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Why March Madness is Bigger than the Super Bowl

Personal_Finance / Gambling Mar 15, 2012 - 04:53 AM GMT

By: Money_Morning


Best Financial Markets Analysis ArticleJason Simpkins writes: If you're planning on taking a little bit of time out of your work day to watch the first round of March Madness today, you're not alone.

A survey by MSN showed 86% of employees will spend at least part of their workday checking in on the tournament, up from 81% last year.

And 56% of employees will devote at least one working hour to each of the first two days of March Madness.

With U.S. workers earning an average of $23.29 per hour, employers will lose roughly $175 million to distracted employees on just those two days, according to Chicago-based outplacement firm Challenger, Gray & Christmas.

In the past, the firm has found that in all more than $1 billion worth of productivity goes to waste during the entire March Madness tournament.

Of course, the tournament doesn't just lose money...

March Madness also makes it - a lot of it as it turns out.

March Madness Has More Green than the St. Patrick's Day Parade
The most watched tournament in the country generates over 90% of the NCAA's entire operating revenue.

And it means even bigger business for CBS Corp. (NYSE: CBS) and Time Warner Inc. (NYSE: TWX), which teamed up to pay $10.8 billion for the rights to broadcast the tournament through 2024.

While a 30-second spot during this year's Super Bowl cost a record $3.5 million, the 3.5 hour long program still only generated about $245 million of total ad revenue.

But with three Turner Networks sharing broadcast rights with CBS, the four channels took in $738 million in ad sales last year.

That's 20.2% more than in 2010, when the tourney brought in $613.8 million.

And that doesn't even include revenue from online advertisements on streaming games or a new smartphone app selling for the first time this year at a price of $3.99.

Online viewing has become extremely popular over the years, especially during the first two days of the tournament when multiple games take place during working hours.

In 2011, CBS and Time Warner said free digital viewing resulted in an average of 2.4 million daily unique visitors on broadband and 702,000 average daily unique users on the mobile app.

In total, there were 26.7 million visits across online and mobile from the start of the First Four on March 15 to the completion of the third round on March 20. That was a 63% increase over the year prior.

Meanwhile, online revenue from the tournament surged 825% from $4 million in 2006 to $37 million in 2010. There's no data available on how much it took in last year.

Then there's the gambling.

Roughly half of adult Americans participate in filling out tournament brackets.

The MSN survey showed 58% of workers will participate in at least one betting pool this year, with more than one-third of survey respondents believing that their bets will offer a better return than their 401k portfolios.

Meanwhile, Las Vegas casinos generate an estimated $100 million in revenue from the tournament.

"The first four days combine to create the second biggest weekend of the year for us," Station Casinos sports book director Jason McCormick told Gaming Today. "I like to compare each of the four days of action to having four consecutive NFL Sundays."

Cashing in on March Madness
Las Vegas isn't the only city raking in profits, either.

Atlanta, Phoenix, St. Louis, and Boston are among the cities hosting games this year, with the finale taking place in New Orleans. Each will receive a sizeable bump to commercial industries like tourism, transportation, and retail.

The city of Dayton, which hosted a set of play-in games earlier this week, forecast a jolt of at least $4 million to its local economy as a result.

To capitalize on the fanfare, the University of Dayton held a daylong street party that attracted at least 15,000 people, according to a university spokesman.
An added boost came from U.S. President Barack Obama, who attended a game with British Prime Minister David Cameron. (Incidentally, fans can compete against the President on the administration's Website comparing their brackets to that of the Commander-In-Chief. Anybody who does better than the president will have their name posted on the site.)

These kinds of opportunities to cash-in rarely come around for smaller cities such as Dayton, Omaha, and Albuquerque, and they don't come cheap. A bid for the early rounds of the tournament often falls in the $2 million to $4 million range.

Still, any of the schools or cities involved will tell you it's worth it - and not just for the notoriety.

"The school gets 15% to 20% of the ticket sales," Jim Baker, the former associate athletic director for events and operations at the University of Texas, which will host an early round of the tournament in 2013, told The Statesman. "The NCAA pays the teams for expenses, and the school keeps 20% of novelty sales. It's meant $400,000-$500,000 to the university in the past.''

Of course, if you're interested in attending any of these early-round games, ticket packages cost anywhere from $180 to $270.

So you may be better off watching at work.

Source :

Money Morning/The Money Map Report

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