The business of March Madness: Economic impact on host cities, advertisers, and the NCAA
The business of March Madness means big bucks to host cities across the country. We look at how much money can cities expect from the tournament.
No country in the world cares as much about college sports as the US. American’s love for March Madness is the purest of this love. Across the country, millions of people will tune in to watch the NCAA Tournament only to see upsets, drama, and basketball.
Being in the tournament means big money for many cities, so it is no surprise that many of them invest so much in their schools entering March Madness. For many colleges, the NCAA Tournament is a make or bust when it comes to money. They rely on making it to make their yearly accounts above the red.
But how much money does March Madness leave for host cities?
From last year, host cities can expect 250 million for their participation in the NCAA Tournament. But this is not for all of the cities that host the tournament. For example, last year, Pittsburgh, which hosted first and second-round games, saw $10.5 million in revenue for both women’s and men’s games.
To safeguard against issues like the COVID pandemic, the NCCA voted to get a cancellation insurance policy. The policy cost 175 million to set up. The way they did it was “Captive” insurance, in which the company sets up another company to ensure payment, so that nothing will happen if cancellation is required.
How much money can advertisers make on March Madness?
Prices for airtime during March Madness range from the hundreds of thousands for early rounds to more than $2 million for the national championship game. Moreover, CBS and Turner got more than 140 advertisers in 2022 including more than 35 new ones. For 2023 executives expect these numbers to be higher.
The tournament created a revenue of one billion dollars back in 2021. So if that is any indication, 2023 should surpass that with ease.
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, with the networks committing to paying a further $8.8bn for the eight years added to the contract.
Because the NCAA doesn’t control the College Football Playoff and the FBS bowls, they have to rely strongly on what the D1 tournament can bring.