NCAA distribution cut 'significant' for Michigan schools; eliminating sports not on table yet
The NCAA's announcement this week that it will distribute nearly two-thirds less than the original $600 million to its Division I members isn't likely to have a major impact on Power Five schools, but it could prove "significant" at the mid-major level, local athletic directors are warning.
For some Michigan public schools, the NCAA's cut could amount to 10 percent or more of the departments' annual revenue projections.
"It's a significant cut to our revenue," said Scott Wetherbee, athletic director at Eastern Michigan. "We're fortunate that our revenue numbers projections for our fiscal year are actually up, so that will offset some of those cuts.
"But then, what does next year look like?"
The NCAA earlier this month cancelled the NCAA men's and women's basketball tournaments in the midst of the coronavirus pandemic; the men's tournament is worth $800 million a year to the NCAA, in terms of television rights.
The NCAA announced this week that it expects to distribute about $225 million to its 350 member schools in June, down from the projected $600 million.
Wetherbee had been expecting to receive more than $1 million from the NCAA, before the coronavirus crisis. That comes from two pools — direct payments by the NCAA, and payments funneled through the conference, in this case the Mid-American Conference. The TV money and the College Football Playoff cut should amount to the same for schools in the MAC, but no NCAA Tournament means no "units" to account for there, so that's lost cash.
Eastern was told by the NCAA to expect about 37 percent of what it normally gets, which could result in a loss of anywhere between $700,000 and $900,000. Eastern Michigan's projected revenue for the athletic department was about $17.8 million, of which $12 million is subsidized by the university.
At Central Michigan, the projected operating budget is about $31 million, with $21 million from the school.
At Oakland, which doesn't have football, total expenditures for this fiscal year are around $10 million.
At Western Michigan, there's already been a president-imposed hiring freeze, though WMU is moving forward, albeit slowly, in its search to replace men's basketball coach Steve Hawkins.
The state's bigger schools, Michigan and Michigan State, for comparison's sake, count yearly revenues that exceed $100 million.
"They can withstand it a whole lot easier," said Michael Alford, athletic director at Central Michigan who has a history of working at Power Five schools, at Oklahoma, Alabama and Southern California.
"Is it a financial impact (for us)? Yes."
The Horizon League (Oakland, Detroit Mercy) and MAC (Eastern, Central and Western) all held conference calls Friday to start discussing the potential fallout.
Alford and Wetherbee noted that there have been some financial savings this year, up to $1 million, because there's no travel for spring sports, nor money allocated for basketball and football recruiting, which has been limited to text or video messaging or phone calls. There's essentially no travel for anybody in the athletic departments.
But where things could get even more complicated, financially, is on the NCAA's expected vote to allow spring-sports athletes another year of eligibility.
That means more financial aid will have to be made availability for those who want to stick around.
"We're waiting on that ruling," Alford said. "I'm supportive of getting those kids to come back. We just have to figure out what that means financially."
Alford for the last week or so has been crunching numbers and looking at formulas — six different models in all — and still doesn't have a concrete answer as to what this means going forward.
But all the state's athletic directors who spoke to The Detroit News on Friday did say one thing: Cutting sports teams isn't on the table, at least not now.
At Eastern, a Title IX settlement earlier this year stipulates it can't cut women's sports teams, anyway. It will be adding a women's lacrosse team for next season, with a coaching announcement expected soon.
Right now, with NCAA cancellations just through the spring, there could be time to recover, especially when football season arrives. If there's no football season, well, then there'll be a truly devastating impact. There's been no serious talks about cancelling football season, but if the nation's nearly full-on shutdown lasts into June and especially July, those discussions are going to come fast and furious.
"There's been no conversation about eliminating any teams," said Steve Waterfield, athletic director at Oakland. "That's not a conversation I expect to have or plan to have or think we'll have.
"Right now, it's more about how do we reduce expenditures, then look to increase revenues moving forward."
The state athletic departments continue to meet payroll and have kept their coaches on staff, including the spring-sports coaches, most of whom are under contract through May or June anyway. Layoffs appear very unlikely at this point, especially given the schools are expected to benefit from the just-passed $2-trillion federal stimulus, which has payouts stipulating that recipients must keep employees on the books.