March Madness: The NCAA

It’s early April, and I’m sick.  It’s 25 years ago, the NCAA Final Four is in Minneapolis, and my Dad has managed to obtain four great tickets from a friend of his (“Uncle” Nolan – Thank You!).

Dad had to work so my mother made me a deal: Go to church on Sunday and she’ll take me and two friends on Saturday (her “deals” were always the best).  We had a great time.  How couldn’t we – it’s the final four?

Sunday morning I wake up, and my throat is on fire.  I go to church, and then sleep most of the day.  Monday is even worse.  My mother insists that I’m too sick to go the the championship game that night (Duke vs. Michigan).  For a couple of hours I’m afraid that she’s correct.  Finally, I realize that this is the NCAA Championship, and I’m going.  She knows I’m lying, but I tell her I’m fine anyway.  As usual, she looks the other way, and drives us to the game.

(Important side note: My mother drove us to countless games even though she really had no interest in sports.  I sat next to her, seven rows behind home plate, for the 1987 World Series, and she read a book.  I can’t remember if she had a book at the NCAA Championship, but it wouldn’t surprise me.  She’s the best!)

Duke blows out Michigan, we had a great time, but I felt miserable.

During the championship game we sat across the aisle from Stephen King – yes, the author.  I remember thinking that he looked the way I felt – miserable.  Even though his team won, he just looked creepy.  I’m sure my judgement was off because I was sick or maybe it was that I had just read one of his books (I don’t really like the genre), but it was eerie.

**********

I don’t really like to use words like “crazy,” “insane,” or “madness.”  Let’s just say that I’m trying to do better with a new appreciation for people that struggle with mental health challenges.  However, sometimes it’s challenging to come up with words that relay the same point without the negative connotations.

I was thinking about this the other day while I was reviewing the most recent tax filings of the National Collegiate Athletic Association (NCAA) for the tax year 2014-2015.  Consider this:

  • The NCAA had revenue of $952 Million during that year
  • Most of that comes from media rights ($776.6 Million), and putting on championships ($120 Million)
  • However, the NCAA still collects roughly $4 Million a year in membership dues – why?
  • The NCAA spent approximately $25 Million in legal expenses during that year – wow!
  • The NCAA held about $690 Million of investments at year end, and they listed their “endowment” at $709 Million at year end.
  • Their endowment is up from $445 Million five years earlier
  • The top two employees at the NCAA combined for $2.6 Million of compensation during the year

I confess that I find some of these numbers … hmm … questionable.

Why does the NCAA need an endowment?  Is that really the best use of money rather than giving it to the member institutions that may actually be able to use the cash.  Or is the NCAA saving for a “rainy day” and what does that mean?

It seems unlikely that they are saving because they fear their media revenue streams are in trouble.  It seems more likely that they are saving because they realize their labor force may not always be free (remember, in economics there is an unlimited demand for free labor).

I saw an article the other day that one estimate puts the value of the University of Kentucky basketball program at over $300 Million.  The players get … what? A quality education?

Whether the NCAA acknowledges it or not, the current arrangement is … madness.

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