The Economic Impact of the Final Four

Zack Schmidt

Mrs. Straub

Economics

3/29/2015

The Economic Impact of the Final Four

With the final four on saturday and the national championship the following monday, it only seems fitting to take a closer look at the economics behind the final four. Every year the NCAA hosts the post season tournament to crown a new national champion, and every year the sites for all of the games change as well. With each round dwindling down the number of teams every weekend, the cities that host these games pull even more income. Although the real winners each year are the schools that make it that far and the host city of the final four; which this season happens to be Indianapolis, Indiana.

This year though there’s something special about the end of the road being held in Indianapolis; they may have drawn the best time to host the final four and gotten the best chance to pull in the most amount of income. With the final four hosting Kentucky, Wisconsin, Michigan State, and Duke all of the teams, excluding Duke, are all within 330 miles of the games which is a driveable distance (Rishe). All of these respective teams as well have incredibly loyal fan bases that are willing to travel. If people don’t have to fly, and are willing to drive from their respective cities; that means that even more people will want to come out to city and experience the final four for themselves. Also there’s a number of storylines to follow going into this final four; especially the Kentucky Wildcats chasing perfection, something that was last done by the Indiana Hoosiers in 1976. Although, what does all of this have to do with economics?

What this has to do with economics is a lot, and Indianapolis is going to greatly benefit from it as a whole. As noted above, this years final four has the potential to bring in more fans than ever, and with that more money than ever too. The population is going to be shifting in Indianapolis, there are going to be far more people there than normal, which is will shift the demand for goods and services as well. In a fox news report Renny Harrison said “A few weeks ago, ticket prices were 30-40 percent less than they are now,” (Houser). With future expectations, one of the determinants of demand, of the prices of tickets becoming even more expensive as we near closer to tip off, one can only imagine how expensive tickets could be at the door or even the night before. This will not only generate revenue for the people working in Lucas Oil Stadium this weekend, but it will help out the surrounding firms as well. Some people will inevitably not be able to go to the game because of the cost of tickets, but it some people will also not be able to go because when they arrive the game could be sold out; they will then resort to going to nearby bars and hangouts to catch the action on a big screen tv.

Along with the cities that milk this cash cow, the schools that make it this far take in a large sum as well. The NCAA rewards their teams on a six year rolling basis, in that time the number of wins by a team are recorded and they are given a “unit” value for each time that they win.

This will later on correlate to how much money they get. For example: Kentucky has won 19 championship games, each game is worth roughly $250,000 dollars, which if you look at the graph above is increasing each year, and they will earn several million dollars by the time that the six year window closes (Smith). For teams that make these consecutive deep runs into the tournament, they are generating their schools unprecedented amounts of revenue. In other words, it can bring in some serious cash. Not to mention also the amount of money that schools receive from consumers because of licensed apparel and increased applicant numbers. To have a good sports team pays off.      

All in all there are five big winners at the end of the road, the city, and the four teams that get to it. The city is able to generate revenue and sales from the games in the form of goods, services, and national air time to try to increase awareness of their city. Then there’s the final four teams that are all sitting pretty with the amount of money that they’re going to be pulling in from the number of games that they’ve won over the past month, and if in the tournament previously, years.

Works Cited

Houser, Shannon. "Final Four Ticket Prices Higher than Ever before." Fox 59. Tribune

Broadcasting, 30 Mar. 2015. Web. 31 Mar. 2015.

Rishe, Patrick. "March Madness: Indianapolis Hits Jackpot With Four Basketball Bluebloods

Reaching Final Four." Forbes. Forbes Magazine, 29 Mar. 2015. Web. 31 Mar. 2015.

Smith, Chris. "A Trip To The NCAA Tournament's Final Four Is Worth $8.2 Million." Forbes.

Forbes Magazine, 20 Mar. 2015. Web. 31 Mar. 2015.