Tuesday, March 27, 2018

The Economics of March Madness

The Economics of March Madness
Written by Hannah A.

The end of March means nothing to some people, but for college basketball fans it signifies the ending of March Madness. With the Final Four approaching, this tournament has impacted the economy in many ways and will only generate more money moving into the final rounds.

Every year, millions of people around the world create brackets, betting on which powerhouse teams are going to lead the tournament. Whether you spend hours researching teams, pick the winners based on which mascot you like better, or scramble to put together a bracket at the last second because you forgot, almost everyone is in it for the same reason: to win money. In the 2017
NCAA tournament, an estimated $10.4 billion was wagered legally, an increase of roughly $1.2 billion since the previous years tournament. Another $10.1 billion is bet illegally, totaling roughly $20.5 billion a year being wagered on these games, with the average bet on a bracket being anywhere between $20 and $50. Even though the odds of getting a perfect bracket are 1 in 9.2 quintillion, multiple people still fill out multiple brackets in order to strengthen their odds of winning their pools (“March Madness”).

It is without a doubt that this year has been one of the wildest tournaments since it started in 1939. This year was the first time ever a 1 seed beaten 16 seed, and there have been countless of other major upsets that have made this tournament so interesting to watch. TV companies such as CBS paid “$19.6 billion for basketball tournament broadcast rights by CBS/Turner to NCAA for 2011 through 2032” (Schwartz), and another $1 billion is made in ad revenue. This is good for the NCAA as they are receiving a lot of money, and it is also very good for companies that are paying for ads because even though they are paying millions to get their brand on TV in the form of a 30 second commercial, this is great for their brand recognition due to the 80.7 million people that watched the tournament in 2015. With numbers that high three years ago, the numbers now will be even higher.

There is a huge opportunity cost when it comes to watching March Madness as well. During the initial rounds, most of the games are aired during the day, so people with full time jobs or who are in school aren’t able to watch these. However, people have found ways to get updates on their phones or stream the games to their computers. It is estimated that this year, there will be $6.8 billion of corporate losses because of distracted and unproductive workers watching the games. This is bad for the companies because they are losing a lot of possible revenue and profit that could have been easily made if it weren’t for the games.

March Madness has proven to have positive and negative effects on the economy whether it be the large amount of money cities are making when hosting the games or the billions lost to distracted workers and busted brackets. However, while some are benefited negatively in the economy, we can all agree that we are benefited positively because of the pure excitement and entertainment college basketball gives viewers all over the world for the month long period that comes only once a year.




Sources

Athlon Sports. “Economic and Social Impact of March Madness
(Infographic).”AthlonSports.com,
athlonsports.com/college-basketball/march-madness-numbers-economic-social-impact.

“March Madness Stats & Facts.” WalletHub,
wallethub.com/blog/march-madness-statistics/11016/.

Schwartz, Elaine, and Econlife Team. “March Madness Money Facts and the NCAA, the Teams,
the Viewers.” Econlife, 19 Mar. 2017, econlife.com/2017/03/march-madness-money/.

5 comments:

  1. I definitely agree with your statements throughout your writing and I like how you kind of tied various economic concepts together. All of the content flowed well and connected the piece together. Content wise, I definitely agree that March Madness has impacted the economy in a large way, specifically because of the betting and potential ‘gambling’ that goes along with it. People risk a lot to bet on March Madness, however, I am sure that it will continue to be a popular phenomenon throughout the years. Economic wise, I also wonder if these huge events reflect on anything, government wise or money supply wise.

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  2. You bring up an interesting point that people in general all have similar goals when it comes to filling out a bracket (making money). This series of basketball games has a way of joining many people together, both those who love basketball and those who don’t even have an interest. That being said, wagering high amounts of money in this system causes the marginal cost to outweigh the marginal benefits, as the likelihood of winning is so slim due to the nature of the games.

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  3. Your post effectively analyzes the economic effects of this year’s March Madness tournament, and I find your comment about corporate losses particularly interesting. I knew that some measure of decreasing productivity must result from distracted workers watching March Madness; however, I would have never guessed corporate losses would be $6.8 billion. Productivity of workers is a factor that affects aggregate supply, and this decrease in worker productivity could cause the aggregate supply curve to shift leftward in the short-run, pushing price levels up and GDP down. Evidently, the opportunity cost of watching March Madness at work is large. It would also be interesting to see how many hours students spend in total watching games or checking scores during the school day.

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  4. I think your post was very interesting to see just how much money is involved in March Madness. With the multiple upsets this year, I wonder if the NCAA is actually going to lose some money since so many people's brackets were busted, causing people to no longer care about the games, therefore less people viewing, or does it cause more people to want to watch the tournament to see the underdogs? It was also fascinating to see that corporations are losing $6.8 billion just by this tournament being on and distracting workers from their routines. Overall, you have a lot of great facts and your post was very relevant to today's economy.

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  5. Not many people think of it the way you did with the way you put together how March Madness has a positive and negative impact on our economy. A lot of people fill out their brackets during class or during the day at work and takes away more work that could have been put toward making more money. There's so many ways the NCAA can generate money through this tournament. When there are big upsets like the one with the 16th seed beating the 1st seed because people are just so shocked or mad people will either watch because they love the team or want to see them lose. It's amazing to see how much money the NCAA receives from people just watching the first couple of days because of the non-stop action from multiple games. I feel like the marginal benefit outweighs the cost of unproductive workers because it's not like it's just one person in the office watching the games or one student, it's almost every person and it happens every year. With March Madness happening every year, I feel the businesses and schools are just use to it as long as everyone gets their work done.

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