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March 24, 2017 - NCAA issues cash payouts but will monitor how they're spent

A March 24, 2017 USA TODAY article reports that the NCAA will make payments to college athletics departments ranging from $165,000 to more than $1.3 million from a $200 million distribution in mid-April.

“Schools will face restrictions on how they can use the money, which is coming from the liquidation of a type of endowment that had grown to more $360 million,” the newspaper reports. “The money is to be put toward ‘the direct benefit of the student-athlete and their academic success, life skills, career success, health and safety and student-athlete focused diversity and inclusion initiatives,’ according [to an NCAA] Q&A document. The money cannot be used for items such as coaches’ salaries, strength equipment, and stadium or arena improvements aimed at fans.”

These restricted uses are consistent with the recommendation the Knight Commission made last year to increase the restricted use of funding that institutions receive from the NCAA to “supporting athletes’ education and providing them with appropriate health and safety benefits and protections.”

The article also points out that institutions with football at the Football Bowl Subdivision (FBS) level received the highest amounts from the NCAA due to the allocation formula that rewards the high number of football scholarships provided by the schools – even though the funding for this distribution is primarily generated from the Division I March Madness basketball tournament. Revenues generated by postseason football bowl games and the College Football Playoff are managed independent of the NCAA and are not allocated toward any national operating costs or distributions.

In a March 16, 2015 memo to the NCAA Board, the Knight Commission highlighted the dysfunctional relationship between FBS football and the NCAA in that FBS football benefits from the NCAA’s national services and distribution formulas but doesn’t contribute to the shared revenues that pay for the services and supply the distributions. The Commission’s recommendation at that time was to require a portion of the CFP revenues to pay for national services as “an initial step toward having football playoff revenues contribute in a responsible way to its operation as a collegiate sport instead of placing that primary financing responsibility on the NCAA Division I Men’s Basketball Tournament revenues.