The Big Business of NCAA’s March Madness
The nation’s largest basketball craze has been appropriately named March Madness. In 2018, roughly 10 billion dollars was wagered – twice as much as what was wagered on the Super Bowl. Americans’ fascination with college basketball generates billions every year for the NCAA through licensing and broadcasting deals, game tickets, and advertising.
To learn more, check out the infographic below created by the Ohio University’s online Master of Coaching Education program.
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NCAA Industry Overview
Collegiate sports – especially in the NCAA – are a high-stakes business for universities, athletes, manufacturers, advertisers, and media outlets.
CBS and Turner Broadcasting have agreed to pay $19.6 billion for the rights to televise the NCAA March Madness games through 2032. This translates to the NCAA receiving more than $1 billion per year from its television deal, a figure that represents 90% of the organization’s annual revenue.
History of March Madness
The term “March Madness” was coined in 1939 by Henry V. Porter, a basketball coach in Illinois. He used the phrase to describe the fervor surrounding basketball tournaments in the Illinois High School Association. The term was used in the Illinois Interscholastic that same year and was embraced by newspapermen. It became an official term in 1973, when the Illinois High School Association (IHSA) branded merchandise with the term and used it in its programs. In 1989, KOST Broadcast Sales of Chicago and the IHSA produced March Madness: The Official Video History of the IHSA Basketball Tournament.
Capitalizing on March Madness
The numbers behind March Madness are astronomical, and they stretch across revenue, fundraising, and publicity.
How Participating Schools are Paid
The basketball fund distributes money over a six-year rolling period to Division I conferences in unit shares that are allotted for every round played by a team in the tournament. This could pay huge dividends for conferences that send multiple teams to the tourney every year. In 2015, the Atlantic Coast Conference (ACC) became the first conference to pass the $30 million mark, receiving nearly $33 million over a six-year payout cycle. Individually speaking, the University of Louisville and the University of Arizona were the highest-profiting schools in the 2013-14 academic year, hauling in $24.2 million and $17.7 million, respectively.
Value of Licensing Deals and Free Publicity
In 2006, George Mason University started out as an 11th seed underdog, but its team’s stellar performance in the NCAA tournament led to a whole lot more than a surprise Final Four appearance. Their run generated $634.1 million in overall revenue – a dramatic jump from $528.7 million. It also created $23.5 million in fundraising, a jump from $19.6 million. The tourney performance also produced a capital campaign of $132 million. They ended up on the cover of Sports Illustrated, an appearance worth $1.9 million. Additionally, they secured 54 licenses, which gave the university an extra $100,000 in licensing revenue. Finally, their Cinderella run generated $667 million worth of free publicity.
How Colleges and Universities Benefit
According to Bloomberg, “Schools that showed significant improvement in the NCAA men’s basketball tournament also had some of the highest year-over-year changes in applications the following fall. Top performing schools also see spikes in social media impressions and web traffic. Finally, a school’s spirit is strongly motivated by its sports teams, encouraging students to apply and enjoy a great college experience.
The NCAA’s Black Hole
In May 2018, the Supreme Court ruled to allow states to legalize sports betting. For daily fantasy sports, or DFS, companies, this ruling was great news.
Leader in Fantasy Sports
The DFS company Fanduel capitalizes on the March Madness tournament through its own Survive the Madness game, which pays a total of $250,000 to winners. At the same time, the NCAA can explore various opportunities to monetize DFS. For instance, they can use it to create advertising opportunities for betting operators. They can also use it to increase licensing revenue from sports books. Additionally, they can push Congress to impose a tax known as an “integrity fee” on sports bets.
March Madness has come a long way since its humble beginnings in Illinois nearly a century ago. Generating a billion dollars in revenue each year, the NCAA today not only gives college athletes a platform to compete and gain recognition, but also creates business opportunities for many other organizations.
Learn more about Ohio University’s Online Master of Coaching Education program.