March Madness is a financial winner for just about everyone except the athletes playing the games. The NCAA, the media, sponsors and advertisers, the participating schools, the host cities and businesses all profit from the tournament, while the players enjoy media exposure but do not share in the financial windfall. In our changing marketplace, it seems like the time to pay college athletes may be here at last.
The March Madness Tournament generates billions of dollars of revenue every year amid skyrocketing popularity, trailing only the Super Bowl as the highest ranked sports advertising event. The NCAA will take in an estimated $777 million this year, most of which will come from broadcast rights for the tournament. A $10.8 billion, 14-year broadcasting deal gives the NCAA plenty to smile about in the future.
Broadcasters themselves do very well during the three-week tournament — ad revenue for the 2013 tournament was approximately $1.15 billion, according to Kantar Media. The level of unpredictability requires live tune-in, which is great news for advertisers, who shell out from $100,000 for a single spot in the opening round to almost $1.5 million for the championship game, according to TRA, Inc.
In addition to the money the colleges receive from the NCAA’s tournament revenues, they also take in huge sums from merchandise sales and alumni giving (not to mention the recruiting benefit and profile exposure). Many athletic directors and coaches receive bonuses for participation in the tournament as well. The cities that host the games earn a profit, and so do the restaurants and bars that draw fans for the telecasts.
That’s a long list while omitting the players themselves. Many feel the time has come to change to economic structure of college sports, and while the debate about compensating student athletes is not new, the stakes have risen as the success and the profitability of the tournament grow.
Those opposed to paying student athletes argue that these players are amateurs who are amply compensated through scholarships and the current system is needed to keep in place the amateur nature of college sports and the educational goals of the NCAA.
Moreover, they argue that paying athletes will wreck the competitive balance in college sports, eroding the integrity and leading to exploitation of the athletes.
The counterargument is that the old system fails to reflect the realities of today’s market and the motivations of the NCAA and the universities. Many find that one of the biggest hypocrisies is the NCAA’s argument that academics take precedence. On average, college athletes spend over 30 hours a week practicing their sport and regularly miss significant class time due to athletic obligations.
Those absences intensify during tournament season, when the athletes and their schools get major lifts in visibility. For example, heading into this year’s Elite 8, Creighton’s Doug McDermott connected to the largest audience of any participating athlete, according to SponsorHub’s internal measures. It’s safe to say many hadn’t heard of McDermott or thought about Creighton prior to the tournament.
Schools leverage this visibility by selling school and player affiliated paraphernalia — witness how quickly teams don NCAA approved t-shirts after winning big games. Players, who face career-ending injuries each time they play, do not see a dime of this tournament income, even though they are the real revenue source. The players should be able to receive some sort of cut of the pie, not matter how small the slice is.
Of all those who stand to gain from the players’ performance, it is the players who need it the most. For those athletes who have few professional sports prospects, visibility and earning potential is highest during their college years. More than 80 percent of college athletes on scholarship live below the poverty line, and therefore compellingly need the money.
March Madness and its built-in unpredictable outcomes will continue to grow as a TV rights and sponsorship behemoth. But that success will naturally fuel the debate on whether to pay the student participants. It may not be long before the players are shown the money.