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How NCAA ruling could affect UNC’s ability to make money from athletics

One of the entrances to Kenan Stadium on the UNC campus in Chapel Hill on Aug. 24, 2017.
One of the entrances to Kenan Stadium on the UNC campus in Chapel Hill on Aug. 24, 2017. cseward@newsobserver.com

For years, alumni and fans of UNC-Chapel Hill have waited to see what penalties the NCAA would hand down for its academic scandal that spanned multiple decades.

They will finally learn the university’s fate on Friday. But whether the university receives a harsh punishment or a lenient one could affect the school’s ability to bring in revenue from athletics and solicit donations from alumni.

At their most severe, the sanctions could include postseason bans and the vacation of victories, including, potentially, at least one national championship in men’s basketball. Or the penalties could include probation and a fine.

The investigations aren’t new. The NCAA has been looking into UNC athletics since 2010, when the current crop of freshmen were about to start the sixth grade. The current investigation began in June 2014, after the previous investigation ended in 2012.

“I would think there would already have been an impact” on the brand from the investigations, said Andrew Zimbalist, a professor of economics at Smith College who focuses on sports. The school’s “reputation (has been) harmed and that will take a while to get past.”

UNC made $23.3 million from ticket sales in 2016, according to USA Today, but Zimbalist believes that number could fall if sanctions cause the quality of the product to decline through postseason bans or scholarship reductions.

 
UNC athletic revenue

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That the investigation has gone on for so long and is so well known, any further damages to the school’s brand could be limited, said John Powell, a professor of marketing and sports business at Pennsylvania State University.

“But I still believe there will be an impact when the sanctions come down, especially if they are severe and there is a lot of speculation whether they will be,” he said. “If it does come down hard on the athletic department and UNC there will be an impact – because now it is real.”

Powell, a former associate athletics director at Penn State, said areas that could be hurt are ticket revenue from games, brand licensing, sponsorships from national and local businesses and, especially, donations from alumni.

“There will be people who are upset that UNC perpetrated fake classes for years and lose faith in the university and not want to contribute,” he said.

But when Penn State suffered its own scandal earlier this decade, the school posted its second-highest donation amount in school history, so there is a chance any punishment could cause donors to be more giving.

“I would imagine that there are always ... the super loyalists, but I think there will be more people less inclined to donate,” he said. “In the case of Penn State we have an extremely loyal alumni base and I think the bounce back was pretty quick. What is pretty quick (in this situation) would be speculation. It just varies so much on the education and loyalty.”

 
Rams Club

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So far the scandal hasn’t seemed to put too much of a dent into contributions, or UNC athletics revenue.

Even after facing a bowl ban for football in 2012, revenue for the athletic department increased from the year before. In fact, revenue from UNC athletics, which was $95.2 million in 2016, has only declined one time since 2006 (from 2009 to 2010), according to USA Today.

UNC and the Rams Club, a booster program for the athletic department, have also been wildly successful when it comes to raising money in recent years.

Donations to the Rams Club – which it says contributes to 450 athletic scholarships and funding for new facilities – have been up every year since 2012, according to its 990 tax forms. Charitable commitments to UNC, likewise, have been up every year since 2013, according to the UNC Development Office.

The NCAA’s ruling arrives while both come off record years for donations. The university just recently kicked off a $4.25 billion fundraising campaign, while the Rams Club is helping raise funds for several new sports facilities, including a $67.4 million practice field for the football team.

UNC recorded a record $543.3 million in commitments this fiscal year, a 9.7 increase from the year prior – while the Rams Club raised $69.2 million in 2016, a record amount and a 12 percent increase on the year before.

Zachery Eanes: 919-419-6684, @zeanes

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