6 percent over the budgeted amount. The actual expense exceeded the amount budgeted for transportation, promotions, payments to sponsoring agencies, games committee and equipment. Actual game expenses exceeded the budget in several other Division I championships, including baseball, men's lacrosse, women's basketball and women's volleyball. However, total actual transportation expense and per diem allowances were within budget.

    In Division II, per diem allowances exceeded the budgeted amount by about $116,000, mostly in men's and women's basketball.

  • Legal services. Legal expenses were more than double the projected amount, with a total expense of $3.3 million in this area. The primary factors were a lawsuit filed against the Association by former University of Nevada, Las Vegas, men's basketball coach Jerry Tarkanian and litigation involving the NCAA's restricted-earnings coach legislation.

  • Initial eligibility. Expenses related to initial eligibility exceeded budget by about $400,000, primarily resulting from Initial-Eligibility Clearinghouse operations that totaled $1.09 million.

  • Professional development. Only about one-third of the budgeted amount was spent, primarily because expenses on the NCAA Fellows program were much less than anticipated.

  • The Executive Committee also has made some adjustments to budget projections through the 2001-02 fiscal year.

    There are two primary differences from a schedule that was provided last January.

    First, the schedule now contains approved budget figures for the 1996-97 fiscal year. The figures are similar to the projection provided last year, but not identical.

    Also, the new projection includes information relating to the Divisions II and III restructuring guarantees.

    In Division II, the 4.37 percent allotment guaranteed as a result of the restructuring legislation approved at the 1996 Convention means that division will receive a total of at least $60.7 million from 1997-98 through 2001-02.

    In Division III, the 3.18 percent guarantee assures at least $44.2 million from 1997-98 through 2001-02.