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Money madness

| Wednesday, March 25, 2015

Brackets! Basketball! Sports! The NCAA basketball playoffs are in full swing right now, and the first weekend has surely contributed to the moniker of Madness. Fan bases from Spokane, Washington, to South Bend, Indiana, have something to cheer for as teams large and small deliver both elation and agony in equal portions. The excitement of March Madness came first, but since the tournament expanded to 64 teams in 1985, money followed closely behind. Today, billions of dollars are tied to the basketball abilities of 18- to 22-year-olds. So much money is involved that the real madness happens behind the scenes in how the NCAA, broadcasters and the colleges themselves profit off the tournament.

March Madness is inherently inclined to capture our short attention span as we consume the latest dunk, buzzer-beater and upset. Inspired by this and my inability to select a single topic to write about, I’ve decided to highlight the most interesting — and concerning — aspects of what makes your bracket really come together.

Without Princeton, there may never have been the March Madness we know today. In 1989, the power conferences were pushing to exclude the mid-majors from the tournament, citing blowout losses and a lack of competitive balance. When No. 16 Princeton was selected to face No. 1 Georgetown, another blowout could have been the final nail in the coffin for the non-power conference schools. ESPN broadcasted the game in primetime because CBS (who still owns the rights today) didn’t begin full coverage until the Sweet 16. Instead of the blowout that everyone — including Dick Vitale — predicted, Princeton went into halftime up nine points and only lost on the last possession of the game on two successive Alonzo Mourning blocks. The president of CBS was inspired by the excitement and asked if CBS could manage to broadcast the whole tournament. Eight months later, they signed a broadcasting rights deal worth $1 billion.

Today, that same deal is worth $10.8 billion over 14 years. To put that in perspective, the broadcast rights for the entire NBA season are worth $2.66 billion per year. With some quick math, that payout equals $1.15 million per March Madness game and $1.055 million per NBA game. And remember; the NBA players are getting paid for their efforts.

The distribution of all that money is part of the deal. Nearly three-fourths of the revenue is earmarked by the NCAA for various programs such as financial aid and academic programs. The remaining $194 million is distributed based on performance in the tournament. Each game participated in counts as a “unit.” Each “unit” is worth $255,379, paid to the school’s conference each year for six years. Altogether, winning a game in the tournament will earn a school’s conference roughly $1.6 million when it’s all said and done. Within the conference, the money is typically split evenly, so even though only six teams from the ACC made the tournament this year, all 15 members will receive a cut. On the first day of the tournament this year, a single point decided five games. Roughly $8 million changed hands based on five possessions of basketball.

Outside of TV contracts, still more big money changes hands because of March Madness. A recent survey estimated $9 billion would be bet on the men’s tournament this year. About $2 billion of that will be placed in bracket pools. And it’s important to note that companies, such as Quicken Loans last year, often create free pools with cash prizes in the hopes of gaining new customers. In Las Vegas, betting on March basketball outpaces the revenues for the Super Bowl. March Madness commands the attention of the nation, and it also commands the nation’s wallets.

The pride and passion on display during March Madness have few equals in sports. The unpredictable nature of the tournament draws fans of all levels of engagement to watch, fill out brackets and bet. While the players and coaches are the stars of the show, it is the vast amount of money behind the scenes that makes it all possible. The NCAA, college conferences, Las Vegas and television broadcasters all have a vested interest in creating and increasing the emotional connection and excitement you feel every March. So cheer and scream and pray for your favorite team to go all the way — I certainly will. But in the midst of the Madness, try to remember that there are dozens of organizations depending on your passion to cash in on college basketball.

The views expressed in this column are those of the author and not necessarily those of The Observer.

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