March Madness: How It Generates Billions for the NCAA

We probably don’t need to tell you that March Madness is big business — for the NCAA, for the teams participating, for sponsors, and for sports bettors. Billions and billions of dollars change hands every single March when the three-week tournament rolls around. Still, you might not be aware of just how big this machine really is.

But that’s what this article is for. We’re taking you “behind the madness” to break down just how lucrative this event really is for NCAA basketball and others involved. Spoiler alert: you might not believe some of the numbers were about to throw around.

How Much Does NCAA Make Off March Madness Tournament?

The tourney is the “kingmaker” of the entire NCAA revenue figure. The entire organization — including all of its sports, not just men’s basketball — reported $1.3 billion in revenue during the 2022-23 fiscal year. About one billion of that comes squarely on the back of March Madness, that’s a hair over 75 percent of the organization’s entire revenue. In other words, the NCAA literally lives and dies off this event.

Let’s hone in on how exactly those billion in revenues are made. Here’s how the NCAA monetizes March Madness:

Broadcasting

Almost all of NCAA’s annual revenues stem from TV rights packages, especially in the tourney. Again, using the 2022-23 fiscal year numbers, March Madness contributed over $900 million from media deals alone. That number will escalate each year too so it will soon be in the billion-dollar range.

Who’s paying these exorbitant fees? The TV networks that air the 67 games featuring 68 teams. In 2010, the NCAA struck a 14-year deal with CBS Sports and Turner Broadcasting to handle broadcasting in the United States. This deal was extended for eight years in 2016. Right now, this TV contract will remain in effect until 2032 and is valued at $8.8 billion total.

It’s anyone’s guess what happens after 2032. It’s no secret that traditional TV is a business in decline. However, most business analysts are confident rights fees will continue to escalate among streamers. After all, the likes of Netflix, Apple, and Amazon are all worth multiples of old-school broadcasters like ESPN, FOX, Warner Bros, and so on. The NCAA — if they’re still around — has to be licking their chops at those prospects.

Sponsorship

So March Madness sponsorship is a tricky number to get a grasp on. There’s definitely money being made for companies to get their brand and messaging in front of TV audiences, but the number isn’t as clear-cut.

For one, we know the TV rights holders are selling commercial space. After all, that’s how they recoup the billions they spent in broadcasting fees. This is where having 67 different games is advantageous — that’s a whole lot of TV spots to sell.

As for the costs of these TV spots, we only know the ad rate of the national championship game. A 30-second commercial in the finale costs advertisers about $2.2 million a pop. It’s believed the number shrinks way down in the earlier rounds, like a few hundred thousand dollars. Still, that can add up over 67 games.

The NCAA earns sponsorship dollars too. Though, how much money does March Madness generate in NCAA is unknown for this category. We’d guesstimate it’s in the eight-figure range. In recent years, big-name corporations like AT&T, Capital One, Coca-Cola, and Buffalo Wild Wings have forked over money to be official sponsors.

Do Schools Get Paid From Making March Madness?

Yes, member schools that go to the Big Dance share in the March Madness riches. The NCAA is more charitable here than critics give them credit for. It’s believed around $160 or so million goes back to the “basketball performance fund”, which is essentially prize money on NCAA Tournament performance.

Here’s how that fund works. The NCAA pays out conferences — not teams directly. How much money each conference nets is determined by the number of tournament games that conference played over the last six years. This can get wonky to explain so it’s best to use a real-life example.

Let’s take the SEC. In the 2023 tourney, it sent eight programs dancing. Together, those schools played 17 games in total before being eliminated. The NCAA pays about $2 million for every game played so $34 million total.

Here’s the best part: this payment is paid out annually over six years — not just once. No, we’re not saying that $34 million is spread out for six years, we’re saying they’ll get that amount every year until 2029. This is on top of the money they’re still earning from March Madness games played in 2022, 2021, 2019, 2018, and 2017. The 2017 payments end this year since that six-year period is done.

The conferences split this money with all conference members — not just with the schools that actually qualified. So even teams that didn’t get invited still get paid out thanks to conference foes that did the heavy leg work.

This March Madness thing sure is a good business model, eh? What we covered doesn’t even account for March Madness betting, but that’s a whole article in itself. All in all, it seems like just about everyone basks in the money off it — even players now thanks to NIL.