March Madness: The $800 Million Bubble
After canceling March Madness last year, the NCAA has $800 million reasons to make sure it happens in 2021.
|Joseph Pompliano||Nov 17, 2020||4|
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The NCAA announced yesterday that the 2021 March Madness tournament will be moved to one geographical location—most likely Indianapolis—instead of spreading out amongst the previously scheduled 13 host cities including Texas, Michigan, North Carolina, California, and New York.
You can read their full statement here:
Selfishly, I’m happy we’ll get March Madness this year—I think we all are—but let’s be honest:
The NCAA was never going to cancel March Madness for a second year in a row.
Money, of course.
Let’s dig in…
(📸 / USA Today)
First — let’s set the stage.
The NCAA makes a lot of money—more than $1 billion annually for each of the last 4 years—but the majority of it comes from one event.
The NCAA, which hosts the annual March Madness tournament, makes more than 80% of their annual $1B+ in revenue from tournament related sources including broadcasting rights, ticket sales, merchandise, concessions and more.
Specifically, the NCAA has seen their annual broadcasting rights for March Madness increase 300% since 2000 — going from ~$200M to ~$800M.
But will there be fans?
Honestly, it doesn’t matter.
To be fair, ticketing, merchandise, and concession revenue related to March Madness, which brings in a couple hundred million dollars annually, isn’t exactly insignificant.
But think about it this way — would you throw away a couple hundred million dollars to preserve losses of more than a billion?
The NBA did, and the NCAA will also.
Outside of the NCAA, there are various other factors to consider. Without fans, the local Indianapolis economy would certainly see a drop from their projected influx of tournament related spending, but sports betting operators like FanDuel and DraftKings will surely be happy.
The part no one is talking about?
While the NCAA is doing all they can to preserve $800 million or more in revenue, they’ll ask student athletes to participate in a tournament during a pandemic for no financial benefit in return.
Don’t get me wrong, I’m aware players can opt out if they want and most get a scholarship in return — but don’t chastise me for thinking it’s a scam.
The good news?
In due time, athletes will be able to profit off their name, image and likeness.
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ICYMI — The Miami Marlins named Kim Ng their new General Manager last Friday, making her the first female GM in MLB history.
Her resume includes:
30+ years experience
Started as White Sox Intern
Assistant GM for Yankees & Dodgers
Senior VP of Baseball Operations for MLB
3x World Series Champion
Last night, I did a thread on her journey from intern to GM — you should check it out.
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