By: BJ Wallace
I’m sure most people are aware of the college basketball tournament that has been taking place for the last couple of weeks. Most people know of the hopeful excitement in filling out a bracket and cheering on their favorite teams. Through all of this madness, there are large effects on the economy in both a positive and negative manner.
There is a certain energy that arises as the snow clears and the upsets begin. This energy can also be reflected in the GDP of the economy in the form of consumer spending. There are 63 basketball games played throughout the month-long tournament and they take place in many different cities. At each one of these games, there is a tremendous amount of consumer spending. Dayton, OH has been home to the four “play in” games for the past couple of years. These are arguably the least important games in the entire tournament, and yet the city has seen a $66 million increase in their economy from the time they began hosting these games. People go to these games and stay at hotels, buy food, jerseys, and of course the tickets. Having this tournament creates a huge spark in our GDP.
The majority of fans don’t get the chance to go watch a game in person. They instead watch the games on tv. There is still a lot of money spent through this form of views. There was an estimated $10 billion spent of the broadcasting rights by the cbs and Turner Sports. Along with this, the average 30-second ad was sold for $1.5 million in the 2016 tournament. All of this would count towards our nation’s GDP and would cause it to increase greatly. Both of these increases in GDP would shift the Aggregate Demand curve to the right because consumer spending increases.
All of these transactions are great for the economy, but the actual basketball itself turns out to cause a large dent in production across America. A survey by Seyfarth Shaw at Work showed March Madness to be the third ranked distraction in the workplace, only falling to texting and Facebook. All of the time spent on filling out brackets and witnessing the games live has a serious impact on productivity of the country. It was estimated that in 2016, $6.3 billion was lost due to unproductive workers. This decrease in productivity would increase production costs, which would then shift the short run Aggregate Supply curve to the left.
The activity around March Madness sends the aggregate supply and demand curves moving just about as much as the games move the emotions of all of the fans. The decrease in short run aggregate supply and increase in aggregate demand will make the output level unknown but we do know that the price level will rise. Luckily, many upper level managers across the country say that the tournament is good for employee morale and actually increases productivity due to the fact that the employees work harder when the games are over. This will send the short run aggregate supply curve to the right and decrease the price level back to close to where it was before the tournament.
Works Cited
Athlon Sports. “Economic and Social Impact of March Madness (Infographic).” AthlonSports.com, athlonsports.com/college-basketball/march-madness-numbers-economic-social-impact.Bresiger, Gregory, and Gregory Bresiger. “March Madness Is Driving down Work Productivity: Study.” New York Post, New York Post, 25 Mar. 2018, nypost.com/2018/03/24/march-madness-is-driving-down-work-productivity-study/.
Dickler, Jessica. “Get Ready for March Madness, a Time When Little Office Work Gets Done.” CNBC, CNBC, 7 Mar. 2018, www.cnbc.com/2018/03/06/march-madness-takes-a-toll-on-productivity.html.
Ogus, Simon. “The Economic Impact Of March Madness From First Four To Final Four.” Forbes, Forbes Magazine, 24 Mar. 2016, www.forbes.com/sites/simonogus/2016/03/17/the-economic-impact-of-the-ncaa-basketball-tournament-from-first-four-to-final-four/#2d1e7eee1b56.
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The March Madness Tournament is a great boost in GDP, as is any other major sporting event (Super Bowl, World Cup, Olympics, etc.). The revenue gained from tickets, fan wear, and streaming online really contributes to the real GDP, and I was shocked at how many Americans this event disrupts in jobs. The 6.3 billion dollar loss in revenue doesn't really seem to help the GDP as much, even though there is a 4-ish billion dollar gain in all. Aggregate demand will overall go up, increasing the price level and real GDP.
ReplyDeleteGreat article and analysis. I personally don't watch or put investment into March Madness but seeing as millions of other people do it's interesting to see its varying impact on the economy. This reminds me of how I was just in Chicago last Friday and saw a sports apparel store whose name was "Team Store." Though the store sold Cubs gear (baseball instead of basketball), the title of the store presents a smart economics decision. No matter what team the populace supports or what sport it's for all the store would have to do is switch out the logos on the windows.
ReplyDeleteWith all the fanfare surrounding March Madness, you are right that spending increases as people go to buy tickets and sports paraphernalia. This leads to a rise in real GDP. However, with productivity in other industries decreasing due to the games being a hindrance, does that really mean March Madness is good for the economy? With the aggregate supply decreasing, some other source of real productivity would need to occur. Unemployment may increase as people are laid off due to not working as efficiently. This leads to an effect in other industries that only hurts the economy even more. Though this may not happen on a major scale, this consequence could happen. It would be interesting to see how unemployment levels change over this period of time.
ReplyDeleteThe March Madness tournament is great for the economy. Not only does this tournament increase consumer spending but it also creates a fun environment in most places including, school, work, and at home. From experience I have seen that people go all out for these games and will pay outrageous amounts for tickets and even food for either watching the games at home or at a tailgate. Although these games may limit the amount of work that is being done I think it overall helps our economy more than it hurts it. When the tournament ends and the GDP decreases again it makes people think that we should create more of these big tournaments in order to continue to increase our GDP.
ReplyDeletePeople spend more money based on things they enjoy. The majority of sports fans love to participate in March Madness. Whether it's watching games on TV, filling out brackets, or actually attending games, there is no doubt that March Madness is one of the most important sports events in America. It is no surprise that these tournament games bring in a significant amount of revenue. This revenue is very good for cities and surrounding town. Most of the time, everybody wins when March Madness comes around unless your team loses. These tournaments should, in my opinion, be brought to other sports like Football, instead of having a four team CFP. This can help bring in even more revenue to different parts of America.
ReplyDeleteAfter reading it is really interesting to see how March Madness has impacted the economy. March Madness is a great way to increase in GDP, with all the tickets that are being selled and all of the fan gear. I thought that is was really interesting on how much of a distraction March Madness it. When you said that in 2016 we lost $6.3 billion to unproductive workers that is a lot to lose. With workers not working this could cause unemployment to increase and then that will not be good for our economy. I feel like there is a lot of good to March Madness however they is bad to it as well.
ReplyDeleteGreat blog BJ! I think this is really interesting that productivity actually decreases once the games are on TV. You see this a lot in high school of people watching march madness in class, but I didn't think it made as much as a 6.3 billion dollar impact on workplace productivity. Well, I guess adults like to slack off a bit, too. But, the relation to the graph of the US economy is great, and while the short run aggregate supply can be changed, it does, however, correct itself thankfully, after the tournament. That would be a great example of classical economics, because there would be no need for government intervention, just a determined winner of the tournament.
ReplyDeleteAfter reading about March Madness and how much fun people have during this time. Also the kids that get super hyped before and during the time they fill out there brackets. Having March Madness is a great way to boost up the GDP with all the tickets and fan gear that is being sold during this time. I was shocked when you said that in 2016 we lost $6.3 billion to unproductive workers. The more people we don't have working the more the unemployment rate will rise and this would being down the demand for goods. There is a lot of goods that March Madness provides but behind the scene there is also some weaknesses to March Madness.
ReplyDeleteI think that it is super interesting the one basketball tournament can make such a big impact on the surrounding communities. But it makes sense as many fans travel to the cities and need hotels, food, and transportation. This serves as a huge influx of revenue for the cities in which the games are hosted in. Also, since the tournament is in the beginning of the year, local businesses can get an early season boost in sales that will hopefully help but them in the black sooner in the year. This takes lots of pressure off of businesses that might not otherwise get a ton of sales. Overall, I think march madness is a great way to help the economy of any of the cities that the games are hosted in as more people are brought to the area, increasing the revenue.
ReplyDeleteMarch Madness as you said is great for the economy. It brings in a ton of revenue to the host cities of the games and especially to the city that is hosting the Final Four (which is Minneapolis this year). But it was super interesting how you not only acknowledged the good that March Madness has on the economy. Also the bad, when you see how much productivity goes down during March Madness you can see how much people just stop working. It was extremely interesting how much money that is lost with the non productivity of employees. However, when it's all said and done when a boss doesn't hover over people during this time, the employees build a trust and actually want to get work done for a boss that promotes positive morale. And as you said that after all it's all said and done the curve shifts back to long run aggregate supply.
ReplyDeleteThe March Madness tournament has the most impact on the economy compared to many other sporting events. For this years tournament, the city hosting the Final Four which is Minneapolis is projected to see $142 million in economic revenue coming from hotels, restaurants, tickets, and other things from what you mentioned before. In the end, a city hosting games for the tournament would be a very smart move from a economic standpoint based off of see how much money there is to be made. I believe that Milwaukee should pursue hosting games for next years tournament considering that we just built a brand new stadium and it would be fantastic for the local economy.
ReplyDeleteAs you mentioned, the opportunity cost of March Madness and the distraction it causes students and workers is substantial. People are willing to trade productivity and revenue for the enjoyment and excitement of watching the games. Also, as employees watch the games live on their computers, the website includes a “boss button” that switches the user over to a powerpoint in seconds. Everyone, including the NCAA, is aware of the problem, but the lost time and money must be worth watching the games live to a lot of people. Lastly, I wonder if busted brackets lead to more productivity because people no longer care as much about the tournament or if crazy upsets lead to less revenue for the NCAA because people would rather go to a North Carolina game, per say, than an Auburn game.
ReplyDeleteMarch Madness had an insanely beneficial in GDP the amount of revenue made from the tournament from the round of 64 all the way through is so profitable. Just as the Super Bowl the tournament has the same effect ticket sales, apparel, there are 67 games, across 14 cities all around the country, and over 100 million tune in to watch, all of this over a 3 week span. This is one of biggest GDP boosts that occurs throughout the sports season. Great blog post!
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