Daily Compliance Item- 3.13.15- Current Event

NCAA nearly topped $1 billion in revenue in 2014



The NCAA had total revenue of nearly $1 billion during its 2014 fiscal year, according to an audited financial statement the association released Wednesday.

The total resulted in a nearly $80.5 million surplus for the year – almost $20 million more than the surplus the NCAA had in 2013 and the fourth consecutive year in which the annual surplus has exceeded $60 million.

USA TODAY Sports has compiled the NCAA’s financial statements for each of the past 10 years, and the latest surplus is the largest the association has recorded during that time. Its greatest previous annual surplus was the $70.9 million it recorded in 2012.

The latest surplus increased the NCAA’s year-end net assets to nearly $708 million — more than double where they stood at the end of its 2008 fiscal year.

Among the NCAA’s nearly $665 million in unrestricted net assets is an endowment fund that had grown to more than $385 million as of the end of the 2014 fiscal year. The fund grew by more than $59 million in 2014, by far the greatest one-year increase since it was established in 2004.

 NCAA had $989 million in total revenue in fiscal 2014, according to the statement. It had $908.6 million in total expenses, including $547.1 million distributed to Division I schools and conferences.

The new financial statement – dated Dec. 12, 2014 – also provided some insight into the NCAA’s recent legal costs and how it plans to pay for various legal settlements – and the role of insurance in those matters. The association has been involved in a series of high-profile lawsuits ranging from the Ed O’Bannon and Sam Keller cases relating to the use of athletes’ names and likenesses, to concussions cases, to litigation that rose from the Penn State infractions case.

The concussions case has reached a proposed settlement under which the NCAA would provide $70 million for concussion testing, diagnoses, education and research. The statement states that: “Negotiations are continuing with NCAA insurers to fund the medical monitoring fund, should the settlement agreement reach final approval stage with the Court. Settlement is contingent upon a funding model acceptable to the NCAA.”

As for the $20 million settlement the NCAA has proposed to make in the Keller case, the statement says “funding will be provided by a combination of insurance proceeds and settlements with third parties.”

The statement also takes note of the “unfavorable verdict” the NCAA received in the O’Bannon case, in which U.S. District Judge Claudia Wilken also awarded the plaintiffs their legal costs and fees. The NCAA has appealed the verdict and is contesting the plaintiffs’ lawyers request for nearly $50 million in attorney’s fees and costs.

“At this time,” the statement says, “the NCAA cannot reasonably estimate the amount of loss, if any, that may result should an unfavorable resolution occur upon appeal.”

However, the statement says that the NCAA has incurred attorney’s fees while defending against these various legal matters and those fees are recorded in the statement’s figures. The statement says the fees are included among the expenses categorized as “Association-wide programs.” Those expenses grew by $36 million in fiscal 2014 to $158.1 million. That differential is unlikely to be entirely attributable to increased legal costs, but from the association’s 2010 fiscal year through its 2013 fiscal year, its expenses for association-wide programs were never reported as being more than $128.3 million.

The NCAA gets most of its annual revenue from its long-term multimedia and marketing rights agreements with CBS and Turner Broadcasting that are primarily tied to the Division I men’s basketball tournament — $700 million in fiscal 2014 and growing at rate of about 3% per year.

During a news conference at the NCAA convention in January, NCAA President Mark Emmert said “the other pieces of (association) revenue are predominantly also out of the tournament because of ticket sales and other ancillary efforts around the tournament.”

Emmert did not discuss financial specifics at that time, but he said the association had particularly good revenue growth in 2014, in part because the Final Four drew NCAA tournament-record crowds at the enormous AT&T Stadium in Arlington, Texas. While 2014 tournament attendance declined overall compared to 2013, more than 79,000 attended both the national semifinals and the final.

“Great big venue and lots of people attending,” Emmert said. “It will be hard to achieve that same result in a somewhat smaller venue this year” when the Final Four will be held at Lucas Oil Stadium in Indianapolis.

The endowment fund has been designated as a quasi-endowment, which means the money is intended to be retained and invested, but unlike a permanent endowment, its principal can be spent. It was established in 2004 by the NCAA Executive Committee, a group of college presidents that oversees association-wide matters, primarily to protect against an event that could impact what is overwhelmingly the NCAA’s greatest revenue source: the Division I men’s basketball tournament.

This article was selected for educational purposes only.

Jennifer M. Condaras 
Associate Commissioner
BIG EAST Conference

Daily Compliance Item- 3.12.15- Counting Aid for Multi Sport Athletes

Stutter Step is a freshman track student-athlete at Ocean State University (OSU). Stutter is receiving a full athletic scholarship during the 2014-15 academic year.  The OSU football coaches have talked to Stutter about playing football next year.  If Stutter plays football during the 2015-16 academic year and receives athletic aid, does he have to count as an initial counter in the sport of football since he received athletic aid the previous year for a different sport?
Yes.  NCAA Bylaw states that a counter who previously has not been counted in football shall be considered an initial counter even though the student-athlete already has received countable financial aid in another sport.

Daily Compliance Item- 3.10.15- 15.2.8, Summer Aid

Ocean State University (OSU) administrators are reviewing student-athletes’ records to determine which student-athletes need to enroll in summer school.  If OSU provides those student-athletes athletic aid to attend summer school, do they need to provide them with a written aid agreement?
No.  NCAA Official Interpretation- 7/30/12- Notification of Summer Financial Aid Award (I)- states that an institution that is providing a financial aid award to a student-athlete for attendance at the institution’s summer session is not required to provide the recipient with a written statement of the amount, duration, conditions or terms of the award.
[References: NCAA Division I Bylaws 15.2.8 (summer financial aid) and (written statement requirement); a staff interpretation (5/31/12, Item c) and an official interpretation (10/14/92, Item No. 5-c-(4)) which have been archived]

Daily Compliance Item- 3.9.15- Departure for Foreign Tour

The Ocean State University (OSU) volleyball team will participating in a foreign tour during OSU’s spring break period (Saturday, March 14th – Sunday, March 22nd).  The coaches would like to leave on an 8am flight on friday the 13th to take advantage of lower air fares.  Only two student-athletes on the team have classes on friday, but they were able to make arrangements with their professors to turn in any assignments before the trip.  Is it permissible for the team to leave friday morning for the foreign tour?
No.  NCAA Staff Interpretation- 2/28/14-  Departure for Foreign Tour Competition Prior to an Official Vacation Period (I) – states that it is permissible for student-athletes to depart for a foreign tour prior to the start of the institution’s official vacation period, provided all participating student-athletes have completed their classes or exams and no special arrangements are made to rearrange classes or exams.
  [References: NCAA Division I Bylaw (timing of tour); and a staff interpretation (12/2/08, Item No. a), which has been archived]

Daily Compliance Item- 3.6.15- Competition After Midnight

Due to the inclement weather, the Ocean State University Tennis Team was not able to begin its home match until 9pm.  If the match is still being contested at midnight, is it permissible to continue or do they have to wait and resume the next day after 5am?
The teams may continue the match.  NCAA Bylaw states that countable athletically related activities may occur between midnight and 5 a.m. under the following circumstances:  (Adopted:  1/16/10)
(a) During participation in a conference championship or an NCAA championship;
(b) Participation in any competition that begins before midnight and concludes after midnight; or
(c) Participation in a promotional practice activity (e.g., first practice of the season)

Daily Compliance Item- 3.5.15- 17.1.8(b)- Practice After Conference Tournament

The Ocean State University (OSU) women’s basketball team was eliminated in the semi-finals in Ocean Eleven’s Conference Tournament last night.  The team’s conference record is 9-10 but the coaches believe they will be selected to participate in the Women’s NIT. 
Can the OSU women’s basketball team continue to practice to prepare for the postseason?
  Yes.  NCAA Bylaw 17.1.8(b)- NCAA or NAIA Championships Participation in Team Sports- states that neither practice for nor participation in any NCAA or NAIA championship event (including play-in contests conducted pursuant to NCAA championships) is considered part of the institution’s declared playing season. A member institution that has reason to believe it is under consideration for selection to participate in an NCAA championship event may continue to practice (but may not compete against outside competition) beyond its last regular-season contest, including the conference championship (if any), without counting such practice against the institution’s declared playing-season limitation until it is determined by the appropriate committee whether the institution will be selected to participate in the NCAA championship competition. An institution that is not selected to participate in the NCAA championship may continue to practice or compete until the end of that championship only if it has time remaining in its declared playing season.

Daily Compliance Item- 3.3.15- Time Limits on CARA During Vacation Period

The Ocean State University softball team will have 3 competitions next week during spring break.  Since it is an official vacation period, do the weekly and hourly limitations apply?
No.  NCAA Bylaw states that daily and weekly hour limitations do not apply to countable athletically related activities occurring during an institution’s term-time official vacation period, as listed in the institution’s official calendar, and during the academic year between terms when classes are not in session.  If such vacation periods occur during any part of a week in which classes are in session, the institution is subject to the daily and weekly hour limitations during the portion of the week when classes are in session and must provide the student-athletes with a day off (see Bylaw, which may be a vacation day. (Adopted: 1/10/91 effective 8/1/91, Revised: 1/10/92)