NCAA Divisional Reclassification
Assumptions, realities, and everything you need to know before
considering a move
Joe Infantino, Director, Research
Facing a perfect storm of rising costs and enrollment challenges, some college and university leaders are turning toward athletics to boost brand recognition, drive applications, and generate more revenue. In extreme cases, leaders are reviewing whether to reclassify to a higher NCAA division for a chance at the big payouts that, according to headlines, seem promised at those levels. Since 2021, nine colleges and universities have completed the move into a higher NCAA division. But the pace is picking up. As of December 2024, an additional 24 institutions were actively reclassifying and many more were considering it.
Despite the costs associated with reclassification, some institutions still feel compelled to move forward. In some cases, they face external pressures, such as conference realignment limiting their competition opportunities. Others are betting on their own “Flutie Effect,” a phenomenon where unexpected, sudden athletic success boosts revenue through things like merchandise sales, increased brand recognition and applications, and yield.
Regardless of the circumstances, institutional leaders considering a move to a higher division must reflect on the complete implications before doing so. When institutions don’t appreciate or plan for the challenges ahead, reclassification is unlikely to support their strategic goals.
This report will help executive cabinet leaders assess whether changing NCAA divisions is a strategic move and, if so, how prepared they are. Download the full report, or read on to learn more about two assumptions that drive reclassification:
- Historical success in our current division means we’re ready to (and should) move up
- Participating in a higher division promises higher revenue
Once you’ve explored the assumptions and realities, use our NCAA Divisional Reclassification Readiness Assessment to evaluate whether changing divisions is the right move for your institution.
Two common assumptions driving NCAA divisional reclassification
EAB has analyzed the landscape to better understand the impact of reclassification. The review found that institutions that move to higher athletic divisions not only report higher costs than anticipated, they also struggle to sustain competitive and enrollment success, and face diminishing opportunities for revenue growth. Yet institutions continue to assume moving divisions promises benefits because of two pervasive assumptions:
Assumption #1: Historical success in our current division means we’re ready to (and should) move up
The reality is that historical success has little to no impact on future performance. In fact, moving up will likely have a negative impact on competitiveness and potentially harm brand.
Few institutions that move divisions experience competitive success during the transition or in the years that follow. The average team takes over 15 years to return to their pre-transition competitive record when moving from D-II to D-I. Many institutions say one of the perks in selecting their new conference is the opportunity to earn an automatic bid to March Madness and other championship tournaments, but the probability of making the NCAA tournament during the first ten years after reclassification is between 30% and 60%.
If institutions experience competitive success at the highest level, they can see increased name recognition outside their traditional market. The University of Michigan, Texas Christian University, and North Carolina State University saw an increase in applications and yield after CFP appearances, winning the College World Series, and making the Final Four. But these benefits returned to normal after 1-2 years and required winning on a national scale in a televised sport (e.g., College Football Playoff, March Madness). Most institutions, especially those outside Power 4 conferences, simply are not financially or competitively prepared to invest at that level.
Institutional examples
University of Michigan
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+12%
Increase in first-year and transfer applications after winning College Football Playoff
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$230.4M
Total FY24 athletics expenses
Texas Christian University
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+4.7%
Increase in yield after College Football Playoff and College World Series appearances
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$141.9M
Total FY24 athletics expenses
North Carolina State University
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+25%
Expected increase in applications after March Madness Cinderella run
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$118.7M
Total FY24 athletics expenses
Assumption #2: Participating in a higher division promises higher revenue
In reality, shifting market dynamics means access to revenue opportunities (e.g., media deals, guarantee games, conference payouts) and student markets is getting even more limited.
College sports is a growing market, but it’s the rich who will get richer
College sports are expected to increase revenue totals in the next decade, but those gains will be concentrated among a small group of institutions. Most will be left out. Current projections indicate 134 FBS institutions will generate $20.9 billion of revenue in 2032, up from $9.6B in 2022. But $16.7 billion of that revenue will be generated by just 54 public institutions, all of whom are in the Autonomy 5 conferences.
Institutions at the top are consolidating resources in large part because of conference realignment and the NCAA’s legal issues. As a result, the perceived financial benefits of moving divisions are anything but certain.
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80%
Portion of FBS revenue generated by 54 institutions in 2032
NCAA’s legal uncertainty threatens future revenue
The NCAA’s impending legal decisions also limit the amount of revenue available through championship funds and guarantee games. In the wake of the House v. NCAA settlement, billions of would-be revenues are going elsewhere. In the coming years, Division I members are expected to pay:
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$2.8B
Distributed by NCAA, D-I conferences to current and former student-athletes on damages over the next 10 years
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$20M
Paid annually to student-athletes by Power Conference members in revenue sharing, beginning in 2025
The NCAA will tap into six Division I funds, including March Madness distributions, to cover its share of costs. Meanwhile, Division I institutions will begin splitting revenue from media and ticket sales with student-athletes. These factors may cause power conferences to consolidate designated conference spots in NCAA tournaments and opt out of guarantee games as cost-cutting strategies. With more NCAA legal decisions to come, institutions hoping to reclassify cannot count on these potential new sources for exposure and revenue.
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See if reclassification is the right move for you
Before initiating the reclassification process, use EAB’s Divisional Reclassification Readiness Assessment to evaluate if reclassification is the right decision to achieve your institution’s business and athletic goals.
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