NCAA reports loss of $59 million for 2022 fiscal year, but net assets remain over $450 million

The NCAA operated at a nearly $59 million deficit for its 2022 fiscal year after generating revenue of $1.14 billion, the association’s new audited financial statement shows. 

The association saw a major revenue increase from the return to the usual playing setup for the Division I men’s and women's basketball tournaments, but those gains were offset primarily by net investment losses and a one-time charge connected to the association’s creation of a self-insurance entity to cover potential basketball tournament cancellations, as well as the association's litigation costs.

The association also increased the amount of money it distributed to Division I conferences and schools – a move based, in part, on the operating surplus it had for 2021. In addition, it escalated spending on travel and operations for championship events due to gender-equity initiatives and the resumption of full-scale competitions across all three competitive divisions for the first time since the start of the COVID-19 pandemic.

Even with the loss for the year ending Aug. 31, 2022, the NCAA reported that its net assets stood at nearly $458 million. 

The total revenue figure for 2022 is a decrease of just more than 1% compared to the amount reported for the 2021 fiscal year.

The NCAA had a nearly $138 million increase in revenue from championship events, not including a small annual increase in its TV and marketing rights fees. The increase was driven mainly by the Division I basketball tournaments regaining the opportunity for full-capacity crowds at venues across the country. In 2021, there were limited capacities at sites only in Indiana for the men's event and only in the San Antonio area for the women's event.

Also in fiscal 2022, the association received a loss-of-revenue insurance payout of just over $17 million connected to the 2021 tournament. According to NCAA managing director of financial operations David Lafiosca, the association received this money in December 2021. The association last year reported an $81 million payout in fiscal 2021 from this insurance.

However, the fiscal 2022 revenue figure also takes into account net investment losses of more than $72 million. As a non-profit organization, the NCAA has to annually record unrealized investment losses, its director of accounting, Keith Zapp, said. Those losses totaled $90.5 million while dividends, interest and realized gains totaled just over $18 million. Zapp said the investment decline was “consistent” with rates of decline in broader stock and bond markets. In 2021, the association reported net investment gains of $61 million.

Meanwhile, on the expense side, the NCAA reported a total of just over $1.195 billion in spending for fiscal 2022. That’s a nearly 16% increase compared to the amount in 2021.

The top amount was the $657 million that went to Division I conferences and schools. That’s a 7% increase over the distribution for 2021.

The other significant spending increase was an $84 million charge taken as the NCAA on March 1, 2022, established a new business entity that is essentially an insurance company owned by the association itself. According to the National Association of Insurance Commissioners website, such entities are “typically established to meet the unique risk-management needs of the owners or members.” 

In the NCAA’s case, the need primarily was insuring the association against a future cancellation of the basketball tournaments due to a pandemic or a war. Because of the COVID-19 pandemic, Lafiosca said, the NCAA could no longer get such coverage in the commercial event-cancellation insurance market. In addition, because of the many anti-trust lawsuits it has faced, the NCAA has had difficulties with insurers getting satisfactory outcomes from its legal coverage.  

Zapp said the $84 million figure is a “one-time amount keyed to the establishment” of the insurance entity and is tied to an actuarial assessment of the NCAA’s liability as of the end of the 2022 fiscal year. The notes to the audited financial statement say that the assessment was based on “loss experience history and industry loss experience.”

But this money remains part of the NCAA’s consolidated financial structure, Lafiosca said. And, within certain state regulatory parameters, the NCAA Board of Governors, the association’s top decision-making group, could tap it for other purposes.

On a year-over-year basis, the other greatest areas of spending increase were in travel and event operations. Together, they accounted for a nearly $57 million rise, and Zapp said this came from spending connected to championships. The increase in travel spending pushed the NCAA just past the amount it spent in fiscal 2019 – the last year before the pandemic. 

There was some increase due to gender-equity steps implemented in the wake of disparities in the 2021 men's and women's basketball tournaments. But more of that will show up in the association’s spending for fiscal 2023, Lafiosca said.