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Here’s how the NCAA generated a billion dollars in 2017

It’s the first time the NCAA has cleared $1 billion in annual revenue. It won’t be the last.

NCAA President Mark Emmert News Conference
Mark Emmert, the NCAA president.
Photo by Jamie Squire/Getty Images

You’ve heard the saying before that “college sports are a billion-dollar industry.” That’s true, and it has been for many years. When pooling the money that flows through universities and the conferences the play in, college sports have been worth billions for a long time.

For the first time, the NCAA itself declared Wednesday that it’s a billion-dollar-per-year organization all on its own. “The NCAA” means different things — a central organization based in Indianapolis, schools, or conferences — depending on the issue. But here, it means the central organization that enforces the rules and runs the lucrative men’s basketball tournament every year.

In a financial statement for the fiscal year ending Aug. 31, 2017, the NCAA reported $1.045 billion in total revenue. Here’s how it got there.

$817,517,801: “Television and marketing rights fees”

Translation: The NCAA men’s basketball tournament, plus a few other things.

Almost all of that money comes from Turner, which pays the NCAA a king’s ransom for the broadcast rights to March Madness every year. In 2016, the parties extended a contract they signed in 2010, which at the time was slated to pay the NCAA $10.8 billion over 14 years to let Turner put the tournament on TV. The extension tacked on another eight years and $8.8 billion, meaning the NCAA would eventually clear $1 billion a year for just the tournament. That hasn’t happened yet, but the NCAA’s getting closer.

Other NCAA championships make a little bit of TV money for the NCAA, too. Those include the NITs and the women’s basketball tournament, and every other college sports championship you might find on ESPN. None of it comes close to the 68-team men’s tournament.

Wondering where the other major college sporting events are in this section? The NCAA office never sees most of that money. Conferences (and Notre Dame) negotiate their own TV deals and get the money for them without the NCAA serving as an intermediary. Conferences then give most of that money to their member schools. Much of the money from the NCAA tournament eventually filters down to conferences and then schools, too. The NCAA has nothing to do with the business operations of the College Football Playoff.

$128,113,594: “Championships and NIT tournaments”

Tickets, parking, concessions, merchandise, and all the other non-TV and marketing dollars that flow toward the NCAA. Taken in the aggregate, people who go to games in person are a lot less valuable to the NCAA than people who watch games on television.

$47,129,872: Net investment income

The NCAA says its investments are in debt and equity securities, mutual funds, and “U.S. government obligations having a maturity of more than three months.” The NCAA’s in the stock market, not unlike many other old, wealthy entities in the United States.

$26,338,166: “Gain — other”

Based on a reading of the NCAA’s statement, this appears to mostly be from the sale of ArbiterSports, LLC, a “game management solutions” provider that the NCAA notes, apparently seriously, helps teams and conferences with the process of “paying all participants.” The NCAA sold its 68 percent stake in ArbiterSports for about $25.3 million.

$19,958,458: “Sales and services”

The smaller, non-TV things the NCAA sells, not including ArtiberSports, which brought in nearly $11 million in its own LLC (and which the NCAA recently sold).

$6,738,688: “Contributions — facilities — net”

This is money that comes from the NCAA’s various property and office-space deals. The organization operates out of a big complex in Indianapolis, and it got a sweetheart deal to set up there just before the turn of the century. The NCAA thus makes a couple million dollars per year on real estate, which doesn’t hurt.

$2,000: “Contributions — other”

This is the money the NCAA finds in its couch cushions’ couch cushions.

And that’s not even all the money the NCAA gets.

It had another $16 million or so flow through various LLCs that it’s set up, including one for the NIT, one for college football officiating, and one for ArbiterSports.

The NCAA spent all but about $103 million of this revenue.

Its expense sheet, which is consolidated like its revenue sheet, includes:

  • $560,034,866 in distribution payments to Division I schools
  • $93,552,478 in expenses for Division I championships, NITs, and programs
  • $42,232,549 in Division II distributions and championship and program expenses
  • $28,169,295 on Division III championships and programs
  • $181,007,972 on “association-wide programs”
  • $38,027,735 for “management and general” costs

The NCAA says “association-wide programs” include costs for “student-athlete programs and services,” member education, legal services, and governance committees. (That includes the Division I Council, which makes major college sports’ rules, and the Committee on Infractions, which punishes schools that get caught paying their players.)

The NCAA is a 501 (c) (3) organization, so it doesn’t pay federal income taxes.

The government considers it a nonprofit, a la the Red Cross or Amnesty International.