Thursday, March 16, 2017

The Economic Impact of March Madness

Charlie Monday
Mr. Reuter
Economics
3/12/17
The Economic Impact of March Madness

Every March it seems as though all productivity is halted, and the nation watches the greatest annual sports tournament unfold, the NCAA Men’s Basketball Tournament. Everyone is scrambling to fill out the perfect bracket (the odds are 1 in 9.2 quintillion), predicting upsets, finding an excuse to miss school or work, and antagonizing about their team’s tough matchup.  Even those who aren’t college basketball fans from November - February can still find it in their heart to love college basketball in March. It is simply the greatest time of the year.

Business is boomin’ in March and much of that can be attributed to March Madness. There is $9B bet on March Madness every year with $7B of that being done so illegally. The pizza and beer industry both see an increase in demand as pizza sales raise 17% and the normal 14 million barrels of American beer is increased to 17.5 million in March. CBS paid $10.8B to have TV rights to broadcast the tournament over a 13 year span, that may sound like a lot, but when 30 second commercials during the final four cost $1.5 million, they can make plenty of revenue.

Although Villanova edged North Carolina in a game for the ages in last years championship game, the real winner was the city of Houston, because they hosted the final four. Taxpayers were on edge as Texas paid a $8 million subsidy to host the event, but their minds were eased as the local economy saw $300 million in revenue during the final four. The average visitor ended up spending over $2,000 on hotels, food and public transportation and that figure doesn’t even include the ticket price ㅡ which go for anywhere between $437 and $5,700.

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Las Vegas wins every year when it comes March Madness with Casinos raking in an estimated $100 million in profit every year, purely off of bets. That doesn’t even include the increased prices for rooms, food and beverages, due to the increased demand of spending a weekend in Las Vegas during the tournament. One of the most unpredictable and nail biting tournaments is bound to draw a lot of interest in the gambling capital of the world.

Of course schools will be rooting for their teams because of school pride, and also because Villanova raked in $2.1 million in profits as a result of their National Championship. Other teams this year that have no chance of winning it all such as Texas Southern, Jacksonville State, Wisconsin and East Tennessee State will just be hoping to make some noise in the early rounds and enjoy the madness.
Bibliography
"Economic and Social Impact of March Madness (Infographic)." AthlonSports.com. Athlon Sports, 10 Apr. 2016. Web. 13 Mar. 2017.
Ogus, Simon. "The Economic Impact Of March Madness From First Four To Final Four." Forbes. Forbes Magazine, 24 Mar. 2016. Web. 13 Mar. 2017.

25 comments:

  1. Like almost everyone else, I love March Madness and the hype leading up to it. It is probably my favorite week of school. When watching the games, I normally do not think about the money it generates and the effect it can have on a smaller school. The exposure and revenue it generates can be considered a positive externality because it is an added benefit to the tournament. I also think that it's really cool to see the effect that the tournament has on outside businesses like bars and pizza places. Overall, I'm just hoping for another great tournament!

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  2. It is amazing how much revenue these schools can gain by doing well in the tournament. Just being in the tournament is a huge deal to a lot of school that basically get free publicity and advertising, especially if they create a Cinderella story. Did anyone ever hear of Florida Gulf Coast 5 years ago before they beat Georgetown as a 15 seed? Probably not but everyone sure knows them now. This not only helps out their basketball team in continuing to be good and basically making the tournament every year, but it also helps with enrollment that leads to millions of dollars in profit that they would have never had if they did not go on a run in the tournament.

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  3. It's interesting to read the statistics on how much money is involved in this tournament. A fact that struck me was Texas paying $8 million to host the Final Four and as a result the local economy took in $300 million. March Madness is just one of many examples of people paying a lot of money because of the "hype" behind it all. Many people don't pay attention at all during the season and when March Madness comes around they get so into it. This is all due to the hype.

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  4. It's amazing to see how much people stop everything to watch March madness. Even people like me who don't usually watch NCAA watch March madness. Seeing the statistics of how much money the schools and casinos and tv is making just because of it is astonishing. Millions and billions of dollars just for a week of games is huge.

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  5. I'm not much of a basketball guy but it is amazing the amount of money that is around March Madness. I know when March Madness comes around I start to watch college basketball more like a lot of this country does because you want to know what is going on especially when it gets down to the final four. The amount of money states will pay to have a game be played in their state or city caught my eye. Like how Texas paid 8 million dollars to host, but it makes sense because people are willing to travel from all around and by getting people into the state for an event like this means more money is coming in along with it. So it's easy to see why so many people want a piece in March Madness.

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  6. March Madness does impact the economy a lot and I agree it is interesting to see how much money these teams and other companies can receive just by playing in a tournament where the players don’t get paid. This impacts the entire economy and all the businesses where these tournaments are played due to sponsorship, fans that pay for souvenirs, as well as the colleges that are playing. It’s also a great form of advertising especially when a low ranked team beats a high rank team. It gives the college and the players on the team a chance to be shown who they are and what they are capable of. It’s amazing that Texas had paid $8 million and gained $300 million to the economy. This is why this tournament is so amazing because it impacts everyone part of the economy in a good way, which is why everyone should love March Madness.

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  7. March Madness is the best time of the year, no one can argue about that. Honestly, it is really interesting to see the total amount of profit that is earned in the tournament, I honestly never really thought about it all that much. It is crazy to see how much money is bet illegally on March Madness, like it matters all that much anyways. March Madness will always and forever be the money making hype machine that it has been. Cinderella teams will bust brackets and in turn create a profit due to it. It really is crazy. Profits will made and lost through bets. It's like MM is becoming it's own little economy. I know that I will be apart of the pizza boom here this weekend. Here's to hoping that we get another crazy and exciting tournament!

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  8. It is insane the amount of money that is made overall due to March Madness. Not only is there mega revenue from the games, ticket sales, merchandise, and hotel accommodation revenue, there is a other interesting exchange of money. In fact, there are numerous companies and people that create company wide bracket groups. Recent Statistics say that over 1.5 million dollars are exchanged through brackets and wagers. Cities that hold games get major money from many sources. Peoples disposable incomes fluctuate drastically due to the fact that their spending around tournament time increases.

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  9. It really is interesting to find out how much of an increase in revenue there is in certain industries. Although it does make sense especially because pizza is an extremely common food for groups of people to eat when watching sports. Additionally, the amount of money illegally gambled is quite surprising but also quite interesting to look at from an economic perspective. If gambling was legal in more places, a lot of revenue would be generated from this month in just that sector.

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  10. I definitely think that March Madness is such a benefit towards other companies as well! When the demand of beer, pizza or other complements to watching basketball games goes up, the quantity supplied will go up too. The suppliers of these companies might even raise the prices because they know consumers are willing to pay for it. Also, the opportunity cost of betting money can actually be greatly returned if you win the bracket.

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  11. Just by being a top ranked team in the bracket helps the team get a lot of money because people want to watch them. Which ever cities hold March Madness get a lot of revenue from the fans going there and buying tickets, food, hotels etc. I agree that people that aren't even fans of basketball enjoy watching the game in march because it is exciting and anything can happen because each team goes hard because they want to show the world what they can do.

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  12. Imagine the total revenue a business will get out of just March Madness. It is insane. It seems as if March Madness is bigger in both profit and interest than the Super Bowl. That is insane billions of dollar bets just on college games. It seems as if now everyone wants to get into the madness by having multiple colleges host the tournament all at once. The opportunity cost of this is huge because March Madness gives businesses a chance to make millions off of just one tournament.

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  13. I'm not much of a college basketball guy, but I always like to write in the brackets for March Madness and watch some of the games. I never really knew how much money the college games produce when they host games in a certain city. I was surprised with Texas paying 8 million dollars for just hosting the game I wonder what revenue they got and the profit.

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  14. There is an outrageous amount of billions and millions being thrown around here. It blows my mind how college basketball can stir up so much cast and hype. As an onlooker I love to watch people fight about how their bracket is better than someone else when in reality 99% of the time the four to five minutes it took to curate their bracket was 100% not worth it. It wasn’t worth the few calories burned while writing. It’s not worth the possible discomfort someone’s hand might be in after writing it. It’s not worth the brainspace it takes to think about college basketball that happens to be played in march. Is it a fun pastime and a very well built productivity killer? Of course. That’s why I fully support it. I very much enjoy wasting my time by watching other people waste theirs.

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  15. It's surprising how much one city can make off of only three college basketball games at the end of the season. 300 million dollars is no short chunk of change. Investing into the NCAA tourney is a great use of money, and brings a great deal of profit. Not only do cities profit, but companies too. T.V. stations, bars, pizzerias, merch stores all benefit from the extra cash thrown around during this time.It maybe not be the smartest use of money, but if people find it a good use of their money, let them spend it!

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  16. It is interesting to note how much money is raked in during the tournament, but I wonder how this compares to other large sports events in the United States. For instance, how do the Olympics compare to the NCAA tournament? How does the NFL playoff and the residual super bowl compare to the NCAA tournament? Also, it is incredible to see that the tournament champion brought in so much revenue from its clutch of the tournament title. Overall, it seems Americans love to be distracted by almost pointless sports tournaments, but so do I.

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  17. Every year around March, the amount of money that a bunch of college players playing basketball brings to the NCAA is astounding to me. I mean, this tournament rivals with the Super Bowl, World Series, all the big championships with the amount of money that is made, and this is just college players. The NFL and MLB have major league, professional players that are getting paid to play. Now, I'm not saying college players should get paid, completely different argument, but I am just marveling at the fact of how much money is made off of these student-athletes.

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  18. It is amazing how much revenue these schools can gain by doing well in the tournament. An example that not many people talk about is Davidson College. When Stephen Curry lead them on a magical final 4 Cinderella run, the Davidson brand took off. Since then, Davidson has now changed to the better A10 conference and has a sponsorship from both Nike and Under Armour.

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  19. March Madness takes over students’ lives during this time because of the excuse not to do work combined with the entertainment they get from watching the nail-biting games or even the blowouts. For many people it is the greatest time of year especially those who hold leagues with bets and compare brackets competing to see whose will be the best this year.

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  20. There is no doubt March Madness is one of the most fun times of the year for basketball fans, hardcore fans will out an insane amount of brackets, and even just average fans get in on the fun. During the month TV ratings skyrocket for whatever networks are hosting the games, which obviously increases revenue for those companies.

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  21. Just as many other people, I love March Madness. Again, just as many other people, I did not realize how much economic impact it has on businesses, schools, and students. Businesses can earn lots of money from hosting the games, playing them on the tv, and this helps businesses grow and thrive. Also, the fact that the schools makes money as well shows how important teaching as far as they can in the tournament. These addition funds can help improve the universities, improving their education and the work force, eventually leading to a better standard of living.

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  22. Attending March Madness really helped me put into perspective the incredible amount of money that is made from this event. Every seat was filled, parking garage full and concession stand packed. The city was definitely booming from this event, but there is for sure some loss in the business world too. I know as a student on the days of march madness the productivity level is no doubt down. This can be said for many people in their work place too. This do to live streaming of games and lack of work getting done. When looking at the loss and the benefit there is no doubt that the positives outweigh the negatives of this world renowned event.

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  23. As March Madness has progressed, and more upsets have occurred and we are now in the sweet sixteen it is crazy to think about all the money people will spend to follow and travel their teams. For example, all the Wisconsin fans who travel to Madison Square Garden in New York for this Friday's game against Florida will be spending a pretty penny. Another interesting point is how are these college athletes not getting paid if the economy is seeing this much profit. I know this wasn't what your blog post was about but that is mind blowing to me.

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  24. Even though I haven't been able to attend any of the March Madness games myself, watching on T.V. still puts into perspective how much time, money, and effort is put into this event. Not only are the stadiums benefiting, but the crowds that the games draw do wonders to the city, as each person is spending their money around town.

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