Action: March Madness creates excitement, hype and incalculable lost productivity
March Madness is upon us, in fact, it is nearing an end. On the surface, it’s just a couple of play-off games in college basketball at the end of the season to determine a national champion. But that is way, way too simple.
The men’s NCAA College Basketball Tournament has come to be known as March Madness. The reason is simple. In one way or another, the event touches a lot of lives.
Various studies have attempted to quantify just how big an impact March Madness has on the nation’s economy. By one such estimate, outplacement firm Challenger Grey and Christmas estimates the impact this year on the bottom line of American companies could reach nearly $900 million.
To reach that number, Challenger Grey and Christmas starts with the NCAA’s estimate of 22.9 million people who call themselves college basketball fans and then figures that 14.3 million of those so-called hardcore fans are employed. If each of those fans is distracted by the games for just 13 minutes of work a day over the 16-day run of the tournament, the total impact could reach $889.6 million.
The amount of money lost in productivity, spent in advertising and bet on the games is almost incalculable; certainly it is in the hundreds of millions of dollars, but it is so big that no one really knows a number for sure.
First, of course, there are the betting pools. Thousands of office pools around the country are activated to try to pick a winner of the tournament. Some are just $1-a-square pools, but others can go much higher. Often, beginners do as well as, or better than, hardcore fans, but that is just part of the overall appeal.
Beyond that, the 127 game event is also the centerpiece of the biggest single sports deals in history. CBS currently owns the 11-year package to broadcast and marketing rights for the tournament. They paid $6 billion for those rights. The total package includes some 87 championship games in 22 college sports, but clearly the men’s basketball tournament is the number one prize.
Falling as it does, during the last two weeks of March and the first week of April, the NCAA tournament pretty much enjoys the undivided attention of the average sports fan.
CBS sports will generate the vast majority of the money to cover the huge contract by selling conventional 30-second TV spots to advertisers at prices of less than $100,000 for the early rounds, up to as much as $1 million for the final match-up this year to be held in St. Louis on the evening of Monday, April 2. The television, radio and online audiences will be huge that night, but they have been throughout this entire tournament as they likewise have been for previous tournaments.
CBS has signed up a handful of big spending corporate sponsors who get to put their logo on a full package of events and merchandise marked "official." Coca-Cola paid about $500 million to lock up one of those slots for the life of the deal. Other major corporate sponsors include Cingular and General Motors.
So, there you have it, it’s March Madness time. The states of Wisconsin and Illinois were well represented at the beginning of the tournament on March 15. There was the University of Wisconsin and Marquette and the University of Illinois and Southern Illinois, and so there are lots of reasons for sports fans and alumni to be specifically interested in this March Madness.
Yet, those office pools, some for just a dollar-a-square, others for much, much more, can get a lot of so called "non-fans" involved. In the end, you’d like to believe it’s just a little bit of good, clean fun in the springtime.
While gambling is illegal in most of this country, frankly, considering all of those office pools, there just isn’t enough jail space to confine all those who, for just a couple of weeks, may have a couple of bucks down hoping their team will be crowned the national champion on April 2.
(Tom Butenhoff is vice president/investments, Stifel, Nicolaus & Company, Inc. The opinions above are those of Tom Butenhoff and are not necessarily the opinion of this paper or of Stifel Nicolaus.)
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