The finances behind the destruction of college basketball

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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. highstick 04/06/2010 at 6:47 PM #

    My take is that it absolutely sucks! But, since they’ve screwed up the game anyway, does it really matter that they screw up the tournament?

    Real college basketball will be another of those things that will be only remembered by a few of us. I haven’t recognized the game on the court in years. They took a game of skill and turned it into a game of physicality w/o any consistent rules.

  2. 61Packer 04/06/2010 at 8:23 PM #

    The question I want answered is where will the opening-round games be played? On a neutral site or the home court of the higher-seeded team? If the tourney goes to home court sites, then the small schools are screwed. Like I said before, what happened to William & Mary in the NIT is what will most likely happen in a 96-team format. Teams like the Butlers, Northern Iowas, St. Marys and other mid-majors currently have done well at least partially due to being on a neutral court.

    If the NIT does become part of the NCAA tourney, then any of us who want coaching accountability at NCSU are out of luck. All the Wolfpack will have to do to make the Expanded Dance will be to line up home games each season with the likes of ECU, NC Central, Campbell, Elon, UNCG, UNCA, UNCP, A&T, Winston-Salem State,and Western Carolina, and keep bringing in the New Orleanses, Towson States and South Carolina States, and win just 5 or 6 ACC games. How could they miss?

  3. Clarksa 04/07/2010 at 10:02 AM #

    ^could they require at least a .500 record in league play from all the at-large bids and still fill up the 96 slots?

  4. Mike 04/07/2010 at 12:00 PM #

    Just for fun, to see how many responses we can get, I started a Facebook page “I will NOT watch 96 teams in NCAA Tourney”.

    Doubtful it will do any good, but if we can get a bunch of people on baord maybe the advertisers will take notice.

  5. Rick 04/07/2010 at 10:20 PM #

    This is one more step in the destruction of basketball.
    It started with Jordan and the NBA’s obsession with him. They changed the rules of basketball for him. Made it all about star power.

    Now in college, the hand checking, illegal picking, flopping and traveling has taken over. The game is all but impossible to referee.

    This will be the final nail.

  6. wolfmanmat 04/08/2010 at 7:20 AM #

    geez, we got a lot of Wolfpack fans on the EDGE. Seriously though, when the tourney expanded to 64 from 48 in 85 everyone said, “it’s too much.” Same thing when they expanded from 32 to 48. Now, would anyone really want to go back to 48 or 32? The pool of teams has grown; there are 347 teams in NCAA basketball. Parity is the issue here. Hell, WE beat the champ. Anyway, while this may or may not be a great thing for college basketball, it is a good thing for the mid-major conferences. 17 of 32 teams in the NIT this year were mid-majors. These guys don’t have the same chance to win meaningful games like major conference teams. I hope the expansion leads to alot more mid-majors and about 10 majors. That would be about 1-2 more a conference, which means State is still out this year. VT would have gotten in though, and they deserved to.

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