How Much Money Is Involved in March Madness?
We’re in the thick of March Madness, the 64-team tournament that will leave just one team standing at the end of several single-elimination rounds. Okay fine, 68 teams if you count the play-in round. Still though, the March Madness tournament is one of the most exciting stretches in college sports.
But that brings up an interesting question: Just how much money does such a tournament stir up? There’s the famous bracket challenge pools and countless gambling across 63 games. An estimated 100 million people tune in to watch the games, driving countless dollars across network television and resulting in big-time advertising budgets. There’s hotels in tournament cities, venue sales and expensive tickets. If you really dig into it, there’s all the extra business local pizza joints, bars and Buffalo Wild Wings rack up in sales during game night too.
Let’s get a look at where some of this money is going!
Advertising During March Madness
Many may not realize just how much ad money March Madness attracts. In 2018, total ad spend hit $1.32 billion, up slightly from $1.28 billion in 2017. In fact, it’s just under the total ad spend that pro football attracts each year for its playoffs (inevitably boosted by the Super Bowl), and easily tops ad spending during the pro basketball postseason.
Digging through the totals, the $1.32 billion March Madness generated trailed NFL ad spending of $1.67 billion. However, it easily outpaced the $970 million in pro basketball ad spending during the playoffs — in fact, that’s a whopping 36% more! That said, NFL and NBA ad spending growth is outpacing March Madness ad spending.
And you thought college football bowl season was impressive? That total came in at just $399 million, more than four times smaller than March Madness ad spending.
Breaking it down by company, General Motors was the largest spender, followed by AT&T and Coca-Cola. Surprisingly, their immediate competitors — Ford, Verizon and Pepsi — weren’t even in the top 10. Go figure.
How Much Do People Bet on March Madness?
When you think of long-term, deep-value investors, who’s the first to come to mind? It has to be Warren Buffett. Given how against trading and “timing the market” Buffett has been both publicly and professionally, it’s surprising to see his open-mindedness toward March Madness. A couple years ago, Buffett and Dan Gilbert were involved in offering $1 billion for anyone who could complete a perfect bracket.
That’s right. A billion bucks.
Of course, no one ever won as it’s virtually an impossible task. While that offer was only around for a short period of time, Buffett has other offers on the table. For instance, this year he offered anyone in his company who has a perfect “Sweet 16” — meaning they got every pick in the first two rounds correct — $1 million a year for life.
With Buffett in the news for March Madness, it has us wondering, just how much money is wagered during the tournament?
It’s impossible to get a full look at this aspect. Who knows how many office or family pools have $10 to $50 a person on the line. But we can get an idea of how much is gambled during March Madness. The American Gaming Association estimates that $10.4 billion will be wagered this year during the tournament. Incredibly though, just 3% is expected to be legal.
Some may question this estimate, but the $10 billion figure is commonly cited as the betting sum. One estimate pegs $3 billion being wagered on brackets alone.
Productivity and Player Pay
There’s big money in advertising and plenty of money in gambling, but what about the lost money thanks to productivity? Many estimates have suggested that companies lose about $1.7 billion in productivity during the Big Dance.
One estimate read, “Studies have estimated the lost production around tournament time contributes to $134 million in lost wages and about $1.9 billion in lost productivity for businesses.” However, many say that the tournament leads to positive outcomes, whether that’s in office morale or in the sales department
At this point, it’s no secret that there’s billions of dollars on the line. But none of the players are involved at this point. At least when it comes to getting a piece of the pie. There’s a number of people that feel these players deserve some sort of compensation. After all, if it weren’t for them, there would no money to go around. As we’ve seen, that would shift billions of dollars in the grand scheme of things. They are risking their health and their bodies and putting plenty of other of people to work as a result.
That said, many others feel they should be grateful for the opportunity to play in front of millions of fans. Further, they can attend college and get a degree, most often on a scholarship. A case can clearly be made to justify either scenario.