How Much Does March Madness Affect A School's Bottom Line?

The NCAA basketball tournament is largely one of the most watched television events in the sporting landscape. 64 games, 65 teams, and the drama of nailbiters and upsets makes the tourney riveting television. However, while the tournament has proven to be lucrative for the NCAA as a whole, netting a six billion dollar multimedia package for the schools, how much does the tournament, and, in specific, getting to the big dance, mean for an individual school or conference in the college landscape?

Initially, a $30 million dollar payout from the proceeds of the package will be given out, but only to the members of 1-A conferences, 119 of the over 300 D-I colleges in basketball, and , arguably, the most lucrative product available. Reports claim, however, that those 119 schools account for an estimated 4 billion in revenues in the college realm - meaning the payout is equivalent to 0.75% of the revenues brought in by 1-A schools.

In larger conferences, such as the SEC, the rewards for success in the tournament, and in general, are still minute. Florida, who is going to be in a national semifinal game this weekend, will get around a $1 million payout from the SEC as a result of it's success, but even that is less than 1.5% of the budget for the school's athletics. Often times, as one AD notes, these payouts are enough to "help with expenses as we advance, but it's just that: expense money, a tiny slice."

Funds from the tournament package itself account for 90% of the NCAA's own operating expenses, which entail a number of scholarship supplements for teams, as well as support for academics for student athletes. The "basketball fund" is what most of this money is put towards, however - an incentive based system that rewards teams for making and progressing through the tourney.

It's a simple system: A school gets a unit for each tourney game they play in. Progressing along nets schools additional units, which are then aggregated over a 6 year period and paid out from the fund. Each share, in the latest distribution, nets a school nearly $164,000. This spreads out over a 6-year payout period, meaning a share from the 2006 tourney will pay out in 2007, 08, 09, 10, 11, and 2012 - meaning that, essentially, a share is worth a million dollars to a school over its counting. This creates a situation where, at the end of a game, a school may have to deal with a "million-dollar free throw" - if it goes in, and a team moves on, it nets a program another million dollars.

This system of subsidization for teams seems to be a good incentive, but has raised a lot of ire, particularly among teams beyond the I-A conferences. Schools from conferences where, likely, the only tourney team is the automatic bid for winning the league tourney feel that the incentive program shuts out smaller conferences and rewards those conferences who, due mainly to larger exposure, get more teams into the tourney, netting their teams more funds for expenses. Additionally, some teams gripe that their subsidies are not enough to even cover the expenses, as noted above by one AD, for getting to the tourney, which can give some schools in smaller conferences less of an incentive in going to tourney games, as they may end up losing money over the near-term, costing their programs precious funds. A lot of debate also rages about the prospect of the aforementioned "million dollar free throw" scenario - should this be how a school makes or loses money in the tourney?

The main question is this: should the NCAA devise a better subsidy system for teams in the NCAA tourney? Should conferences be given money, and not the teams themselves? And, should the subsidies be increased to ensure teams can cover their expenses?