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Division III to adjust spending in wake of NCAA revenue loss

April 3, 2020

In the past weeks, the threat of the novel coronavirus (COVID-19) has resulted in the cancellation of many NCAA winter championship events as well as nearly the entire spring athletic season. However, the virus may have far greater effects on NCAA operations than just bringing an untimely end to the athletic year.

The cancellation of March Madness, by far the NCAA’s largest revenue producer, as well as a multitude of other profit streams will mean that the organization will lose millions, if not billions, in revenue. Because of this, the NCAA will face serious budget cuts next season and beyond, many of which will affect Division III and Bowdoin directly.

“Each division is expected to lose approximately 70 percent of its annual estimated revenue for the year,” Kathleen McNeely, NCAA senior vice president of administration and chief financial officer, said during a meeting Tuesday of the Division III Strategic Planning and Finance Committee.

According to a press release issued last Friday, revenue allocation to Division III will be cut over $20 million, from $33 million to $10.7 million.

The division is already running a deficit going into next season because the fees for many of next year’s events have already been paid.

“The division already had paid for all fall championships, a portion of winter championships and most of its nonchampionships initiatives,” read the press release. “As a result, it spent about $7.6 million more than the $10.7 million in revenue it will receive. Division III spends approximately 75 percent of its annual revenue on championships and 25 percent on other initiatives, such as conference strategic grants and diversity grants.”

With these preliminary numbers in mind, the primary question is what expenses and programs will be affected first by the budget cuts—and how those losses could affect Bowdoin athletics going into next year and beyond. Ashmead White Director of Athletics Tim Ryan predicts that the most significant changes will not be in championship experiences, but rather in the auxiliary development and diversity initiatives that Division III puts on each year.

“Much of the expenses incurred by Division III are related to championships. So for us, we are in the process now of submitting our expense reimbursements for the NCAA for winter championships. All of those will be covered as they normally would, I think,” Ryan said in a phone interview with the Orient. “The bigger impact would be …  the other programming that the NCAA puts on, whether that’s professional development opportunities for coaches, administrators and staff or programming for student athletes.”

Indeed, the NCAA announced the cancellation of “all remaining staff-administered nonchampionship programs” in the press release. noting that cancelling them would save NCAA “approximately $350,000.”

Ryan predicts that NCAA championships will be largely untouched by the budget cuts. A possible reduction in championships funding would likely not radically change what championship events will look like going forward but could restrict spending on supplemental expenses such as travel and hospitality.

“If there was a reduction in the future in spending by the NCAA for Division III championships, it would likely come in the form of reduced travel party sizes for teams or a reduction in the per diem amount that is allocated for hotels and meals for each member of a travel party as ways for the organization to to reduce its overall expenses … as well as some of the branding initiatives and things like that,” said Ryan.

Although the NCAA will face a serious loss of revenue, this will not directly affect funding for the NESCAC. The conference will likely suffer budget cuts as well, although not to the same extent.

“Unlike NCAA Division I institutions, NESCAC institutions do not receive direct funds from the NCAA,” Lisa Champagne, assistant director for media relations for the NESCAC, wrote in an email to the Orient. “The bulk of the NCAA Division III budget goes toward paying for NCAA Division III Championships and educational programming.”

Beyond the effect that the NCAA’s revenue loss will have on Bowdoin athletics, budget cuts within the College will likely also affect the athletic department’s operations. Ryan looks to the aftermath of the 2008 financial crisis as a model for what the impact of this revenue loss could mean for the athletic department.

“The institution as a whole will be looking at the impact of the downturn in the economy across all expense lines, much like we did during the financial downturn in 2008. I think that it’s important for all of us to play our part in helping to ensure the financial stability of the college going forward,” said Ryan. “But with that also comes a responsibility to make sure that we’re being prudent. So we would certainly look at all areas of our operating activity to make sure that we’re being as efficient as we possibly can be.”

On paper, one of the athletic department’s larger expenses is providing travel for teams. This allocation could be curtailed should the department be forced to trim spending next year, as it was following the 2008 crisis.

“That was an area in which we were able to make some adjustments. We knew that [they] were not long-term adjustments that we wanted to make to ensure the quality of the experience for our students, but there are short term adjustments that we could make for the overall financial outlook for the institution,” Ryan said.


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