Bloomberg News

College Basketball’s Championship Tournament A Money Madness

March 23, 2012

Photographer: Eric Francis/Getty Images

Photographer: Eric Francis/Getty Images

The National Collegiate Athletic Association men’s basketball tournament, currently in the middle of its regional semifinals, will conclude on April 2 in New Orleans. The college championship is defined as much by television money, coaches’ contracts and lofty ticket prices as it is by 3-point shots, rebounds and buzzer-beaters.

1.Bracketmania

The first national men’s college basketball tournament in 1939 lost $2,531, roughly enough to buy one ticket to the 2012 Final Four. If money is the measure, March Madness lives up to its name. What follows are some of the larger costs surrounding the 67-game tournament.

2. The Players

Many college players receive a free education through scholarships. Tuition at Duke University, for example, costs around $228,000. According to a 2010 study by the National College Players Association, many players live in poverty because of a gap between their annual costs and their scholarships -- a gap that averaged $3,222 in the 2010-2011 school year. NCAA President Mark Emmert is pushing to allow conferences to increase scholarship allowances by $2,000.

3. Subsidies by Students

In 2010, 46 of 53 public universities surveyed by Bloomberg News diverted money to fund sports programs. School subsidies and student fees made up 21 percent of the $6.3 billion in athletic revenue at the NCAA’s 120 largest programs, the largest share since 2004. Rutgers University in New Brunswick, New Jersey, subsidized sports the most, at $26.9 million in fiscal 2010. The University of Texas at Austin was one of seven universities surveyed that didn’t rely on other funding.

4. College Programs’ Money Flow

According to the most recent data filed with the U.S. Department of Education, Division I men’s basketball teams made $1.23 billion in 2010 and had $893 million in expenses. Women’s teams raised $374 million in revenue to partially offset $519 million in costs. The University of Kentucky men’s team, this year’s top overall seed, brought in $16.8 million and spent $11.6 million, according to data obtained by Bloomberg News through open- records requests.

5. NCAA Budget Nears a Billion

According to its website, the NCAA expects to bring in $777 million this academic year, 90 percent of which comes from broadcast and other media rights. Last year, $478 million of that revenue went back to Division I schools, with more than a third based on schools’ success in the men’s tournament. The largest share, $24.9 million, went to the Big East Conference, home of 2011 national champion, the University of Connecticut. Among the NCAA’s other expenses: $74 million to cover travel expenses for athletes and coaches to all 89 national championship tournaments last year, plus $5.5 million for drug testing in 2010.

6. Recruiting

Division I universities spent $150 million recruiting for all sports in 2010, according to the Department of Education. A Bloomberg News analysis found the men’s basketball program at Kentucky spent $434,095 on recruiting in fiscal 2010, the most of 53 public universities in the six biggest conferences. The University of Wisconsin -- which has made the regional semifinals each of the past two seasons -- spent the least, at $57,397.

7. Millionaire Coaches

According to a 2011 study by the College Sport Research Institute, the 65 coaches in the 2009 NCAA men’s basketball tournament received an average guaranteed income of $1.1 million, which could pass $1.6 million via incentives and bonuses. In 2011, the University of Louisville’s Rick Pitino made $7.5 million, while John Calipari at Kentucky made $3.8 million. Connecticut’s Jim Calhoun is the state’s highest-paid public employee, pulling down $2.7 million this school year.

8. Ticket Prices

Final Four tickets range from $350 to $3,500 for the three games, with some at more than $7,000, according to PrimeSport, which is designated by the NCAA to sell ticket packages and run an online ticket exchange. Tickets to the three games of the women’s Final Four in Denver run from $350 to $1,500.

9. Gambling Billions

Roughly $75 million to $80 million will be wagered in Nevada on the men’s tournament, according to Mark Goldman, director of race and sports book operations at Cantor Gaming. Of the major sports championships, March Madness is second only to the Super Bowl, which prompted $93.9 million in wagers this year, according to the Nevada Gaming Control Board.

10. Broadcast Rights

In 2010, CBS Sports and Time Warner Inc.’s Turner Broadcasting signed a $10.8 billion deal, more than $770 million per year, to broadcast every game of the men’s basketball tournament for 14 years. In December, Walt Disney Co.’s ESPN renewed its rights to the women’s tournament through 2024 for $500 million, a deal that also included international rights to the men’s tournament and worldwide rights to 23 other NCAA men’s and women’s tournaments.

11. TV Ads

According to Kantar Media, $738 million was spent on TV ads during the 2011 men’s tournament and the average cost of a 30- second ad in the championship game was $1.24 million. Digital revenue is also rising -- this year viewers who don’t subscribe to Turner Networks were charged $3.99 for access to all games aired on TNT, TBS or TruTV.

12. Host Cities

New Orleans Mayor Mitchell Landrieu’s office estimates the Final Four games will inject $134.1 million into the city, including $77 million in direct spending on the event, such as tickets and hotel reservations, and $57.1 million on shopping, dining and other tourist activity. Denver estimates the economic impact of the women’s Final Four this year will be roughly $20 million.

13. Extras for Fans

PrimeSport also sells hospitality packages that include parties before the men’s games in New Orleans. Access to “elite” hospitality events on both days of the Final Four cost an extra $450 per person, which includes a party on March 31, with the band Blues Traveler. Packages that include tickets, parties and four nights of hotels cost $2,000 to $2,500.

14. Coaching Incentives

Men’s coaches at 26 of the largest and wealthiest athletic programs received an average bonus of $47,628 for a postseason appearance, $63,262 for making the Elite Eight, $107,535 for the Final Four and $186,364 for winning a national championship, according to a College Sport Research Institute study. They also received an average $66,726 if players met a particular graduation rate, $48,600 for high grades and $39,333 for a measure of eligibility and retention called the Academic Progress Rate.

15. Spoils to the Victors

Success can have a big impact on schools with lower athletic profiles. Virginia Commonwealth University, which made the Final Four last year as a No. 11 seed, saw donations to its athletic department gain 376 percent and overall giving rise 46 percent.

-- With assistance from Eben Novy-Williams and Seth Magalaner in New York and Curtis Eichelberger in Wilmington. Editors: Dex McLuskey, Rob Gloster

To contact the reporters on this story: Ben Steverman in New York at bsteverman@bloomberg.net

To contact the editor responsible for this story: Suzanne Woolley in New York at Swoolley2@bloomberg.net.


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