March Madness: Big Business for No Pay7
By Ariel Nishli
Today kicks off NCAA “March Madness” with the first round of the Men’s Division I Basketball Tournament. Cubicle farms across the country will be losing an estimated $175 million as distracted workers call in sick, stream live games at their desktops, and slow down Internet connections en masse. Fans cherish this tournament at the expense of job performance for good reason. March Madness gives us Cinderella stories, reignites alma-mater loyalties and rivalries, and makes us feel like frat boys again when we go temporarily insane over a buzzer-beating 3-pointer.
All this hype has transformed March Madness into a multi-billion dollar business. Many are profiting from the tournament’s popularity, but one group is conspicuously left out: The players. College sports has come under fire for exploiting its student-athletes, designated amateurs that they claim, if paid, would undermine the credibility of the league.
Ethical gray areas in sports has been around since the Mayans were kicking around 9 lbs. of rubber. KoldCast TV’s hilarious amateur wrestling comedy Full Nelson, from the producers of Reno 911, is centered on it. The show features Jake Nelson, a single dad who owns and operates a small independent wrestling hall. With the discovery of Dylan Cole, a scrawny teenager hell bent on wrestling his way to avenge his pro-wrestler father’s death, Jake seems poised to become the big shot he believes he can be. Dylan becomes the wrestling hall’s unlikely golden goose, and Jake profits while his star fighter unwittingly learns virtue is its own reward.
Click to watch Episode 1 of the wresting comedy Full Nelson
The Sixth Wall looked at how March Madness will make its money, how much it’s expected to rake in, and how it leaves its student-athletes with nothing but their balls in their hands.
In April 2010, CBS signed a 14-year $10.8 billion contract with the NCAA. That breaks down to a hefty $771 million in revenue for the NCAA per year until 2024, and accounts for more than 80% of their total revenue. The price tag for the rights fee – up 41% from CBS’s last deal – is so high in large part because of new media initiatives by the NCAA and CBS that create an entirely new revenue stream. In years past, mid-March was when dutiful fans would practice their raspy voices and fake coughs to ditch work in exchange for sitting in front of the TV all day. Now they hone their reflexes, ready to minimize a live-streaming game with a quick click of the mouse when the boss walks by their computer.
For the first time in seven years, CBS is going to be charging a fee, $3.99, for watching the games live over the Internet. In 2005, it was reported that the paid service attracted just 20,000 subscribers. Slow connection speeds and choppy, grainy viewing wasn’t much of a draw, so the price tag was lifted. That caused an immediate spike to 1.3 million viewers in 2006. With qualitative advances in Internet TV, online audiences grew organically – tenfold, to 10 million viewers for last year’s tournament. Revenue from fan memberships and online advertising has skyrocketed right alongside it – pudding for proof that Internet TV networks are shaping our future. In 2006, online revenue for March Madness amounted to $4 million, a paltry sum in advertising terms. However, that number octupled to $36 million in just three years. A trend like that is hard to ignore, and exactly why you’ll pay to play this year.
The online revolution is coming, but traditional television is still bringing in a lot of dough. According to Kantar Media, the tournament is second only to the Super Bowl in ad revenue, bringing in over $738 million in ad revenue from 2011 alone. A 30-second spot during round one will run a company approximately $100,000. The Final Four is a whole different ball game, so to speak, during which rates soar into the $1 million range.
Ticket sales, the seemingly obvious part of the equation, generate about $40 million per year for the NCAA in total – nothing to scoff at. The breakdown is wholly dependent on the school’s performance, however. Better teams see better ticket sales. A large stadium is helpful, but if the fan base is waning, it’s just a greater expense. According to The Atlantic, a team’s success isn’t dependent on enormous crowds, thanks to creative initiatives by certain schools. Duke, for example, requires Blue Devils fans to pay handsome donations – up to $8,000 for the worst seats in the house – before buying tickets. Those who can afford it donate up to $55,000 for premium tickets.
NCAA Basketball Fund
This is part of the NCAA’s Revenue Distribution Plan, where the line between amateur and professional begins to blur. The way it works is conferences receive money based on how many tournament games their teams have played. Last year, over $190 million was doled out. The funds are only distributed every six years to reward long-term performance and finals do not count, so as to lessen the financial pressure on players to win games. Another barrier between players and conference earnings is individual conference rules. Some distribute the money evenly among their schools while others distribute it based on performance in the big dance.
Still, the correlation is clear. The better the players, the more money they’ll earn for their school. Forbes calculated this year’s “game units” to equal $258,502 per game. With the value of a game historically increasing at a steady clip of 7.86%, even just one game played in this year’s tournament will be worth $1.9 million in six years when teams can cash in. And if you bring your team to the final four, you’ve just earned your school $9.5 million. No pressure.
With television networks, corporate brands, universities, and the NCAA making billions off their students’ performance, how is the athletes’ inability to earn possibly justified? The NCAA states its noble principles of “amateurism” and the “student-athlete”, or what The Atlantic calls “legalistic confections” (read: bullshit). The argument is that the integrity and appeal of college sports would be destroyed if the players were paid. Maybe it would be, but the fact remains that the institution is fully commercialized and fully dependent on its players’ work.
Author Taylor Branch has compared the overseeing bodies of college sports to profiteering cartels and even colonialism, “a system imposed by well-meaning paternalists and rationalized with hoary sentiments about caring for the well-being of the colonized. But it is, nonetheless, unjust.” As the profit margins continue to widen, pressure to reform has mounted in Congress, from athletes and students, and independent conferences. Many believe the NCAA is on the verge of a legal overhaul. Until then, we’ll just have to revel in March Madness the same way the players do, for the love of the game.
Click to watch Episode 2 of the wresting comedy Full Nelson
Ariel Nishli is the Editor-in-Chief of The Sixth Wall. He’s got a big apple in his heart but moved to Los Angeles to pursue a career in the entertainment industry. After graduating from Vanderbilt University in 2007, he worked in the motion picture literary department at ICM, and then moved on to feature film development at Parkes MacDonald Productions. Ariel’s wardrobe has steadily devolved from designer suits to worn out slippers, as he now focuses on screenwriting and journalism when he’s not obsessing over The Sixth Wall.