In 2005, the NCAA bought the NIT and turned it into an LLC. Not since “Wheel of Fortune” had such magic been conducted with the alphabet.

It worked so well that the Association has formed three more LLCs since, one for the Eligibility Center, one for college football officiating and another, more overarching LLC for college sports.

LLCs (limited liability companies) have been popular not only for the NCAA but also for universities and businesses. LLCs are creatures of state law and are hybrids of partnership principles and the traditional corporate structure. An LLC provides legal protection similar to the way a corporation protects the assets of its shareholders, but an LLC offers simpler operational governance and financial reporting.

The NCAA’s 501(c)(3) nonprofit status applies to all of its LLCs. What dollars, if any, are generated by an individual LLC either go back into the operational budget for that LLC or back to the NCAA and out to the membership as part of revenue distribution.

“Many schools use the LLC model for a variety of enterprises such as hospitals, business and technology incubators, and bookstores” said NCAA Associate General Counsel Scott Bearby. “From a liability and a business operations point of view, LLCs are much less cumbersome than the governance system of the parent organization.”

Establishing the Eligibility Center as an LLC is a good example, Bearby said. While the NCAA membership controls policy and legislation regarding eligibility, the governance structure does not need to be involved in the procedural details of the Eligibility Center. Quality service to prospective student-athletes and the membership can be obtained through sound business practices instead of legislation.

The Executive Committee’s approval in April 2007 of an umbrella group called Collegiate Sports, LLC, further confirmed the Association’s comfort level with the LLC approach. That overarching body reports to the NCAA president and chairs of the presidential governance bodies, which in turn is accountable to the Executive Committee. The NIT and Eligibility Center report to Collegiate Sports. Other LLCs may be formed in the future as new initiatives are identified that would benefit collegiate athletics outside of the NCAA governance structure.

As an example, Collegiate Sports recently approved the College Football Officiating LLC in conjunction with the Collegiate Commissioners Association to make college football officiating more consistent. The new LLC will make postseason bowl officiating assignments and will implement educational programming to help unify officiating region by region.

“Conferences essentially realized that they can obtain the consistency they are after in officiating better collectively than they can individually,” said Bearby, who will serve as the group’s secretary. “That’s why the LLC model made sense in that instance.”

NCAA Executive Vice President Tom Jernstedt chairs a 10-member board of managers that includes eight commissioners from Football Bowl Subdivision conferences and two from Football Championship Subdivision leagues.