BCS first
The BCS is bringing in $186.3 million. It’s net assets are approximately $140 million. This money is then split amongst all teams that are in Division 1 (FBS and FCS). That comes out too 242 teams splitting $140 million. Well, $80.6 million of that remains in the bank, therefore the numbers of distribution are even smaller. Here is what the distribution looked like last year (2009 is expected to be similar in results).
1. Non-Automatic Qualifying Conferences – $19.3 million.
2. Automatic Qualifying Conferences – $17.8 million.
3. Football Championship Subdivision (Formally Division 1-AA conferences) – $1.8 million.
4. Notre Dame – $1.3 million.
5. Each conference with two teams in the BCS – $4.5 million.
6. Army and Navy – $100,000 each.
Each conference gets that money split amongst them (evenly except in the case where a non-auto has a BCS berth and then that conference receives substantially more). This means the 10 teams in the Pac10 receive as much as the 12 teams in the SEC. Also that the 8 teams (WKU and S. Alabama don’t count yet) receive as much as the 12 teams in CUSA and the MAC. Notre Dame gets $1.3 million for simply existing. The numbers are stacked where the big players in college football continue to get the most money and everyone else gets a set amount year after year. This doesn’t include individual bowl payouts in the BCS ($17 million per school). The highest non-AQ contracted bowl pays out $1 million and the highest non-BCS bowl pays out $4.25 million. This is why the bowl season works. It’s all about money and everyone is afraid of what might happen if it goes away. Bowls payouts total up to just over $252 million. So overall, the BCS and bowls can generate a total amount of revenue (for the schools) in excess of $310 million with every school getting at least a piece of the pie. So once you consider that each sponsor gets their kick backs, venues take their money, the hype of bowl advertising is paid off. Schools plus the BCS comes too under $400 million.
March Madness
In 2007, March Madness generated $497 million in money off of just advertising. This is more than the NFL playoffs (yes, including the Super Bowl). That is over 75% of NCAA basketball ad revenue, in a single month. So, you wonder how the NCAA post season bowls do in ad revenue $110 million with $396 million being made during the regular season. So its obvious playoffs work for advertising. In 2006, the average rate for a 30 second advertisment was $2,500 in the Super Bowl. March madness pulled in the second highest rate with $1,118 in the Championship, even the final four brought in $653 per 30 seconds. Thats higher than the World Series, NBA playoffs, first and second rounds of the NFL playoffs and BCS bowls games. BCS bowls games (non-championship) cost less to advertise on than the World Series even.
This does not go to mention the $30 million in online ad revenue that March Madness generated last year.
The broadcasts from CBS bring in just over $545 million for the NCAA per year in the contract. This money is then divided up amongst the schools with no stipulations on usage and all $545 goes to the schools. This is how the money is broke up.
The Division I Men’s Basketball tournament is the only NCAA championship tournament (officially, the BCS Football Championship is not an NCAA event) where the NCAA does not keep the profits. Instead, the money from the multi-billion-dollar television contract is divided among the Division I basketball playing schools and conferences as follows:
“-1/6 of the money goes directly to the schools based on how many sports they play (one “share” for each sport starting with 14, which is the minimum needed for Division I membership).
-1/3 of the money goes directly to the schools based on how many scholarships they give out (one share for each of the first 50, two for each of the next 50, ten for each of the next 50, and 20 for each scholarship above 150).
-1/2 of the money goes to the conferences based on how well they did in the six previous men’s basketball tournaments (counting each year separately, one share for each team getting in, and one share for each win except in the Final Four and, prior to the 2008 tournament, the Play-in game). In 2007, based on the 2001 through 2006 tournaments, the Big East received over $14.85 million, while the eight conferences that did not win a first-round game in those six years received slightly more than $1 million each.” -NCAA revenue
This also doesn’t include the revenue generated in the schools advertising while in the tournament and various other payouts and scholarship grants. Most believe that the total numbers would come out to just under $1 billion a year to be divided up amongst the teams.
The Verdict
We all know football is a cash cow. It dominates the regular season market. The bowls are supposedly making more money than a playoff would. But March Madness generates more money for the schools than you could ever imagine. So where is the bowl money going. Only 10 bowls pay taxes on income. 23 are tax exempt (non-profit) and one is government owned. Therefore I believe any type of playoff taking up a month would generate much more revenue than the bowls, especially if you were to let the bowls continue as week games in the midst of the playoff. You are probably looking at over $1 billion a year.
However, FOX claims that this would decrease the charitable contributions that the 34 bowls make. All these non-profit companies (according to the IRS) give under 2% of the total revenue to local charities. This means that a whole $3 million would disappear from charities (I think that the playoff system would cover that).