Knight Commission Calls for Major Changes to NCAA Revenue Distribution to Correct Gender and Racial Inequities

The Knight Commission on Intercollegiate Athletics recommended earlier this month altering the NCAA’s annual revenue distribution to institutions to correct for racial and gender inequities.

In light of “the current upheaval in Division I athletics and the looming report of the NCAA’s Transformation Committee,” the Commission also urged college sports leaders to reexamine and adopt the group’s “Transforming the Division I Model” proposals, which include reforming the NCAA’s governance, structure, and financial model, and establishing a uniform system to regulate name, image, and likeness compensation.

Knight Commission Co-Chair Arne Duncan said, “it’s long overdue but one of the critical proposals we’ve made is to overhaul the Division I governing board so it has a majority of independent directors, similar to university boards.” As NCAA Division I seeks to transform itself and comes under new leadership, Duncan said “it should be a no-brainer to have independent board members, who are free to act with the best interest of college athletes and not be influenced by institutional or conference self-interest.”

While the Commission “believes” the NCAA, the CFP, and Division I “need sweeping change,” the Commission advanced two important proposals that could be acted upon immediately to correct racial and gender inequities in NCAA athletics revenue distributions to colleges and universities. Specifically, the Commission recommended major changes to the NCAA’s athletics-performance and academic-performance incentives, which total more than $200 million annually, and urged the NCAA Division I Board of Directors to act on these recommendations in time to modify the 2023 distribution. If the Division I Board fails to act, the Board of Governors should review if Division I is operating in compliance with the new NCAA Constitution.

Creating Gender Equity in Athletics Performance Incentives 

The NCAA awards 28 percent of its annual revenue distribution—more than $160 million—based on Division I men’s basketball teams’ wins and participation in the NCAA Men’s March Madness tournament. By stark contrast, the NCAA awards $0 for performance by women’s basketball teams in the tournament. The Commission reiterates its call for the implementation of a gender equity principle that would require any NCAA athletics performance-based revenue distribution to provide equal rewards for the performance of women’s and men’s teams. The Commission initially proposed this modification in September 2021 as part of its comprehensive financial C.A.R.E. Model.

At the Commission’s meeting, Roberta Kaplan, founding partner of Kaplan Hecker & Fink LLP, presented findings from the 2021 Kaplan Report, an independent gender equity analysis commissioned by the NCAA Board of Governors following the disclosure of glaring inequities between the Men’s and Women’s NCAA March Madness tournaments. Kaplan said that the NCAA’s current revenue distribution is “inconsistent with the NCAA’s stated commitment to gender equity.”

The Kaplan Hecker report noted that “the NCAA is a not-for-profit membership organization, not an ‘eat what you kill’ business enterprise.” As a consequence, it doesn’t matter which sport or sports generate the money in ensuring that revenue distributions are gender equitable. Knight Commission co-chair Nancy Zimpher added, “it is dismaying that the NCAA Division I Board of Directors still hasn’t corrected this flagrant multimillion-dollar gender inequity in its revenue distribution. Every university president on the board knows full well that financial incentives reflect values and influence priorities, and this would be an easy fix to do right now.”

The Knight Commission believes the NCAA can and should act swiftly to fix its inequitable revenue distribution. Despite acting on most other recommendations in the August 2021 Kaplan Hecker report, the NCAA has not adjusted its revenue distribution formula.

Addressing Racial Equity in Academic-Performance Incentives

In 2021, the NCAA began awarding “academic units” to institutions for athletic programs that met one of three academic standards. The NCAA is phasing in the distribution of this revenue slowly, but by 2032, more than $1 billion in revenue distributions will be awarded through this new Academic Performance Program.

The Knight Commission first recommended tying a portion of NCAA revenue distribution to academic outcomes of athletics teams in 2001 and consistently promoted the merits of this values-based change until its adoption. Today, we are recommending a new Racial Equity standard to help close the graduation gap between White and Black Athletes. While the Academic Performance Program is an important step to affirm the educational mission of colleges and universities, too many schools with large racial graduation gaps among athletes still qualify for academic awards.

Based on the most recent public data from 2019, nearly 80 percent of the roughly 350 Division I institutions would qualify for the academic unit by meeting one of the three benchmarks for academic success.

However, 47 of those schools had a graduation gap of more than 25 percentage points between their Black and White Athlete Graduation Success Rates (GSRs).

The Knight Commission is recommending that to qualify for academic-based awards, institutions must first demonstrate that the gap between their Black and White Athlete GSRs is not more than 25 percentage points.

If this new Racial Equity criteria had been implemented in 2019, 66 percent of DI schools would have qualified for the academic unit, instead of 79 percent of DI schools. Roughly one in eight schools that now qualify for academic awards would fail the Racial Equity graduation gap benchmark.

Co-chair Len Elmore said, “Black college athletes are both the largest racial minority in Division I and the minority group with the largest negative graduation gap compared to the graduation rate of White athletes. Our research revealed indefensible Black-White athlete graduation gaps among schools qualifying for academic awards and the NCAA should stop sending millions of dollars to schools that fail to close those gaps.”

The Commission’s new data and analysis of academic units awarded to schools with large Black-White athlete graduation gaps can be found here.

The Commission’s C.A.R.E. Model proposal received a recent  statement of support from the Coalition of Intercollegiate Athletics (COIA). COIA represents the elected faculty governance bodies of NCAA Division I universities and colleges on activities related to the administration and governance of intercollegiate athletics.