The NCAA must absorb a $375 million revenue hit; here’s how it could affect Utah and Utah State’s athletic programs

(Rick Egan | The Salt Lake Tribune) University of Utah's new Athletic Direct, Mark Harlan, talks to reporters after a news conference at the Rice-Eccles Stadium, Monday, June 4, 2018.

The NCAA rakes in approximately $800 million per year through its NCAA Tournament television rights deal with CBS and Turner.

When the NCAA Tournament was canceled on March 12 in the face of escalating coronavirus fears, it was a certainty that athletic departments across the country would eventually bear the brunt of that decision.

The NCAA announced on Thursday that its Board of Governors voted unanimously to drastically reduce its financial distribution to Division I schools. The college sports governing body will distribute $225 million in June to Division I schools. The original distribution was budgeted at $600 million, with payments going out in April. That reduction represents a 67.5% decrease from what was expected.

The announcement came as an eye-opener to the casual observer, but the leaders of two of the state’s biggest athletic departments were ready for what was coming.

“I was not surprised by the number yesterday, the Pac-12 has done a good job of keeping us informed as these conversations have been ongoing with the [NCAA] Board of Directors,” Utah athletic director Mark Harlan said Friday afternoon on a conference call. “I’m pleased we know what it is now. As a conference, we can begin the business of how we manage that on a school-by-school basis.”

“It had been something we knew was coming for the last couple of weeks,” Utah State athletic director John Hartwell told The Salt Lake Tribune on Friday morning. “When the NCAA Tournament was canceled, we knew it was coming to some extent, so it was not totally out of left field. The number for Utah State will be about $600,000 of budgeted revenue that will not be coming our way for fiscal 2020.”

Harlan and Hartwell may be trying to navigate the same problem, but they are not in the same boat. While Hartwell has the Aggies’ shortfall at $600,000, Harlan said the Pac-12 will have between $17-$19 million to distribute to its members. The good news for Harlan is that his athletic department generally operates in the black. He offered no indication Friday that will change as things currently stand. In fiscal 2019, Utah was plus-$3.5 million between operating revenue and expenses.

(Rick Egan | The Salt Lake Tribune) John Hartwell, Athletic Director, Utah State University talks about the new menÕs college basketball showcase featuring BYU, Utah, USU, and Weber State, at Vivint Smart Home Arena, Thursday, July 21, 2016.

The better news is that the Pac-12 has a rainy-day reserve fund for an emergency situation, such as a global pandemic, it could dip into to help athletic departments.

“We’ll look to those reserves to help with any needs, but that will be a vote of the league membership to activate those reserves,” Harlan said. “Institutions will have those conversations and we’ll make a determination. I’m confident that if we are not whole, we will work collectively to manage that.”

Harlan has the support of a Power Five conference behind him, and while Hartwell spoke of potential cost-saving measures on Friday, he didn’t sound like someone ready to hit the panic button. However, their thought processes are in the present. What the future may hold, specifically whether or not a football season can begin in five months, is increasingly a topic of conversation.

Can football begin on time? If so, would fans be allowed to attend? If not, millions of dollars in ticket revenue would be lost. Would the season be shortened? Would it start late? Can it start at all if the pandemic extends into the fall? Of course, what of lucrative media rights deals?

The Mountain West is set to begin a new six-year, $270 million media deal that will pay Utah State and the league’s other 11 members $4 million per year, which is almost four times what they were getting under the league’s previous deal.

“It becomes a monumental task in college sports because football is obviously a big revenue source, whether it’s tickets, television rights, that’s the engine that drives the train,” Hartwell said. “Things get much harder if football is affected.

“Ticket sales is one thing to consider if there were no fans, but then TV contracts as well. That’s a huge piece of the financial puzzle as well. We hope to not get there.”

The Pac-12 has been lambasted for years over its media rights deal when compared to that of its Power Five brethren in the SEC and Big Ten. For fiscal 2019, Pac-12 schools received $31.3 million in conference revenue distribution, a number that is expected to rise to at least $33 million for fiscal 2020.

That may be tens of millions less than what Big Ten and SEC schools are getting, but having no football and having those revenue distribution figures radically altered would, in theory, hurt Utah’s bottom line.

“Without question, there will be a pivot beginning next week, looking at different scenarios that could be coming our way based on Coronavirus at that time,” Harlan said. “We will start modeling possibilities based on unknowns. It is very important for us to be prepared for whatever happens.”