The money comes from the county, which is divided up from the budget received from the state every year. Most of that money goes to academics, paying teacher's salaries, etc. Nothing really happens to the athletic facilities unless someone begs for it or a fortunate alum gives back to the school to help out the up and coming athletes of tomorrow. In NCAA sports, money for college athletic scholarships mostly comes from the association. That money mostly comes from television network agreements to broadcast sporting events on the air. It pays the tuition, room and board fees for a number of students every year and covers team expenses for uniforms, entry fees for competitions, travel, and more. Other large sums of money that comes in to run the university and contribute to the upkeep comes from donors, state governments (if it is a public institution), sponsors, and bonuses achieved from sports. And usually, if you're more important than another institution, you get a bigger piece of the pie.
Just looking at the Men's NCAA D-1 basketball tournament, each school gets $239k per win. The money doesn't go directly to the school... but to the conference to be dispersed amongst each school. So you have the collection of Big East schools who so far have brought in 9 wins, or $2.15M to the conference to be split up between 16 schools. But then schools like Norfolk State, who surprised many people this weekend and knocked off Missouri, only made the minimum to be spread out among 13 institutions (about $18,000).
Those 13 schools don't get as much money from wealthy alumni or even state money (minus Bethune-Cookman, Howard and Hampton which are private). When I was a student at North Carolina A&T, I remember hearing of how hundreds of millions of dollars went to other state schools every year, some not that much bigger than our school, and the living and educational facilities at A&T were severely lacking. As a freshman, I remember that you could count on one hand how many dorms on campus had air conditioning. Now after millions in grant money there's only a couple dorms that do not have a/c. Still, it's a bit unbelievable to think a school with a history of graduating more African-American engineers than any other school in the country could have such sub-standard living facilities for students after the turn of the century.
It all comes back to who gets what. When your most important sport (football) is a Division I-AA program, even though it's in the same education system as NC State and UNC, you just don't get the same financial contribution from the NCAA. Or the state. And because you don't get the funding, you won't usually find the most prominent high school football players in the country scratching at the door to go to a small HBCU that doesn't get any national attention... especially when you can go to an SEC school who helps the NCAA earn part of that $10.8 Billion contract that CBS and Turner sports has to broadcast the sports on national tv, not just ESPN-U occasionally.
One would think that if more money from the NCAA was contributed to these smaller schools they would be able to build up a program that gets better national attention and give a better opportunity to more students. Maybe then a Division 1 Norfolk State basketball team winning a game in the big dance would be about as commonplace as a kid from A&T graduating with an ABET accredited engineering degree. Maybe Elvin Bethea wouldn't be the only A&T Aggie in the NFL Hall of Fame. Maybe then those schools could also tag the athletes and recognition to raise their football programs from I-AA to I-A. Maybe the college football bowl game pool would be a lot more interesting. Will it happen? Who knows. Unfortunately, it all depends on who is voting on the money distribution.
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