For the vast majority of us, the NCAA March Madness Tournament is a great form of entertainment that provides us with a fantastic opportunity to cook our favorite appetizers, invite friends over, and root on our favorite schools. Few of us realize the economic impact March Madness has on the NCAA and the schools that have teams that are making a run for the championship.
How nonprofits make money
The issue of money, colleges, and the NCAA is always a touchy subject. The NCAA and most of the colleges competing in the 2020 March Madness Tournament are legally registered as nonprofits.
Most people assume that nonprofit status means the organizations don’t need money, which is why so many people argue about the cost of tuition. The reality is that while nonprofits like colleges and the NCAA might not be in the business of making large sums of money for profit, they do have to make enough money to cover their expenses, which includes things like venue rentals, employee salaries, advertising, utilities, and travel expenses.
Quite simply, March Madness is one of the NCAA’s biggest moneymakers.
How the NCAA makes money from the March Madness Tournament
The bulk of the money the NCAA earns from March Madness is what they make from the deal the NCAA signed with CBS/Turner which allows CBS to air footage of the tournament.
It’s estimated that approximately 90% of the NCAA’s basketball earnings are generated by the March Madness Tournament. In 2019, March Madness added about $933 million to the NCAA’s coffers. While the contract with CBS/Turner made up the bulk of this revenue, additional sources of funding included things like sponsorships and ticket sales.
How much do the colleges get paid for winning the NCAA March Madness Tournament
Winning the NCAA March Madness Tournament is a really big deal for colleges. Not only does the win provide them with a great deal of free publicity and showcase the school’s basketball program, but it also gives them a great deal of additional funding that they can use to recruit another crop of players, attract better students/faculty, boost merchandise sales, attract new corporate sponsors, and even add new programs and classes that had previously been nothing more than pipe dreams. The NCAA also pays each team that makes it into the March Madness Tournament.
The NCAA takes a portion of the money they’ve made from the CBS/Turner deal and gives it to the schools that developed a strong enough program that they qualified for the March Madness Tournament. In 2019, each school was paid $273,500 for each unit they played.
The deeper the team progressed into the tournament, the more money the school earned. Winning the NCAA Basketball Championship requires playing in five different units so the final two teams earned $1,367,500 during the tournament. That’s a great deal of extra money that the school can use the following year which is one of the reasons schools are so serious about developing a solid basketball program.
This year, participating schools will make even more during their run towards the championship. The NCAA expects to pay $280,300 per game in 2020.
The amount of money schools make during March Madness and the rest of the basketball season is one of the reasons so many college athletes are frustrated with NCAA rules.
Staying eligible means the athletes can’t earn any money from their athletic prowess, yet they see how much money the school’s and NCAA are making, which creates a great deal of bitterness. Many people involved in the program would like to see the system change so that players have the ability to at least do some light promotional work during their college years.
In some of the player’s cases, being able to earn, even a little extra money, would eliminate a great deal of the pressure they experience during their college career.