Jamie Brodbeck
March Madness is considered to be a widely popular social event, creating a way where National Collegiate Athletic Association (NCAA) college basketball fanatics can support, predict, and bet on the biggest university teams throughout their spring tournament. As consumer tastes increase, more and more people watch and are actively involved. The greatest impacts reside in the influence on television networks, the NCAA, and host cities of the tournament games.
Considering that this event brings a sense of unity and collectiveness to the nation, each game is streamed live. This greatly impacts the broadcasters who are willing to support and be involved in such an event. Television Broadcasters CBS and Time Warner’s Turner made a deal with the NCAA in 2016 regarding a broadcasting rights commitment extension, from 2024 until 2032 (SBNation). This extra eight year extension came with a steep price tag for the television channels: $8.8 billion. CBS and Time Warner agree to this bondage for their own marginal benefit. After all, an average 30 second commercial was worth $1.5 million, and in 2015, the total revenue for advertisements in the form of commercials, was $1.1 billion (Forbes). While it seems that the contract is exorbitant in price and the outcome is unknown from year to year, it is expected that March Madness is enough of a widely popular event that the opportunity cost is worth it.
Just last year, according to Investopedia, the NCAA made approximately 1 billion dollars in revenue from ticket sales, social media awareness, broadcasting rights, and a portion of advertisements. In addition, the college players do not earn a living off of their performances, and thus, the NCAA does not have to pay. However, the NCAA does give out $8 million dollars in “conference grants,” for officiators, programs, and services that benefit the student athletes (SBNation). To many, this seems miniscule in respect to the great amount of revenue. The NCAA’s best support as to why it can run a billion dollar event is that a great chunk of the profit goes back to support student athletes and teams. However, suppliers are undeniably selfish, so the NCAA will keep most of its profit for its own benefit.
Cities which host the tournament games benefit for this event as well. In 2016, fourteen US cities hosted the first two rounds. Philadelphia made approximately $18 million in hosting the “Elite Eight” game between Notre Dame and North Carolina. Houston gained approximately $300 million in the Final Four. While the average price of a ticket is $344 (Forbes), which is considerably less than a super bowl ticket or NBA finals ticket, the revenue for the host city is incredibly immense.
Whether the outcome of your bracket fails, or your favorite team is defeated in the “Sweet Sixteen,” many companies, cities, and teams are economically bolstered by the support and liveliness of Americans.
Works Cited
“March Madness Economics.” Investopedia, 18 Mar. 2011, www.investopedia.com/financial-edge/0311/march-madness-economics.aspx.
Ogus, Simon. “The Economic Impact Of March Madness From First Four To Final Four.”Forbes, ForbesMagazine,24Mar.2016,www.forbes.com/sites/simonogus/2016/03/17/the-economic-impact-of-the-ncaa-basketball-tournament-from-first-four-to-final-four/#7df60a891b56.
Sherman, Rodger. “NCAA Will Now Make $1 Billion from TV Rights.” SBNation.com, SBNation.com, 12Apr.2016,www.sbnation.com/college-basketball/2016/4/12/11415764/ncaa-tournament-tv-broadcast-rights-money-payout-cbs-turner.
Pictures
https://www.bigonsports.com/national-championship-odds-ahead-of-sweet-16-kansas-favored/
https://www.ncaa.com/news/basketball-men/article/2018-03-13/printable-march-madness-bracket-2018-ncaa-tournament
As you said, tickets cost less than they do for the Super Bowl, yet they are still extremely pricey. When you take into consideration how much it will cost to be transported to the game, parking, and anything else you might buy, the cost of attending a March Madness game in person could probably be more than $500. At this point, the opportunity cost is much higher and might surpass the actual worth of seeing the game in person, when you could just watch it being streamed live.
ReplyDeleteIt is crazy the amount of money that goes into March Madness, but it does make sense as there are lots of games being played, and the farther into the tournament, the more important games become. For cities like Houston who need the money, this a great thing. And it really does help the economy up all the other cities as well. So although the NCAA may be a little selfish with the profits like you said, but really it is a great thing for the economy.
ReplyDeleteIt is crazy how much money the suppliers of the NCAA make in comparison to the teams. I feel that it is good that the players don’t get paid because they are only at a college level. Although, these players generate lots of revenue for the city, college level players just don’t need to get paid. In addition, lots of students on these teams are getting full rides, so in a way they do get paid for these games. I feel the school could get a little more money which could help lower the cost of tuition. This would be a cool way to help counter the fast growing college tuition rates, by giving the schools more money from the NCAA which could help attract more students to their school.
ReplyDeleteI agree with the fact that March Madness does help boost the economy of the host cities because of the tourism that it brings in with the games. Many fans from both teams and even people who live in the area come watch the game because of the teams and the upsets that might occur. Just this year, we've had a 1 seed lose to a 16 seed which has never happened in the history of March Madness. Along with that Arizona (a 4 seed) lost to Buffalo (a 13 seed) and that was also a big upset. I believe that the upsets are what attract many people to the games and really help boost the economy because you really have no idea what might happen at one of the games.
ReplyDeleteIt's always a fun time when watching March Madness and like you said, it really does bring the country together to watch their favorite teams advance farther into the tournament. The prices to see such games grow, as the farther the game is. People from out of state could be cheering for a team, which bring in more money than before. March Madness really benefits the cities that big games are played in and helps the organizations with the amount of support from the fans.
ReplyDeleteSuch a large basketball tournament is bound to have a large impact on the economy. Something that doesn't necessarily "count" from an objective point of view is the money wagered on brackets. Of course, there are places to formally bet your pick, but most is done informally. This mean we don't specifically see the exchange of money in the economy, but it does significantly impact the velocity of money in the constant changing of hands.
ReplyDeleteIt is amazing the amount of money that goes into March Madness. The huge impact on the economy will help to ensure March Madness will also stick around due to the large economic benefits, not to mention the positive externality to the public who enjoy watching and following along with the games.
ReplyDeleteBeing a huge March Madness fan myself, I can see how a ticket to one of the games could be considered a treasure. However, it is shocking to me just how expensive it is to attend a game. It's unbelievable the amount of money a person is willing to spend to go to a basketball game when you could see it anywhere else: on you television at home, live streamed on your laptop or phone, or even at virtually any restaurant or bar in the country. Although it could be deemed ridiculous to spend this amount of money on a basketball game, there really is nothing like being involved in the madness yourself.
ReplyDeleteI agree with you, it is just astonishing how much a ticket to go to a game is. On top of that any restaurant or bar that has a tv has to have a revenue spike during march madness. Just the amount of money that exchanges hands. This also brings up the question on whether college athletes should get paid but that is not about econ so I won't give my input on that. The ticket prices are inelastic because they can change the price but people are still gonna buy it.
DeleteIt's incredible to see the statics about how much March Madness is impacting the economy. This also is a good sign that the economy is doing well since consumers are willing to spend millions of dollars altogether. Especially with the commercials, even though a person may not be a fan of basketball, many different demographics of people and businesses are impacted by March Madness. Also, the money coming into the cities for hosting the games is really beneficial for the economy.
ReplyDeleteI like this article a lot and I think it speaks volumes in relations to how much the NCAA is truly making off this tournament. With the economy doing so well for the NCAA during this time it also brings up the topic of whether the players should get a cut of this money. This debate has lead to FBI investigations and other scandalizes things, so is it really worth the argument anymore? If the NCAA is truly making almost a billion dollars off this tourney, maybe it is time to give the players some of that back, especially considering they are the pure reason why the tournament is there in the first place.
ReplyDeleteIt's crazy to think they make this much money in only about a month similar to how much the Superbowl makes in one day. A great part about march madness is that it is not dying down each year but getting more and more popular. This is also great for the economy as this is not a one time event but a gathering that happens for a month each year, bringing lots of money to our economy for years to come.
ReplyDeleteIt is very interesting to see actually how much the NCAA is making off of this tournament. And in addition to the NCAA making a profit, each individual team participating in the tournament makes a huge profit as well. The farther each team progresses in the tournament, the more potential revenue they can receive. For instance, just recently Kansas has made it into the final four. As a result the team will produce limited edition final four t-shirts which will increase profit tremendously. Additionally, "underdogs" in the tournament can receive a huge profit as well. For instance UMBC was the first ever 16 seed to defeat a 1 seed in the history of this tournament. As a result, UMBC has created many different products in order to celebrate this historic win which subsequently increases their profit from the tournament. All in all, I found your article very beneficial and am excited to see how the rest of the tournament plays out.
ReplyDelete