College Basketball Nation: March Madness

One of the most frequent sources of debate and disdain when it comes to college football’s Bowl Championship Series is the disparity between payouts to automatic-BCS-qualifying conferences and non-automatic qualifiers.

It turns out that gulf is just as big when it comes to NCAA distributions from March Madness.

Last year, the Big East brought home more men’s basketball tournament money -- $24.9 million -- than any other conference. The most a non-automatic-qualifier conference brought home was Conference USA, at $6.95 million.

Not much is likely to change this year, as 14 of the Sweet Sixteen teams hail from automatic-qualifying football conferences. Nine are from the Big East and Big Ten conferences.

Since automatic-qualifying conferences were formed in 1998, no school outside of those has won an NCAA men’s basketball national title, and every champion since 1967 would fit into today’s FBS conference lineup. Just three national championship games since 1998 have featured a team from outside such conferences.

Although March Madness produces revenue of $771.4 million a year, as compared to $162.5 million generated by the BCS’s television contracts, the majority of conferences receive more revenue from the BCS than from the NCAA’s Basketball Fund, as the table shows.

Schools from the six automatic-qualifier football conferences brought home 47.5 percent of all money distributed by the NCAA based on performance in the tournament, while the five non-automatic-qualifier conferences banked 10.5 percent. The rest went to teams whose conferences play football at a lower level. In football, the disparity is even starker: automatic-qualifier conferences took home 85 percent of all BCS money distributed last year.

March Madness is the primary revenue generator for the NCAA, so not all money is distributed based on performance in the tournament. For 2010-11, the NCAA distributed $452 million of the approximately $771.4 million produced by its television contract.

Just $180.5 million was distributed based on performance in the NCAA tournament through what’s called the “Basketball Fund.” An almost identical amount was distributed based on how many sports each school sponsors and how many grants-in-aid each supports. The remainder is distributed for academic programs and financial assistance for student-athletes.

The Basketball Fund portion of the NCAA’s distribution each year is based on how many units each team in the tournament earns. Each team in each game except the championship game receives a unit for playing. This year each unit is worth $242,000.

Money is distributed based on a six-year rolling period by adding up all of the units earned by each school during the preceding six years. Checks are cut to the conference, not the individual school which participated in the tournament, unless the school is independent. Each conference then chooses whether to divide the money equally or based on tournament performance.

The SEC has historically divided the money it receives into 13 equal shares, with the conference keeping one share, after reimbursing participating teams for travel and rewarding them for performance. In addition, schools receive $50,000 for participating in each round up to the Final Four and $100,000 for appearing in the Final Four.

The Big 12 distributed by an entirely different method in 2010-11. Each member institution was awarded an amount equal to the units the school earned in the current fiscal year. Revenue from units earned by members during the previous five years was divided equally among all members. The conference did not supplement travel or other expenses.
Thanks to the annual national phenomenon that is March Madness, we know all about VCU now -- Butler, Gonzaga and George Mason, too.

But what does such awareness mean for schools that were not quite in the national consciousness before a magical men’s basketball tournament run? Millions of dollars, significant increases in student applications and even smarter students, according to various studies.

No school can afford the kind of publicity a deep run into the tournament offers. Studies done by media firms Borshoff and Meltwater for Butler University after it reached the title game the past two years show a combined publicity value for the university of about $1.2 billion.

Butler’s 2010 run to the national title game resulted in $639.3 million in publicity value, including $100 million from the CBS broadcast of the national title game. Last year’s appearance was valued at more than $512 million. Neither calculation included the publicity value of radio broadcasts or talk shows, but instead focused on television, print and online news coverage.

The exposure cascades off-court, as experts point to a positive correlation between athletic performance and application rates. They call it the “Flutie effect” after quarterback Doug Flutie, who was credited with a 30 percent increase in applications at Boston College the year after his Heisman Trophy win.

A 2009 study by brothers and economics professors Jaren and Devin Pope showed that just making it into the men’s NCAA tournament produces a 1 percent increase in applications the following year. Each round a team advances increases the percentage: 3 percent for Sweet 16 teams, 4 to 5 percent for Final Four teams and 7 to 8 percent for the winner.

The only way to achieve similar application increases would be to increase financial aid or reduce tuition by 2 to 24 percent, the study said.

"These numbers tend to be larger for private schools than for public schools," co-author Jaren Pope said. "For example, private schools in the Sweet 16 see a 4 percent to 5 percent increase in applications compared to a 2 percent to 3 percent increase for public schools."

Butler University experienced a whopping 41 percent increase in applications after its 2010 run to the title game. George Mason University saw a 54 percent increase in out-of-state applications following its 2006 Final Four appearance. And within a month of being defeated in the first round of the 2000 tournament, Central Connecticut State University saw application rates increase by more 12 percent.

The impact of admitting more out-of-state students can be profound. For example, George Mason’s in-state tuition rate is $9,066 per year, while out-of-state tuition is nearly three times as much at $26,544.

Rising application rates also can allow a school either to increase enrollment or be more selective. The Popes’ study found that basketball success did not lead most schools to increase enrollment but did allow for increased selectivity.

The study concluded, “… schools which do well in basketball are able to recruit an incoming class with 1 to 4 percent more students scoring above 500 on the math and verbal SAT. Similarly, these schools could expect 1 to 4 percent more of their incoming students to score above a 600 on the math and verbal SAT.”

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