March Madness posts up
for big financial score

It’s one of the biggest sport events of the year — with more eligible teams than there are countries in the Olympics, more minutes played than the World Series, and more beer and buffalo wings consumed than the Super Bowl.

While a full accounting of the economic impact is impossible, the NCAA men’s basketball championship series is surely one of the biggest money-making sporting events as well. And this year, with all-you-can-eat cable TV premium packages and expanded live coverage on the Web, fans will have more ways to watch more hours than ever before.

“Baseball season hasn’t started yet, the NBA season is just getting set to close and no one even knows if there a hockey league any more. For that moment, the NCAA owns the sports landscape,” said Paul Swangard, managing director of the Warsaw Sports Marketing Center at the University of Oregon “That’s really hard to accomplish in this day and age when there do much competition and so many diversions for people.” 

With all that attention focused on the sport, it’s a wonder viewers can get any work done. In fact, various studies have attempted to quantify just how big a productivity hit is felt every March by Corporate America.

One such estimate, by outplacement firm Challenger, Gray & Christmas, estimates the impact this year on the bottom lines of American companies could reach nearly $900 million. (To come up with that number, the firm starts with NCAA’s estimate of 22.9 million people who call themselves big college basketball fans, and then figures that 14.3 million of those hard-core fans are employed. If each of those fans is distracted by the games for just 13 minutes of work a day over 16 days, the total impact could reach $889.6 million.)

With all that undivided attention on the Big Dance, a lot more money — potentially hundreds of millions of dollar, but no one knows for sure — flows though thousands of betting pools set up in offices, college dorms and on the Web. Part of the allure is the uncertainty inherent in the fast-moving elimination schedule; those with little expertise often fare as well or better in the pools than the most die-hard, statistics-riddled fans.

“For all the football pools and all that sort of stuff, this is far and away the largest event in terms of gambling interest in the country,” said Victor Matheson an economics professor at College of the Holy Cross who has written about the economic impact of March Madness.

The 127-game event is also the centerpiece of one of the biggest single sports deals in history: CBS’s $6 billion, 11-year package of broadcast and marketing rights with the NCAA. The total package includes some 87 championship games across 22 college sports, but the men’s basketball tournament is clearly the prize.

Men’s brackets | Women's brackets

For three weeks in March, the NCAA tournament pretty much enjoys the undivided attention of sports fans everywhere. Matheson said that by bundling the huge rights package — some 90 percent of which represents March Madness — the basketball tournament subsidizes most of the NCAA championship playoffs in other sports.

As in years past, CBS Sports will generate vast majority of revenue to cover that huge contract by selling conventional 30-second TV spots to advertisers — at prices of less than $100,000 for early rounds to as much as $1 million for the final match-up in St. Louis. CBS has also signed up a handful of big-spending corporate sponsors who get to slap their logo on a full package of events and merchandise — much like “official” Olympic sponsor. Coca-Cola paid a reported $500 million to lock up one of those slots for the life of the deal. Other major corporate sponsors include Cingular and General Motors.

Along with the perennial flow of beer commercials, this year’s advertising line-up will include marketing programs designed to capture the bounce in viewing from hordes of young male viewers of the games — a group that's highly sought by advertisers. Coca-Cola plans to pump up promotion of its PowerAde sports drink. General Motors will roll out a new “March Madness” sale that includes a $1,000 cash rebate. Sneaker maker New Balance will hit the airwaves with a new campaign to try to catch up with sales leaders Nike, Reebok and Adidas.

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