How much does the NCAA make from March Madness? Where does the money go?
The NCAA, the governing body of college sport in the US, makes almost all of its money from the yearly Division I Men’s Basketball Tournament.
The National Collegiate Athletic Association’s Division I Men’s Basketball Tournament, an annual event most commonly known as ‘March Madness’, is responsible for the vast majority of the NCAA’s revenue.
Indeed, the governing body of college sport in the US pockets just under ten figures each year from the competition, whose 2022 edition began on Tuesday.
NCAA has big-money, long-term TV deal for March Madness
The NCAA’s chief source of income from March Madness, which determines college basketball’s national champion, is the sale of the television and marketing rights to the tournament.
In 2010, the NCAA signed a 14-year, $10.8bn TV rights deal with CBS Sports and Turner Broadcasting System. In 2016, that agreement was then extended through to 2032, the networks committing to paying a further $8.8bn for the eight years added to the contract.
The NCAA’s other major revenue stream from March Madness is ticket sales.
March Madness worth around $1bn a year to NCAA
According to the NCAA's published accounts, its overall 2019 income across all sports was $1.12bn. March Madness therefore accounted for just over 82% of the organisation's earnings.
The NCAA's 2019 income included $867.5m in TV and marketing rights, and $177.9m in ticket sales. Although the NCAA does not break these sums down by tournament in its annual figures, both can predominantly be attributed to March Madness.
The event was cancelled in 2020 after the outbreak of the pandemic - the only time in its 83-year history that it hasn’t been held - before returning 12 months ago, with covid rules restricting venues to 25% of their maximum capacity.
In 2021, the NCAA's total TV revenue increased to $917.8m, and its accounts show that, while ticket sales unsurprisingly shrank to $61m, this shortfall was largely offset by $81m in loss-of-revenue insurance, “related to reduced ticket sales and additional costs for COVID-19 precautions”, the body said. In all, the NCAA's income rose to $1.16bn in 2021.
The NCAA has not specified how much of this amount corresponds to revenue from that year's March Madness - but, unless there was a significant change in the competition's impact on the body's finances, it can be estimated that it brought in between $900m and $1bn.
NCAA says nearly all revenue pumped back into college sport
According to the NCAA, almost all of its overall revenue - around $1bn in 2019 and 2021 - is distributed back into the collegiate sport system. The NCAA’s published accounts for 2019 and 2021 do not offer a breakdown of exactly how this revenue is shared out, but in 2016 the organisation said the three chief areas money was distributed to were:
- sponsorship and scholarship funds, “to help fund NCAA sports and provide scholarships for college athletes”: $222m
- a basketball performance fund, consisting of prize money distributed to each Division I conference on the basis of its’ teams’ results in March Madness over a six-year period: $168.8m
- general financial support for the 26 men’s and women’s championships in Division I, across 24 sports: $153.8m
In all, $924.1m was spent on prize money and financial assistance in 2016, the NCAA said, with just over $100m used for “other association-wide expenses” and “general and administrative expenses”.
It's worth noting that, as a registered non-profit organisation, the NCAA is exempt from federal income taxes.
Athletes not paid despite NCAA raking in revenue
While the NCAA might argue that it invests much of its income back into supporting college athletes, it nonetheless remains a source of controversy that the body can pull in such huge sums from March Madness while refusing to directly pay its athletes for playing.
The NCAA requires all college athletes to adhere to its 'principle of amateurism’, insisting they should always be students first and athletes second - indeed, it refers to them as ‘student-athletes’. Amateurism, says the NCAA, ensures that gaining an education remains the primary focus of their attendance at university.
"Student-athletes shall be amateurs in an intercollegiate sport, and their participation should be motivated primarily by education and by the physical, mental and social benefits to be derived," the NCAA says in article 2.9 of its 2021/22 Division I Manual.
The only type of financial compensation student-athletes can receive from colleges is aid aimed at covering educational costs such as tuition, textbooks, accommodation and meals.
However, in the wake of numerous lawsuits over the NCAA’s amateurism requirement, the body announced in June 2021 that it was to relax its rules to allow athletes to benefit financially from their name, image and likeness (NIL), through revenue sources such as endorsements.
The NCAA maintained its hardline stance against directly paying athletes, though. "The new policy preserves the fact college sports are not pay-for-play," said Sandra Jordan, the chair of the NCAA Division II Presidents Council.