Moody's: NCAA Changes Will Add Expenses, Hurt Less-Wealthy Programs

August 21, 2014

The recent restructuring of the National Collegiate Athletic Association's governance and the ruling against the NCAA in an antitrust class action will lead to new expenses for college sports and disproportionately affect the competitiveness of less wealthy programs, Moody's Investors Service predicted in a new report.

Earlier this month, the NCAA granted a greater level of autonomy to the Atlantic Coast, Big Ten, Big 12, Pacific 12, and Southeastern Conferences. The five richest conferences can now more easily adopt changes like allowing cost-of-attendance stipends, moving to four-year scholarships, and improving medical coverage. Colleges outside of the five conferences will not have to adopt those same rules, but they will be allowed to if they choose. In addition, the judge's recent ruling in Ed O'Bannon lawsuit against the NCAA means colleges will be able to pay athletes for using their name and likeness. 

Moody's estimated that the changes would create an additional $3.5 million in expenses per school.

"The power five conference members may be well equipped to absorb incremental costs, but other universities with less profitable programs will become less competitive," the report stated. "The cost-of-attendance stipend, for example, will give the powerful conference members an additional recruiting tool that others will lack. Other expense pressures relating to amateurism, such as those rising from litigation, could impact lower resourced athletic departments as well."

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