The Economics of March Madness

The Economics of March Madness


The Economics of March Madness


March Madness is one of the largest and craziest sporting events every year. Three weeks of blood, sweat and tears, from young kids trying to make names for themselves on national TV. From boosting your draft stock, to winning a National Championship, the NCAA Men’s and Women’s Basketball Tournaments mean so much to the players and coaches that partake. Obviously with a tournament of this size (over 60+ games), there is an enormous amount of money to be made. But how much revenue is generated? And who gets the profits?

Let’s address the first question. How much money is being pulled in, and where is it coming from? The NCAA reports over $1 Billion (yes that is billion with a “B”) in revenues annually for the Men’s Basketball Tournament. This money comes from numerous revenue streams, including but not limited to- what CBS and its affiliates pays to host/stream the tournament on TV, ticket sales, concessions, etc. All the while, the players in the tournament are not receiving a dime of this money. Of the 900 million dollars in revenue, the NCAA claims that they only receive about 3% after their expenses. Of that 3%, the NCAA says that virtually all of this money goes towards their operating costs. So if the NCAA is not making as much money as some may have thought, who is profiting?

The answer is big business. The sponsors and the arenas that hold the games, and the TV channels that broadcast these games all over the country and the world. So even if the NCAA is not profiting as much as others, there are people benefiting all over the place from the hard work of college kids who will never see any of this money.

Two of the main arguments against players being paid are that 1) the NCAA doesn’t make enough money after all their expenses and 2) that most players’ tuition is paid through scholarships, hence acting as compensation mechanism. We already discussed the fact that the NCAA doesn’t need to directly pocket this money in order to take advantage of these players, because businesses still do. 

As for the argument of players having their tuition paid for, this argument is not satisfactory. First of all, not all of these players are on full ride scholarships. Many of the lower ranked teams have players on partial scholarships, and many also have players who were not recruited and receive no tuition as walk-ons. Even if a player is afforded tuition, that $200,000 in classes does not guarantee them anything in the future. Even players that will use this as a platform to possibly play in the NBA, run the risk of being injured. 

Overall, there is clearly a need for change in the current system and one thing we know for sure is that the players in this tournament are not being compensated nearly enough. With all the money that’s being made, whether it is by big businesses or the NCAA, these players dedicate their lives, day in and day out to for tournaments like these, and they deserve to be compensated for their work. 

Tune in this week to The Wrightway Podcast, where COO Austin Meo and I will go into more detail about this ongoing struggle in college athletics, and the legal/political implications that compensation/sponsorship/etc could mean for student-athletes across the country.


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