Every March, worker productivity in the US plummets as a result of the nearly three-week-long NCAA tournament. Expecting basketball fans to focus on things like quarterly metrics and actionable goals during the tournament is completely unreasonable. After all, we are talking about one of the most popular sporting events in the country. Which gets us to an interesting question. What even is the NCAA? Here’s a quick overview.
The Basics
NCAA stands for National Collegiate Athletic Association. Operated as a non-profit organization, the NCAA serves as the governing body for men’s and women’s college athletics in the US (and to a far lesser extent Canada). Among other things, it creates policy regarding athlete eligibility, athlete recruitment, and the rules of certain sports. Currently based in Indianapolis, Indiana, the organization was established in 1906 as the Intercollegiate Athletic Association to help protect student-athletes. In particular, it was formed to ensure the safety of those participating in college football. Membership is voluntary, and other less prominent governing bodies do exist. Examples include the National Association of Intercollegiate Athletics (NAIA) and National Junior College Athletic Association (NJCAA).
Approximately 1,100 colleges and universities fall under the umbrella of the NCAA. These schools are divided into three divisions (I, II, and III) based on size, athletic program budget, and the ability to award scholarships. As an example, Division III schools do not offer athletic scholarships. The NCAA governs 24 sports and coordinates 90 championship events. Overall, the number of athletes represented is around half a million. Interestingly, sports such as rugby have their own governing bodies.
Various stakeholders including athletic directors, athletes, and school presidents participate in the numerous committees that comprise the NCAA. Ultimately, policy decisions are made by the NCAA Board of Governors.
The Cash Flow
The majority of the NCAA’s annual revenue comes from the Division I men’s basketball tournament mentioned above. (Specifically, the sale of television and marketing rights surrounding this event serves as the key economic channel.) Another important revenue source is ticket sales for the various championship events. Finally, membership dues are in the mix, though apparently as a relatively minor contributor.
Of the over one billion dollars of annual revenue, the vast majority is distributed via various funds to member institutions. Given that some of this money is used to provide scholarships and other services, the idea that the NCAA provides no financial support to student-athletes is a bit of a misrepresentation. A certain percentage of revenue does go toward the operational costs of the NCAA itself, and bickering over exactly how much is to be expected.
The Controversy
Criticism of the NCAA largely centers around one issue, namely the distribution of earnings. The fact that players do not directly receive even a sliver has been a point of contention, with the disapproval becoming more prominent as the numbers have ballooned over the years. Throw in the fact that coaches at larger institutions can pull in seven figures annually, and the omission of athletes becomes even more glaring.
Of course, payment of players would bring a massive amount of complexity at the legal level. Would these students become employees, and, if so, which laws would apply? Which athletes would get paid and how much? Would such payments violate equality laws? And on and on.
Short of direct payment, athletes are now able to monetize their so-called name, image, and likeness. Such terminology refers to the ability to receive money for endorsing products, signing autographs, holding camps, and other such activities.
The bottom line is that the NCAA began over a century ago with a reasonable mission. As college sports have evolved, it has failed to adapt to the modern economic realities of what it now governs. As such, it has left itself open to criticism, much of which is fair. And on that note, enjoy March Madness, because the NCAA sure will.
