NCAA releases audited financial statement for fiscal year 2019-20
Contingency plan was key in navigating significant revenue decline
The NCAA this week released its fiscal year 2019-20 audited financial statement, which reinforced the value of the financial contingency plan that the Association used because of the COVID-19 pandemic.
Despite a challenging fiscal year that saw total revenues decrease by more than $600 million — a decrease of more than 50% from fiscal year 2018-19 — the statement showed a loss of only $56 million for fiscal year 2019-20. The relatively minimal loss was due in large part to the NCAA’s financial contingency plan, which led to a 45% reduction in expenses and included $270 million in event cancellation insurance proceeds.
This loss is reflected in the NCAA’s net assets of $394 million at the end of fiscal year 2019-20, which is still about $15 million more than the NCAA’s net assets on Aug. 31, 2018.
“The NCAA’s long-standing financial remediation plan put it in a position to successfully weather a decline in revenue like it’s never seen before,” said Kathleen McNeely, NCAA senior vice president and chief financial officer. “Because of this plan and the NCAA’s strong financial resources, continued efforts to reduce spending and event cancellation insurance for fiscal year 2020-21, I’m confident the Association is well positioned for current and future obligations.”
The NCAA’s event cancellation insurance helped offset the more than $800 million of lost revenue due to the cancellation of the 2020 Division I Men’s Basketball Championship between television and marketing rights and ticket sales. The NCAA holds similar coverage for fiscal year 2020-21.
On top of robust insurance, the NCAA’s financial contingency plan included leveraging financial reserves, reduction in Division I revenue distributions and NCAA operating budget cuts.
In total, these efforts saw the NCAA’s expenses in fiscal year 2019-20 finish at $575 million compared with $1.05 billion in fiscal 2018-19. This reduction in expenses included a $365 million reduction in Division I distributions, which totaled more than $246 million in fiscal year 2019-20. Division I championships expenses were down $97 million compared with fiscal year 2018-19, while Division II and III expenses decreased $15 million and $13 million, respectively.
Additionally, the NCAA implemented operational and staffing adjustments that included salary reductions, reduced spending, employee furloughs and voluntary employee separations.
In May, the NCAA used $100 million in a line of credit from PNC Bank to ensure short-term cash needs were met, all of which was repaid by Aug. 31 — the end of its fiscal year. There is currently no balance on that line of credit.