Suspending sports will have ‘huge economic impact’: Steinberg Sports and Entertainment CEO
Steinberg Sports and Entertainment CEO Leigh Steinberg explains how the economy will be impacted by sports events and seasons being canceled due to coronavirus.
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The NCAA will drastically reduce its payouts to Division I schools this year after the coronavirus outbreak forced the cancellation of its March Madness basketball tournaments and other championship events, the organization announced on Thursday.
NCAA’s board of governors voted to distribute $225 million in revenue to Division I schools in June. The sum marked a sharp decrease of an earlier projection for $600 million in revenue distributions, with the first payment originally scheduled for April.
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“We are living in unprecedented times not only for higher education, but for the entire nation and around the globe as we face the COVID-19 public health crisis,” said Michael Drake, chairman of the NCAA’s board of governors and president of Ohio State University. “As an Association, we must acknowledge the uncertainties of our financial situation and continue to make thoughtful and prudent decisions on how we can assist conferences and campuses in supporting student-athletes now and into the future.”
Earlier this month, the NCAA made an unprecedented decision to cancel the men’s and women’s March Madness basketball tournaments due to the coronavirus outbreak. The decision came hours after U.S. sports leagues, including the NBA and NHL, suspended their seasons until further notice.
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The cancellation cost the NCAA expected revenue from its most lucrative event. The men’s basketball tournament alone generates $867.5 million annually from television and marketing rights, according to the NCAA.
“The Association has prepared for a financial catastrophic event like the one we face now,” Drake added. “While we certainly have challenges ahead, we would be in a far worse position had it not been for this long-standing, forward-focused planning.”
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The $225 million in payouts will include $50 million from the NCAA’s reserve fund. The NCAA noted that it has a $270 million event cancellation insurance policy to cover the remaining distributions within a year.
Television rights, marketing deals and championship ticket sales comprise the bulk of the NCAA’s annual revenue. The Division I board of governors will determine how to disperse the $225 million among its member schools.
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