The finances behind the destruction of college basketball

SFN: We’d like to thank one of our loyal readers, ‘noah’, for submitting this great piece. If you would ever like to submit an entry for the front page of the blog please just email us at [email protected]

So, now that the NCAA men’s basketball tournament is over, I suppose we can say goodbye to college basketball. Not just for this year, but college basketball. Oh, they will still be playing next year. But will you care?

The expansion of the NCAA tournament is pretty much a given. If they are calling it “probable” in the media, that means it’s already been decided. And why not change the tournament? The expansion will mean that the NCAA can opt out of its contract with CBS…a contract that is currently worth $550 million.

When I first heard about the opt-out, my initial thought was, “The NCAA tournament is NOT a $550 million piece of property!” Surely, I can quantify that. There are 63 games and a college basketball game is about two hours long. So that’s 126 hours of actual basketball on the air. Typically, in an hour, you expect there to be about 18 minutes of

The ratings for the first weekend of the tournament were pretty consistent with the ratings over the last decade – pulling about a 5.0. In Los Angeles, the largest TV market, the first weekend got a 2.0. Last weekend, ratings were around 7.5 and the Final Four should get around a 10. (Link)

Saturday’s Final Four games drew the highest TV ratings in five years and were up 8 percent from last season. The games drew an overnight 9.7 rating and 19 share, which is good for the network. However, it’s still a far cry from Duke’s heyday in the 90s, when the Devils’ games usually doubled those numbers. Overall, the tournament ratings are 6.2/13, up 2 percent to last season.

To put that in comparison to college football, the Alamo Bowl, typically played on December 29, usually gets around a 5.0 rating. The Motor City Bowl (now knows as the Little Caesars Bowl) was played in the middle of the day on December 26 and featured college football titans Ohio University and Marshall University. That match-up managed to get about a 4.5 rating. At halftime of the Rose Bowl played on January 1, 2009, USC was ahead of Penn State by a 31-7 margin and the second half still managed to get a 12 rating.

So there’s just no way that those modest ratings for basketball can be worth $550 million, right?

Wrong! Not only are the television rights to the NCAA Tournament worth the $550 million, they are worth MUCH more. And something else I discovered…there may be no bigger bargain than a Super Bowl ad.

CBS sold just about every single ad space for the NCAA Tournament, with revenues rising by more than 10%. A 30 second ad during the first couple of rounds costs $350,000, rising to to a cost of $1.3 million during the Final Four. Furthermore, CBS is expecting to make more than $20 million for their on-demand service and several official sponsors will provide more revenue. (Link)

Does $1.3 million sound high to you? Apparently, it’s worth it to advertisers. The amazing thing is NOT that a Final Four ad costs $1.3 million; the amazing this that the same ad during the Super Bowl costs $2.6 million. About 20 million people watched the Final Four. What’s the audience for the Super Bowl? About 100 million.

There is considerable debate as to whether or not a Super Bowl ad is worth the $2.6 million. First, the ad buy is just a fraction of the cost. Most companies want to roll out a new ad and they want the ad to be memorable. That means that after production costs, a company could easily be dropping $5 million for 30 seconds. But every year, they do it again and, while I’m not a fan of their products, I can’t criticize Budweiser, Coke and Gillette as poorly-run businesses. Also, if you’re CBS…what do you care? You just want to sell the space.

As it stands now, college basketball is profitable enough to justify CBS spending more than $500 million on it. With its cable franchise fees, ESPN can afford to spend $1 billion for the rights to put on ONE NFL game a week. You could easily see them dropping close to that for the NCAA Tournament.

So…opting out of the contract? Good move for the NCAA. Now the question is whether or not the new format will be worth the price ESPN and others will pay for it.

The first question is whether or not an expanded tournament will actually chase viewers away with a tournament that lets EVERYONE in. March Madness? Gone.

And an expanded tournament severely devalues the regular season. One of the biggest issues college basketball has is that no one plays anyone out of conference anymore. No one pays attention to college basketball during the first two months of the season anyway. A team plays approximately 27 games in a regular season and one-third of those are meaningless games against JV squads from the local high school. During conference play, a team might have four or five teams that a casual viewer might really look forward to playing. A squad will play them twice. Add in three or four other games that are interesting and the casual fan is done. So, half of the season is worthless. It has no value whatsoever.

With an expanded tournament, are you just throwing away the other half?

Casual fans are a big part of the post season. Brackets. How many people fill out brackets? More than four million filled out a bracket just on ESPN. Plenty of casual fans will fill out a bracket because everyone in their office fills one out. So it’s a social thing that they can talk and bitch about. Because they fill out a bracket, they will watch the tournament to see how the teams that they picked end up doing. If you go to a 96 team bracket, filling the damn thing out just becomes a pain in the butt. The casual viewer is already throwing darts at a board. Now the NCAA wants to add 32 teams no one has ever heard of?? Expansion chases even the bracket-filler away.

The ACC Tournament used to get really good regional numbers. The championship game got good national numbers. So, how do we make this three-day event better? Make it FOUR days! So the conference expanded and the tournament is a Thursday-Sunday thing.

The first day of the tournament used to get good ratings. Thursday ratings now are basically non-existent; and Friday numbers have dropped since the conference expanded.

I’m fine with the NCAA making as much as they can. That’s what they are supposed to do. But decisions that will ultimately chase viewers away and yield lower ratings can no longer be considered “profitable decisions.” They are simply short-sighted money-grabs. It’s a stick-up crew masquerading under the banner of “Mergers and Acquisitions.”

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31 Responses to The finances behind the destruction of college basketball

  1. BJD95 04/05/2010 at 11:59 PM #

    It’s hard to believe how anyone could watch the fantastic 2010 tourney and screw with it one iota. At least college basketball as we know it went out on a good note. It was fun while it lasted.

  2. PackerInRussia 04/06/2010 at 7:22 AM #

    Great article and great point about the casual bracket-filler. I know I fall into the category of one who loses a lot of reasons for watching the earlier games without a bracket. Add in the fact that these teams will probably be lesser in stature and I’m having a hard time seeing why I will care about the first day’s games. Will be interesting to see what happens, but count me as one not in favor of expanding the tournament.

  3. Rochester 04/06/2010 at 7:44 AM #

    I don’t know anyone who is in favor of this. It’s so stupid and bloated it’s hard to believe it didn’t come from Congress. It would be nice if the NCAA would stop insulting our intelligence and just come out and say, “Yes, of course we’re doing it for the money. Next question, please.”

  4. packer74 04/06/2010 at 8:36 AM #

    I never thought I would say this but might as well do away with the ACC Tournament and use that week to play two more conference opponents. Then change four of the early warmup games to conference opponents and we get a home and home against all the ACC teams during the regular season. After seeing the large number of empty seats in Greensboro this year for Thursday and Friday games, I imagine the venues for 1st round games in a 96 team dance field will be lucky to fill 25% of the seats. The atmosphere will be luke warm and the quality of play worse.
    Money, Money, Money.

  5. Wulfpack 04/06/2010 at 8:40 AM #

    ^That’s a great point. I wonder if any of the major conferences will consider doing away with their conference tournament now that it is likely that just about everyone will get in. What’s the point? As packer74 alluded to, nobody cares about the ACC tournament anymore. Expansion killed it. And tournament expansion will kill the NCAA Tourney as this great piece points out. Sad state of affairs for college basketball. Totally watered down.

  6. Noah 04/06/2010 at 9:00 AM #

    “I don’t know anyone who is in favor of this.”

    Brian Cook over at the Sporting News had a great title for it. He called it something like “the most universally-despised inevitability of all time.”

  7. TOB4PREZ 04/06/2010 at 9:04 AM #

    It’s ONE more round…. and not even that for the folks that have truly earned the right to be there (top 32???). I understand that the “quality” of team that will “get in” now is going to be lesser, but truly they’re just getting themselves into a “play-in” situation… how many of the NIT teams this year thought they belonged in the “big dance”??? Now they’ll have that chance to “play” their way in.

    At the end of the day, no one likes “change”, and I agree that this past tourney was very exciting… but I hardly think ONE more 1/2 round is worthy of [the amount of criticism this idea has been getting]

  8. Noah 04/06/2010 at 9:35 AM #

    “It’s ONE more round…. and not even that for the folks that have truly earned the right to be there (top 32???).”

    So? Are you arguing that the additional day of the ACC tournament hasn’t impacted ratings for the tournament as a whole?

    I assume you’re a die-hard and you’ll watch no matter what? Then you aren’t really relevant to this discussion. CBS doesn’t care about you. You aren’t on the hook…you’re on the ice in their cooler. CBS and ESPN are trying for the people who don’t even know there’s bait in the water.

  9. choppack1 04/06/2010 at 9:41 AM #

    One smaller item that’s missed here is the change in the format that I’ve seen:
    1st round – (round of 96) – Thurs/Fri..

    2nd round – (round of 64) – Sat/Sun

    3rd round – (round of 32) – Tues/Wed

    This is a screwy format – I imagine they’ll change it so the first round is Mon/Tues or Tues/Wed (thought that’s hard to do w/ the conference tourneys). This way, you could at least fool viewers into thinking that things were the same.

    This is awful – I can’t imagine how awful the attendance will be for the round of 96…and do you see people taking a long lunch to catch those first games? Hey wait, when do they start?

    If nothing else, it will be interesting to see how this impacts viewership. I wonder what if the “playoffs” recently incorporated by NASCAR and golf have given them the viewing spike they were anticipating?

  10. Noah 04/06/2010 at 9:43 AM #

    “Not at all…. why would I “argue” about something that has NO bearing on ME???”

    Well…thanks for participating.

    “I’m merely offering my opinion relative to the discussion of adding 1/2 a round of games to the “Big Dance”.”

    Really? Where is it? The only thing you’ve posted is a personal attack on me and an idiotic statement on politics.

    The fuck??

  11. Rochester 04/06/2010 at 10:15 AM #

    It’s not just an extra half round of games. It’s that there’s no longer a need to achieve during the regular season. If, as projected, 13 of 16 Big East teams are going to get into the tournament, what is the difference if you finish 12-4 in conference or 6-10? The only incentive is seeding, which only really matters because 1-8 seeds get the first round off.

    As for the ACCT, if 9-10 teams are going to the NCAAT anyway, it’s hard to see why they’d go all out in the the ACCT. Once you know you’re in the Dance, just take it easy and avoid injury.

  12. Alpha Wolf 04/06/2010 at 10:24 AM #

    What will be REALLY interesting…especially to fans of teams like NC State: missing the tournament now is harder and there is little excuse for it for coaches who lead “decent” programs.

    Really, if you are a power conference coach, missing the tournament when 96 teams are in is almost inexcusable.

  13. Sam92 04/06/2010 at 10:30 AM #

    a 96 team tournament does sound like a bad idea

    yes, it will minimize the regular season considerably – but not entirely; probably what it minimizes more than anything is conference championships

    teams will still want to win – but only to improve their seeding in an NCAA tournament that most of them know for sure they will be in.

  14. PackerInRussia 04/06/2010 at 10:32 AM #

    Longer tournaments do not make for more viewership (which is what advertisers are paying for, right?). Although this new format would not make the season last longer since they’re planning to fit it all in within the same time frame, it will still have more volume. I read an article today about how World Series viewership is affected by how late in the year it starts. The later it starts, the lower the number of viewers with Oct. 15th being the date that draws the most viewers (30-mill plus) and Oct. 22nd and later being the date when the number of viewers drops below 20-million. It’s hard to make a direct correlation since that has to do with how late the season goes rather than simply talking about number of games, but I think it does show that there is a point of diminishing returns. More is not always better.

  15. LKNpackfan 04/06/2010 at 10:41 AM #

    More is not always better.

    ^This. Wake up America.

  16. rtpack24 04/06/2010 at 10:42 AM #

    Noah’s point about the ACC tourn is an excellent insight to what happens when things are diluted. The NCAA says it will still be a 3 week tourn with the top 8 seeds getting a bye. So if the play in games are moved up I do not see how that is not going to effect end of the year conference tournaments. Leave it to the suits to mess up the greatest sporting event in America. If it goes to 96 and you do not make the tournament do you automatically fire your coach?

  17. LKNpackfan 04/06/2010 at 10:46 AM #

    Fantastic article BTW. One question which I’d like to see answered, why does a non-profit organization care so much about profit-maximizing? How about – because it’s a non-profit only in theoretical terms.

  18. Clarksa 04/06/2010 at 10:51 AM #

    Meh…shoe companies, AAU teams, and the NBA age limit have done just as much, if not more damage.

    I’ll watch whatever is put out there and not really worry about the details.

  19. Noah 04/06/2010 at 10:55 AM #

    “why does a non-profit organization care so much about profit-maximizing?”

    There is a joke about a guy becoming a priest. I can’t remember the entire set up, but the punchline is, “Wow…if this is poverty, I can’t wait to see chastity.”

  20. RickJ 04/06/2010 at 11:17 AM #

    Regarding the ACC Tournament – From 1953 to 1974, the regular season meant nothing in the ACC except for seeding into the tournament. During most of this period, other conferences did not have end of season tournaments and their regular seasons decided who made the NCAA tournament. The ACC developed the most valuable conference TV regular season package during a time when the regular season meant nothing.

  21. FuquayWolf 04/06/2010 at 11:37 AM #

    It sounds like the NCAA wants to fold its other championship, the NIT, into the “mother-ship.” Want to know what a 96 team field looks like? Take the 65 from the Dance, and then add in 31 of the 32 NIT teams. Having watched the NIT semis live at MSG, it was ugly basketball. None of those teams belonged in the NCAA Tournament. So now imagine casual fans tuning in to watch the first round of the Tournament with NIT-level teams? Forget it. Heck, CBS might not bid on it if it will eat even more of their primetime programming away. Surely all of their CSI shows will draw more than a game featuring Rhode Island vs. Dayton.

    Adding 32 is universally reviled because it will dilute the Dance into oblivion, for all the reasons mentioned above. It will also destroy what little meaning there is to the regular season.

    The only 96-team Tournament proposal that even half-way makes sense to me has been floated by a few people. Make every conference crown both a regular-season champion and hold a conference tournament. Then, each conference is granted an automatic 2 bids: 1 for the regular season champion, 1 for the tournament champion. That would yield a total of 68 bids (34 conferences x 2). The remainder of the 96-bid field would be at-large bids, for a minimum total of 28. There are currently 31 at-large bids. Those numbers don’t account for the fact that sometimes, a team would win both the regular season championship and the tournament championship (ala Duke this year). When that scenario takes place, the # of at-large bids will increase.

    That proposal makes some sense, since it accomplishes what the NCAA wants (an expanded tourney and the folding in of the NIT, where the “regular season champ” rule already exists). It also keeps the regular season relevant for 2 reasons: 1) the regular season champ gets an auto bid (not really relevant for the major conferences) and 2) the decrease in the # of at-large bids makes the competition to get into the dance comparable to what we currently have. Finally, unlike the BCS system, the NCAA gets to wax poetic about how they have made the Dance even more fair for the “little guys”, since smaller conferences will now have a chance to get 2 auto-bids.

    Even that proposal isn’t enough to get me to support a 96 team tournament. But if the tournament does go to 96, it seems to make the most sense and should do the least damage to the March Madness institution.

  22. LRM 04/06/2010 at 1:38 PM #

    Obviously, like the BCS and ACC Expansion, this is driven solely by TV.

    But my question is, will the opening round games be played at neutral sites or on home courts (like the NIT)? If they do play at neutral sites, then a) are they expecting fans to spend an entire week traveling for potentially three games, which means they aren’t too concerned about the thousands of empty seats for the first weekend games this season; and b) wouldn’t this take all those student-athletes out of the classroom even more? (Note, this is one of the so-called arguments against a playoff in football.)

  23. Clarksa 04/06/2010 at 1:59 PM #

    “Having watched the NIT semis live at MSG, it was ugly basketball. ”

    Last night wasn’t exactly a thing of beauty…Butler had a 12min scoring lapse in the semi’s and and 8min one last night.

  24. Hot Sauce 04/06/2010 at 4:20 PM #

    The bigger question is what happens to my Vegas trip for the first 2 rounds of the tourney?

  25. tjfoose2 04/06/2010 at 5:32 PM #

    “Now they’ll have that chance to “play” their way in. ”

    They have that now, two chances actually. Its called the regular season and conference tournament.

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