A downward trend in the stock market has taken a toll on the NCAA. The total revenue for the NCAA was down a reported $76 million in 2015, a year in which it operated at a deficit for the first time in at least the past 11 years according to USA Today.
USA Today cites an audited financial statement released by the NCAA on Friday in reporting the association in charge of collegiate athletics saw revenue drop by $76 million from the previous financial year, although it also should be noted distributions to Division 1 member schools increased by $20 million. That is the total distribution amount to be shared, not the individual revenue share each school received. What is to blame for the drop in the NCAA’s financial standing? Investments not netting the return the NCAA was hoping for.
A comparison of the association’s past two financial statements shows that the annual loss for 2015 is driven by a dramatic change in the performance of the association’s investments. In fiscal 2014, the NCAA reported more than $82 million in investment income. In 2015, it reported nearly $21 million in investment losses.
NCAA spokeswoman Stacey Osburn said the association attributes most of those losses to the large stock-market decline that occurred in August 2015. That month, the Standard & Poor’s 500 index endured its worst monthly performance since May 2012, according to S&P Dow Jones Indices. The Dow Jones industrial average and theNasdaq composite index both fell by more than 6% in August 2015.
At the same time, the NCAA spent more on expenses in 2015 than it did the previous year, rising approximate $3 million to $45 million in spending last year. This does not account for legal battles the NCAA has lost or settled along the way. Although that has certainly had some impact on the NCAA’s financial structure, it is nothing that will seemingly crumble the organisation. This may prove to be just a one-year blip on the NCAA’s radar.