From schoolyards to office buildings all across this country, millions of people are involved in basketball predictions as the circus known as the NCAA tournament has come to town. Sixty-eight college teams compete for the right to advance to the Final Four and be crowned champion of the U.S. in men’s basketball.
The games have begun and the economic bonanza will follow. Billions of dollars will change hands among bettors, and the NCAA and its schools will be infused with new riches.
The first source of revenue is broadcast rights. In 2010 CBS Sports and Time Warner‘s Turner Broadcasting signed a $10.8 billion deal to broadcast every game of the men's basketball tournament for 14 years. Time Warner and CBS will split coverage until 2024. That is more than $770 million per year, which is an increase of 1,877 percent more than the past 30 years. In 1982, CBS paid just under $50 million for three years of rights. Adding the inflation value to the CBS 1982 package, the comparison is $39 million a year compared to $770 million.
The NCAA itself will bring in $777 million this year, 90 percent of which comes from the tournament television and other media rights. Last year $478 million of the revenue went back to Division I schools, with more than a third of that based on the schools' success in the tournament.
In 2011, according to Kantar Media, CBS and Turner were able to generate $738 million in advertising for the tournament. GM, the top advertiser, spent almost $58 million in advertising the March Madness event. The cost of an ad for the championship game was $1.24 million. This year, the expansion in content platforms allows fans to watch the games on live streaming on their computer, mobile phone, tablets and cellular phones. Last year, there was a $3.99 fee to watch all the games on the March Madness app. The high point in viewership for the tourney was more than 30 million fans that watched the 1992 final game featuring Michigan versus Duke.
The universities benefit mightily in the exposure. When Virginia Commonwealth University made the 2011 Final Four, donations to its athletic department increased 376 percent and overall giving to the school by 46 percent. Alums remember their university allegiance and feel pride when their team is involved. After Butler University made it to the finals in 2010, its applications increased 41 percent and the value of the publicity and exposure it received was estimated at $639 million.
Coaches have bonuses in their contracts for making the tournament -- Florida's Billy Donovan receives $37,500. The host city will be a beneficiary. More than 75,000 fans packed the Superdome last year in New Orleans. That marked the first hosting by the Superdome of the event since Hurricane Katrina. The mayor’s office estimates that the games infused $134 million into the city. Regional host cities also benefit.
And then there's gambling. The Final Four is second only to the Super Bowl in amount of wagers placed in Las Vegas with some $80 million wagered. That is an infinitesimal percentage of the overall dollars wagered as this event reaches far beyond hard-cord college basketball fans to reach into every sector of American life. Estimates are that some $12 billion will change hands over the course of the tournament.
And what do the actual participants in this event–the players receive? They have a scholarship that at a school like Duke, costs around $228,000 for four years. Of course the most talented players in college basketball attend school for one year now and then enter the pros.
Is the system fair to players? You decide.
*Sources from this article came from Darren Rovell, Brad Turtle and Ben Steverman.
-- Leigh Steinberg has represented many of the most successful athletes and coaches in football, basketball, baseball, hockey, boxing and golf, including the first overall pick in the NFL draft an unprecedented eight times, among more than 60 first-round selections. His clients have included Hall of Fame quarterbacks Steve Young, Troy Aikman and Warren Moon, and he served as the inspiration for the movie "Jerry Maguire." Follow him on Twitter @SteinbergSports.