Insurance Claims Help NCAA Recoup Funds After Lost Tournament
Dan Levenson January 25, 2021
Insurance is like seasoning for a chef who’s cooking a dish. It’s easy to overdo it, using too much, thereby ruining the dish. Likewise, the right amount makes it perfect. Having no flavor in a meal is perhaps the worst case. In the same way, proceeding without proper insurance coverage is the worst-case for businesses and enterprises of all sizes. Occasionally certain worldwide or nationwide events affect the economy in odd and unpredictable ways. The NCAA is learning this first-hand in the wake of the 2020s Coronavirus pandemic and its effect on their revenue after the 2020 season was called off in early March.
The financial implications have been massive. A small fortune passes through NCAA coffers each season. This season, that money didn’t show up. Those whose livelihood revolves around this massive economic engine that is the many divisions and sports under the massive NCAA umbrella are now left scrambling for a way to replace those lost earnings.
When unforeseeable events take place that causes interruptions in normal business operations, insurance is a useful hedge against potentially catastrophic losses.
One Year, One Billion Dollars
NCAA President Mark Emmert confessed in an interview that he “can’t give you any specific numbers” regarding how much the league lost due to the Coronavirus pandemic that took out the NCAA season entirely.
The earnings from the previous complete season surpassed $1 billion, so clearly there’s some red ink to be expected in these balance sheets ending this fiscal year.
$800 million of that billion-plus comes from the broadcast rights that CBS and Turner have secured through the 2032 campaign.
Emmert has reassured fans and media that, in fact, the league had been holding a business disruption policy that is expected to cover some losses. While this is encouraging for stakeholders, it remains to be seen how much funds are recuperated from claims.
It all boils down to advertising, of course. The bottom line is eyeballs watching ads. Because there were no games, there were no ads and ad revenue was literally nonexistent. It’s pretty safe to assume that most of that billion-dollar revenue pool didn’t materialize in 2020.
Downstream Effects Beyond Basketball
The NCAA itself is not the last stop on the proverbial line. Institutions of higher learning stand to be affected by this monumentally. The pool of funds that typically flows into the NCAA then flows downstream to schools.
With no revenue, now these institutions of higher learning face an additional budgetary shortfall in a year already so replete with them as is. In a normal year, 60% of NCAA revenue goes to schools, in a variety of ways. This year, that nearly $600 million revenue pool simply evaporated. Institutions of higher learning across the country are patiently waiting to see how much insurance recuperates on their behalf.
Insurance payouts will certainly serve a primary role in helping to replace some of these lost funds, the question is how much.
Insurance Is A Game Changer
Reflecting upon the NCAA’s drastic revenue shortfall caused by COVID-19, enterprises of all sizes should take notice. Proper insurance coverage is one of the best and only strategies to replace funds in scenarios such as these that generally aren’t easily imagined.
The key to ensuring that you’re properly covered for these sorts of occurrences is to ally yourself with a team of insurance specialists. These agencies earn their living by knowing all the finer details regarding laws in the area they serve and how those laws affect proper insurance coverage structuring.
Insureyourcompany.com specializes in providing this trusted, well-informed consulting that organizations of every size expect when planning and selecting insurance coverage.
Reach out to one of their strategic insurance specialists today.