The NCAA Is Humblebragging about Giving Athletes a 4 Percent Tip

The world of college sports business has converged on New York City for a two-day public forum sponsored by Sports Business Journal. The event has produced some Twitter gems, like this one from Jon Solomon of CBS Sports:

Lots of ADs discussing concern about college sports becoming pro or semipro. No mention if they'll reduce their salaries/bonuses.

— Jon Solomon (@JonSolomonCBS) December 10, 2014

And this one from an ESPN VP relayed by Andy Staples of Sports Illustrated:

As an antidote to the 'corporate' environment of an expensive title game, they've started the Taco Bell 'Live Mas' student section.

— Andy Staples (@Andy_Staples)December 10, 2014

Interestingly, though, even these jaded reporters offered up praise for the supposed straight talk of Big Ten commissioner Jim Delany (the same straight-talker who once told us the Big Ten going to D-III was a likely scenario):

This is why I like Delany. He didn't do a whole lot of pretending up there today. He accepts it's a business.

— Andy Staples (@Andy_Staples)December 10, 2014

Well, Delany may treat college sports like a business, but I am not so sure about the straight talk. According to a tweet from the Chronicle of Higher Education's Brad Wolverton, Delany also stated (with seeming pride) that "college sports will pay out $4-6B for scholarships, athlete benefits over next 15 years."

Delany says college sports will pay out $4-6B for scholarships, athlete benefits over next 15 years.

— Brad Wolverton (@bradwolverton)December 10, 2014

Seems huge, right?

Of course, that's apparently across all colleges (or maybe he meant all NCAA schools, that is, excluding NAIA, etc.) and all sports. But just to give that some perspective, let's look at federal revenue data for all NCAA colleges/universities for all sports, available courtesy of the Equal in Athletics Disclosure Act. In one year (2012-13), all FBS schools reported $7.1 billion in revenue. The rest of Division I (that is, the FCS schools and those without any football) reported another $3.3 billion. D-II and D-III added another $2.5 billion. Let's make the silly assumption those levels will stay flat for the next 15 years.

That comes to a grand total of $194 billion.

For those not quick with division, that means Delany is bragging that over the next 15 years, if college revenues don't grow by a penny, athletes will receive 2.1 to 3.1 percent of the total reported college sports revenues. And even if Delany misspoke and he just meant Division I, that's still just 3.7 to 5.6 percent of total revenue. Woo-hoo!

Worse still, this is using the reported expense cost of scholarships, which if you've read any of my other college sports accounting pieces, you'll know tend to be inflated. But taking Delany at face value, that's still something in the neighborhood of 4 cents of every dollar—or 4 percent—of college revenue going to athletes. Compare that to major league sports where athletes have recently been berated for poor bargaining skills that only got them about 50 percent of all revenues.

Suddenly, 4 percent seems pretty small.

You know who else gets 4 percent of the revenue they help generate? A certain non-profit in Indianapolis:

The NCAA says 96 percent of its annual revenue is returned to its member schools either in direct payments or in programs and services.

According to the NCAA, it spends $30.6 million -- about 4 percent of its entire budget -- on administrative expenses and staff salaries.

Ok, so am I mixing apples and oranges in my comparisons. The denominator for my calculation was all reported NCAA (or Division I) revenue from all sports. The NCAA's calculation's denominator is just from their March Madness money, which is a tiny share of all college sports revenues, though it is 100 percent of what the NCAA collects. Isn't it funny how you can make a number seem big or small by what you compare it to?

Which just goes back to the original statistic. Is $4 to $6 billion over 15 years a lot? For my 401K contributions, sure. For a $200 billion industry? Maybe not so much.