William and Mary Sports and Entertainment Law Society

← →

NCAA Tournament: Where the Money is

April 4, 2011 by Sam Mann · 3,323 Comments

With the NCAA Basketball Championship game tonight between Butler and Connecticut just hours away, we thought it would be an opportune time to discuss the amount of money involved in the NCAA Tournament. I don’t want to spoil it for you, but there is a lot of it.

Let’s start with the NCAA and its television partners. This year’s tournament is the first under a new 14 year,$10.8 billion deal between the NCAA and CBS/Turner Sports. That equates to about $771 million per year. While that number may seem absurd, according to an Investopedia Report on Yahoo Sports, CBS is estimated to have made $620 million during the 2010 tournament from advertisements alone. The article also states that non-traditional sources of revenue are up 20%, but doesn’t say what those sources are or what they are worth.

The most interesting part of the new TV deal however is the fact that for the first time, every game was televised live. CBS partnered with Turner Sports (TBS, TNT, TruTV) to broadcast early-round games. It was certainly good for viewers, and the early reports seem to indicate it was good for the networks too. Bloomberg reported ratings for the first day were up 24% from last year. The weekend numbers reached an 11 year high.

But at whose urging was this done? Did CBS tire of viewer complaints, or did the NCAA demand CBS secure a partner? Rumors this summer indicated that ESPN threw its hat in the ring, although there were few details about how competitive their offer was. And what role did the expansion of the tournament from 65 to 68 play during TV rights time? We can only wonder…

So what does the NCAA do with all this money? Like any non-profit organization, they distribute it. (Insert tongue-in-cheek joke about NCAA’s “mission” here). Member schools who advance to the tournament get paid in “units” for each game they play. These payments are spread over 6 year windows, so it is hard to quantify them, but a recent Forbes report estimates that each NCAA win is worth $256,000. Let’s just say there is a lot of money riding on each game, and that’s before we even discuss Vegas, the millions of office pools and the increased exposure advancing in the tournament brings to schools.

And of course, the sheer amount of money involved brings with it the normal questions: Should players get paid? Or at least be allowed to reap benefits from merchandise sales? How do we deal with improper recruiting practices? Is going to a Final Four under the threat of NCAA sanctions economically worth it?

That last one is an especially timely discussion. Jim Calhoun of University of Connecticut will serve at least a 3 game suspension next year after an investigation revealed his program’s connection with an agent, a former manager, during the recruitment of Nate Miles. (I believe that penalty was either self-imposed or by the conference, and that the NCAA has yet to act, so the punishment could get worse.) Add in John Calipari of recently vanquished Kentucky; a coach who has never been directly implicated, but has had Final Four runs vacated at both Memphis and Massachusetts. Yet between the NCAA payments, the merchandise sales and the free exposure the university gets on TV, you could argue it’s well worth the penalties to bend the rules in order to win.

So while this tournament is about amateur athletes, underdogs getting their shot on the big stage (can I say “Go Butler” or is that inappropriate?) and the attachments we all have to institutions of higher learning on the surface, there is a whole lot more going on behind the scenes, and the ramifications of who advances and who doesn’t goes far beyond the court.

Categories: Uncategorized
Tagged: , , ,

3,323 responses so far ↓