NCAA in tough spot amid calls to cancel tournament

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The National Collegiate Athletic Association is expected to make big decisions in the coming days that could have a substantial impact on the organization’s finances, amid growing calls to cancel the 2020 men’s and women’s basketball tournaments over the fears of the coronavirus outbreak.

The Indianapolis-based NCAA, which Wednesday announced it would not permit fans at tournament games, is in a precarious position.

It is weighing potential health risks to athletes against hundreds of millions of dollars on which the institution and dozens of athletic conferences and universities rely on for economic stability.

The outbreak of COVID-19, a disease caused by the novel coronavirus, continues to worsen throughout the United States, where more than 1,300 have tested positive and at least 36 people have died.

Last year, the NCAA received $804 million alone—it will receive $827 million this year—from its television rights contract with Turner Broadcast System Inc. for the Division I men’s tournament. That’s part of a $10.8 billion deal that runs through 2032.

Money from the Turner deal accounted for about 72% of the NCAA’s total revenue of $1.12 billion in 2019.

Without that money, the organization—which has already been plagued by publicity nightmares over athlete pay and recruiting scandals in recent years—would have to tighten its financial belt and likely dip into an endowment believed to be around $400 million.

But the organization is in a much less precarious position than other athletic leagues because it has fewer liabilities, said sports business expert Marc Ganis.

“There will be some impact,” said Ganis, owner of Chicago-based agency Sportscorp Ltd. “But the NCAA could handle it better than almost any other major sports operation in the country.”

The NCAA distributed about $611 million last year to its Division I member institutions, including colleges and athletic conferences; the figure accounted for more than half the organization’s total expenses of $1.05 million.

Ganis said he would expect the distributions to those organizations would be “significantly lower” if the event is canceled, because the TV contract wouldn’t be paid out. But he added he doesn’t have concerns it would affect the long-term financial stability of the NCAA.

The NBA indefinitely suspended its season Wednesday, after a player tested positive for the virus. Some say it’s only a matter of time before other athletes—including potential participants in the NCAA—are diagnosed with COVID-19, too. The league has a massive television broadcast deal with ESPN, along with smaller, team-based contracts with Fox Sports regional networks.

Health officials, media members and others have expressed concerns over the NCAA moving forward with its tournament games—even without fans in attendance.

And other than to say student-athletes, team officials and essential venue staff will be permitted at games, the NCAA has shared little publicly about how the contests will be managed and what protocols could be in place to prevent the spread of the virus if games are played.

The chorus of those against continuing with the tournament was amplified Wednesday in Indianapolis, when University of Nebraska Head Coach Fred Hoiberg coached his team in the first round of the Big Ten Conference tournament while sick.

Hoiberg—who was taken to the hospital after the game for treatment, as his team was quarantined inside its locker room—was later diagnosed with the common cold, but the incident raised alarm bells within the sports community.

The Big Ten announced Thursday it was canceling the remainder of the tournament. The Ivy League, the Southeastern Conference and the Atlantic Coast Conference have all canceled their tournaments.

The National College Players Association, which says it represents the interests of current and former college athletes, also said that if the NCAA tournament—or any conference tournament—is called off, the deciding body “should also give players, their families, and fans as much notice as possible to avoid costly travel cancellations.”

The group said in written remarks it viewed the NCAA’s decision to not allow fans at games as a “positive precaution,” but did not indicate whether it believed the tournament should be canceled outright.

“The NCAA’s decision to hold NCAA championships including its March Madness Tournament games with only players, their family members, and essential personnel is a positive precaution,” the National College Players Association said in a written statement Wednesday.

Mark Emmert, president of the NCAA, said Wednesday the organization is considering moving games to smaller venues in respective host cities—including Indianapolis, which is currently expected to host the men’s Midwest Regional round at Lucas Oil Stadium on March 26 and 28. Fort Wayne is also expected to host a women’s tournament regional at Allen County War Coliseum the same weekend.

If the NCAA ultimately does cancel the tournaments, it’s possible they won’t be covered by the event-cancellation insurance policy the organization took out more than a decade ago. In 2016, that policy was worth about $225 million.

Zach Finn, a risk management expert at Butler University, said most cancellation policies exclude pandemics—a designation given to the COVID-19 outbreak by the World Health Organization—meaning there would not be coverage.

Pandemics are “just excluded—it’s not going to be covered in any of their policies,” said Finn, who added he would be “shocked” if there was such coverage in place for the NCAA.

He said pandemic policies, which are offered separately, are rarely used and extremely expensive. It is not known whether the NCAA has such an insurance policy. The NCAA did not immediately respond to a request for comment.

“Honestly, we’re in uncharted water here,” Finn said.

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