Zachary Corso
Mrs.Straub
AP Economics
Tuesday March 22nd
Economic Impacts Of March Madness
Its that time of year where everyone's turned their attention to the courts. Everyone fills out a bracket and hold tight that there final pick makes it all the way to the championship. Yea that right it's March Madness one of the best times of the year. For friends to fight over whose bracket is better. According to Wallet Hub the chances of getting a perfect bracket is 1 in 9.2 quintillion yea that's right and that you have a better chance of winning back to back mega million lottery tickets than by filling out a perfect bracket.Yet the odds are unlike no other it still a massive economic booster for many of the hosting cities. And one of the best times to clench all of your attention towards the big screen and to see the underdog take home the win. Later on you will be able to grasp the economic impacts March Madness has, such as the profits TV gains, host cities, and overall productivity. All of these factors are major positive and negative impacts towards the economy.
First let's take a look at the real impact March Madness has on the economy. As there is an increase in demand for basketball fans to tune into watching March Madness. According to NCAA it is estimated that March Madness Live had reached all times records such as 80.7 million videos streamers. With the increase in demand that leaves March Madness live with “...17% over last year”(NCAA). Which as showed a rightward shift in the demand curve because of the increase of viewers.
Now one might wonder what this increase of demand for March Madness posses such as the profits gained from TV, as well as restaurants, and host cities. It was estimated that the “average 30 second ad sold for $1.5 million”(Ogus). Which will bring in a total revenue of $1.1 billion. Yet the price is high for companies they have to look at the opportunity cost in which tv companies need to take a look at each side by taking a look at the benefits in which option is better. They have to take a look and see if the higher price is really worth it. By taking a look at the increase in viewers for such a popular event as well as the return rate. And that the host city of the final 4 games which is Houston this year gains $300 million dollars. Witch is is not counting in all of the other restaurants all over the world that supply that kind of atmosphere that everyone loves.
But while taking a look at the positive factors that March Madness has towards the economy it also brings in negative factors. Such as there is a decrease in productivity as according to Wallet Hub there is an estimated $1.9 billion loss due to the fact that there are unprotected workers. Because they are constantly checking their brackets as well as cheering for their favorite team. Which could then pose an negative externality because if one is cheering for a team other workers could then get distracted which could result in decreasing their productivity.
Yet productivity might be a big negative factor that stands within March Madness it's has more positive factors such as it boosts social activity at work and with friends by trying to get that next perfect bracket, brings in $1.1 billion in tv ads, projected impacts on final 4 host city 300 million, and the major impacts that it has on restaurants such as an 19% increase in pizza sales.
Works Cited
Kiernan, John S. "2016’s March Madness By The Numbers." Wallet Hub. Evolution Finance. Web. 20 Mar. 2016.
Ogus, Simon. "The Economic Impact Of March Madness From First Four To Final Four." Forbes. Forbes Magazine, 17 Mar. 2016. Web. 21 Mar. 2016.
Schwartz, Nick. "Duke Math Professor Says Odds of a Perfect Bracket Are One in 2.4 Trillion." For The Win. 17 Mar. 2015. Web. 21 Mar. 2016.
With March Madness comes an obvious set of distractions in the work place. While this is true, there are also positives that are brought to the working environment. For instance, many companies take part in a group bracket. This often creates unity and competition that could actually lead to progress instead of setbacks. While this is definitely debatable, there is a chance that March Madness actually does good for companies. Overall, nice job providing information on the economics behind the big tournament.
ReplyDeleteNot only is the demand for basketball increase, but the amount of people that go out on the town for this week greatly increases. Many people go out to sports bars and sports pubs. People are going out and getting drunk, having a good ol time bonding over bar food. So not only does the basketball industry see an increase, but so does the food industry
ReplyDeleteI think this is a really good piece on something it is really relevant at the moment. You bring up a lot of good points, but we should remember that this happens every year so it doesn't have much of an impact on yearly GDP. Although this won't really change the GDP each year, with it being such a big event any semi-major change could have a large impact on revenue for the event. In the future as technology changes it will also have positive impacts on the economic impact of the tournament.
ReplyDeleteMarch Madness is such a crazy time of the year for basketball lovers. It seems that everyone, not just basketball lovers, tune in to watch all these games. To improve on this post, you could have found a statistic which shows how many people in the United States actually watch March Madness. If you had this stat, it would have helped prove just how popular March Madness is. One thing I found interesting about this post was how you related the chances of having a perfect bracket to winning the lottery. The comparison really helped put into perspective just how hard it is to get a perfect bracket. All in all, I really enjoyed reading your post and how you connected March Madness to economics.
ReplyDeleteOnce March comes around the sport focus leans toward college basketball. With the conference tournaments happening as well as the Big Dance it is the time of year for college basketball fans. Since March Madness is a very popular event across the nation, the demand for watching the games increases and the demand for people going to the games increases as well. With people going out to the games it increases the consumer spending because they will most likely buy refreshments and other merchandise items which will positively affect the revenue. Overall, this time of year is great for sports fans of all kinds because tons and tons of people no matter what sport they prefer come and watch March Madness which helps the economy through the revenue generated with this event.
ReplyDeleteOne of the biggest events during the year, and main matches only take place during one month. It's amazing to think that so many people watch March Madness more than even hockey or other sports, which go on for multiple months. Show's how important it is to people and how much money can be brought due to it.
ReplyDeleteThe relation of a perfect bracket to the lottery was also a nice statistic and really gives people an idea of their possibilities when making their brackets to win prizes and such. Good article.
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