The NCAA News -- December 6, 1999

NCAA, CBS reach 11-year, $6 billion agreement

Deal includes marketing opportunities for all championships

With the ink now dry on the NCAA's $6 billion rights agreement with CBS Sports, the Association is set to begin the process of determining how the revenue can best be used to enhance the student-athlete experience and defray the ever-increasing costs that member schools experience in running their athletics departments.

The Association signed an 11-year deal November 18 with CBS Sports for exclusive television rights to the NCAA Division I Men's Basketball Championship and other championship events. The deal also includes marketing opportunities related to all NCAA championships.

The agreement, announced by NCAA President Cedric W. Dempsey and NCAA Executive Committee Chair Charles T. Wethington of the University of Kentucky, begins with the 2002-03 academic year and contains an average payout of $545 million per year. The agreement also contains financial-incentive opportunities for the NCAA and an option for the NCAA to renegotiate after eight years.

The new contract will bring more exposure to all college sports and provide benefits to student-athletes through enhanced or additional programming. What is not clear yet, however, is how the new dollars will be distributed.

Annual payments to the NCAA under the new contract will start at approximately $360 million, a 20 percent increase over the last year of the existing contract. Payments throughout the remainder of the contract will increase by about 8 percent annually. The agreement also provides for the NCAA to receive $40 million up front.

"The NCAA Executive Committee soon will determine how these new resources will be used," said Wethington.

"The expectations for higher education and their athletics programs are broad and deep. We will have to be strategic and wise in how we use these funds to the best benefit of the more than 335,000 student-athletes in 973 member institutions across the country."

Dempsey emphasized that the interests of student-athletes will be a top priority as the Association determines the ramifications of the new contract.

"I will tell you this," Dempsey said, "student-athletes should be among the first beneficiaries of these new resources. This agreement is a celebration of the popularity of college sports, and student-athletes are the reason. We should and will use these new resources -- financial and others -- to enrich the collegiate experience for student-athletes."

Membership-driven process

Dempsey said he would advocate increasing the special assistance fund, currently funded at $10 million annually.

More than 20,000 student-athletes accessed the fund during the 1997-98 academic year for needs such as emergency travel home, clothing and supplies for classes. From 1991 to 1998, the NCAA has contributed $38.5 million to the special assistance fund.

The academic enhancement fund, currently valued at $15.85 million ($50,000 per Division I school), also is among current programs that likely will be reviewed.

"We have the good fortune of having three years to plan for the use of these revenues," Wethington said. "Operating an institution of higher learning becomes a more expensive proposition every year, and we have put more and more pressure on athletics programs to support themselves."

According to the NCAA's most recent study of revenues and expenses among Division I institutions, the average Division I-A program in 1997-98 showed a deficit of $823,000 when general institutional support of the program was not included in the budget. Overall, only 43 percent of Division I-A schools showed revenues over expenses (after removing institutional support).

"The revenue from this agreement -- even if every cent went directly to institution coffers -- would not put all athletics programs in the black," Dempsey said. "It will, however, relieve some of the pressure so that member schools can concentrate on quality of programs, increased participation opportunities for all who want to play sports, and enhanced academic support for college sports."

Dempsey noted that some of the funds would be devoted to the NCAA's promotional efforts regarding men's and women's basketball. Dempsey also said the NCAA will begin negotiations in the near future for rights to 18 other championships currently cablecast by ESPN, including the Division I Women's Basketball Championship.

Wethington said the Executive Committee will expedite the process for determining how the resources will be used. Though he did not indicate a time table for reaching those decisions, he said the Committee would stick to the Association's budgeting process and solicit input from the membership.

"Decisions on the use of these new revenues will be membership-driven," Wethington said. "There are many stakeholders to be considered, and the Executive Committee will seek input from all its constituents."

Enhancing the NCAA's image

According to Dempsey, part of the new contract's appeal is the exposure the NCAA will receive, not only with its championships but in how its mission is delivered.

"This agreement includes much more than just television rights," Dempsey said. "This is the first time the NCAA has packaged -- or as we have called it, bundled -- its resources. We believe it is extremely important that we develop new ways for the public to learn more about the NCAA, its championships and the role of the Association in the development of student-athletes. The opportunity to share more information about the NCAA is key for us."

That bundling will include:

Telecast rights, including over-the-air, cable, satellite, digital and home video.

Marketing rights.

Championships publication program rights.

Championships radio rights.

Internet rights.

Fan festival ("Hoop Cities") rights.

Licensing rights, excluding concessionaire agreements.

New contract items include year-round promotion of the NCAA and its championships; a monthly NCAA show on issues in intercollegiate athletics and highlighting the men's and women's champions in all sports; comprehensive coverage, including network and cable television and the Internet, of all NCAA championships not currently under contract to ESPN; a nightly show featuring Division I men's basketball from March 1 through the conclusion of the championship game; and a commitment to regular-season college basketball programming.

"With this agreement, more people will be able to watch more student-athletes compete in more NCAA championships than ever before," Dempsey said. "This will take the popularity of college sports to new heights."

The NCAA also stands to gain if college sports coverage on the Internet increases dramatically. The contract stipulates that if gross revenues exceed 110 percent of the rights fee for a given year, the NCAA and CBS would share the excess 50-50.

Previous contracts

The new agreement comes five years after the Association last renegotiated its contract with CBS. In November 1994, the NCAA reached a $1.725 billion agreement scheduled to run through 2002. That contract replaced a $1 billion contract that was to run from 1990-91 through 1996-97.

The 1994 agreement included a contract with ESPN to expand coverage of the Division I Women's Basketball Championship from three to 23 games. It also gave CBS coverage rights to several other NCAA championships, including Division I baseball, women's gymnastics, and track and field.

Previous contracts went to CBS for $166 million in 1988, $55.3 million in 1985, and $48 million in 1981, the first year CBS was awarded exclusive rights.

James L. Isch, NCAA vice-president for finance and information services, warned against comparing the value of the various contracts, particularly with the newly signed agreement.

"This contract compared with others becomes apples and oranges because of the bundling aspect," Isch said. "The lengths of the contracts also vary.

"It's also important to understand that the $545 average annual payout is only an average. There's not going to be that figure coming in every year. In fact, the projections are that the $545 million figure will not be reached until the seventh year of the contract."

Negotiations Committee

Members of the NCAA's Negotiations Committee, which finalized the Association's new right fees agreement with CBS Sports:

Cedric W. Dempsey, NCAA president

Charles T. Wethington Jr., president, University of Kentucky; chair, NCAA Executive Committee

James E. Delany, commissioner, Big Ten Conference

Carolyn Schlie Femovich, executive director, Patriot League

Edward Leland, athletics director, Stanford University; chair, NCAA Division I Management Council

Bernadette McGlade, assistant commissioner, Atlantic Coast Conference

C. M. Newton, director of athletics, University of Kentucky (ex officio); chair, Division I Men's Basketball Committee

V. Lane Rawlins, president, University of Memphis

Eugene Smith, athletics director, Iowa State University

Michael A. Tranghese, commissioner, Big East Conference

Escalating rights fees

The amount CBS has paid for the right to televise the Division I Men's Basketball Championship and other NCAA championship events since 1981:

1981 $48 million

1985 $55.3 million

1988 $166 million

1991 $1 billion/seven years

1995* $1.725 billion/eight years

1999* $6 billion/11 years

*Renegotiation of previous contract.

[Previous contracts were awarded to Sports Network in 1963 for $140,000 (championship game only), and to NBC in 1969 for $547,500 (championship game only) and 1973 for $1,165,755, which was the first time the contract exceeded $1 million.]