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How March Madness Directs Your Money To Big College Conferences

Let’s talk about this guy for a moment.

UNC Fan with South Carolina Flag

He’s a North Carolina Tar Heels fan. Tar Heels fans hate the Duke Blue Devils, and vice versa. It’s unquestionably the best rivalry in college basketball, and it produced three highly entertaining (and highly watched) contests this year. Duke won two of them.

So when Duke faltered against South Carolina in the second round of the NCAA Men’s Basketball Tournament this year, this guy, like many other UNC fans in the stands that night in Greenville, SC, was understandably excited. He had just watched UNC defeat Arkansas and advance to the next round, and now he was watching the upstart Gamecocks knock off the team he hates the most. As fan, that’s a fantastic night.

What he probably didn’t realize, though, was that he was cheering for a result that would take money away from his favorite team — and a tiny bit of his own money at that.

Here’s how that works:

CBS and Turner Sports currently pay the NCAA $771 million a year for the broadcast rights to the NCAA Tournament. (That number will jump to $1.1 billion per year in 2024.) Based on current estimates, about $471 million of that comes from Turner, which is paid for by the roughly $3 billion in cable subscriber fees earned by TBS, TNT, and TruTV.

The NCAA distributes more than $207 million of that money to conferences based on their schools’ NCAA Tournament successes over a six year span. Chris Smith of Forbes describes how the NCAA’s system works:

Conferences get a ‘basketball unit’ for each tournament game one of its teams plays, including the play-in round but not the championship game. Those units have a six-year shelf life, so units won this year will be held by a conference through 2023. Why is that important? Because every spring the NCAA provides a financial payout to conferences for each unit in their possession. This year conferences will receive $264,859 per unit.

Unit values tend to increase a bit every year – next year units are projected to be worth $272,620, and in 2019 they’re projected to pay out $280,756. Assuming similar increases over the following four years, a unit won in this year’s tournament will be worth just over $1.7 million across its six-year life. So if North Carolina makes a run to the Final Four, thus collecting five units, it will have earned more than $8.5 million for the ACC.

UNC did just that, of course, reaching tonight’s final. With 15 teams in the ACC, each school in that conference — including Duke — will receive more than $94,000 per year over six years from just the Tar Heels’ success this year. The ACC’s overall success in the tournament — 97 basketball units in the last 6 years, including a whopping 25 last season — will net the conference nearly $25.7 million this year. (This is why you’ll see some fans claim they back all their conference’s teams in the NCAA Tournament. They know what that means to their own school.)

So had Duke beaten South Carolina, UNC and other ACC schools would have shared an additional $1.7 million over six years. Instead, that money will be redirected to the SEC. In fact, the Gamecocks’ run to the Final Four will net the SEC more than $5.1 million over six years.

If that Tar Heels fan has a pay TV subscription that includes TBS and TNT, that’s a bit of his money being redirected away from his school to schools in another conference. Roughly 91 million people get those two channels. By dividing the NCAA’s conference payouts by 91 million, we can determine how much money each subscriber is contributing to major conferences through this year’s NCAA Tournament:

  • ACC: 28.2 cents
  • Big Ten: 20.9 cents
  • American Athletic Conference: 15.4 cents
  • SEC: 13 cents
  • Big 12: 12.8 cents
  • Pac-12: 11.3 cents
  • Big East: 8.1 cents

Oh, and just a reminder — the athletes themselves don’t get a piece of that action. They remain “amateurs” while coaches and NCAA officials rake in millions in the numbers game that is college sports.

Now it’s entirely possible to make the argument that advertising revenue covers the entire budget of the NCAA Tournament for CBS and Turner. I’ve made that argument myself. But it doesn’t have to — not when a mere two months of carriage fees can cover Turner’s portion of the broadcast rights, and CBS’ retransmission fees cover their share. March Madness might deliver huge TV ratings, but people who aren’t watching are still paying for it.

As for that UNC fan… well, perhaps he’s okay with UNC receiving $18,000 less this year than it otherwise might have. After all, UNC’s athletic department will receive more than $21 million this year — $16 million of which comes from ESPN’s long-term deal with the ACC. Isn’t cutting one paid student intern a pretty fair exchange for the joy of watching a hated rival lose? Maybe that intern would trade his or her job to watch Duke lose, too. It is that sort of rivalry.

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