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NCAA Tournament Payments: How Much Money Do March Madness Colleges Make?



The Men's Basketball Tournament of NCAA Division I makes a lot of money. In fact, the NCAA – a non-profit organization – is pretty much the only one that actually makes money.

Recently, the organization released a financial test showing how much it earns from the tournaments that it draws in all sports, with the lion's share coming from the huge deal with CBS / Turner Sports for the men's basketball tournament.



The pot from which the NCAA pays out is called the "basketball fund".

There are many places where all the money goes, but one of them is called basketball fund, which is a pot of about 30 percent of the tournament TV money. The NCAA retains some of this money for things like administrative salaries and the financing of other tournaments.

This system began in 1991, and the fund's money is distributed at conferences called "units". These units are allocated for each round of the tournament in which a team is playing, with the exception of the championship round. The fund represents approximately 40 percent of NCAA's annual revenue. The way teams earn these units for their conferences is not as easy as the X team makes it to the Y round of the tournament and earns $ Z.

The NCAA explains the basketball fund and the unit system like this.

The basketball fund plans to divide funds into Division I conferences based on their performance in Division I men's basketball championship over a six-year period (for the period 2007-2012) Distribution 2012/13). Independent institutions will receive a full share based on their tournament participation over the same rolling period of six years. Payments from the basketball fund will be sent to conferences and independent institutions in mid-April of each year.

This is how the NCAA tournament units looked in 2013, based on the six-year period previously.



For the sake of simplicity, we will use the first conference listed there (the America East). From 2007-2011, the America East got its automatic qualifier in the big dance, but this team lost in the opener. In 2012 they came in the round of the last 32 and got an extra unit.

The units can really qualify for leagues that last well into March, and especially those that make it to April.

The value of a unit increases by 3 percent every year. In 2013, a unit was worth $ 245,500 per season. This number has risen to $ 264,859 from last year's tournament. For a league like the ACC, which routinely sends multiple teams to the tournament and usually at least one to the Elite Eight or Final Four, it's easy to win money. And the six-year rolling timeframe can dampen the bottom line's poor annual result.

With its 21 units in 2015, the ACC was the first conference to hit $ 30 million in a tournament, with a payout cycle of nearly $ 33 million. Last year, the ACC earned 25 units, reaching the 2009 Big East conference record (24). This was the highest since the launch of the 1991 basketball distribution fund.

Thanks to the fact that six of the ACC's teams – Duke, Virginia, North Carolina, Syracuse, Notre Dame and Miami – have made the Sweet 16 last year, the six-year payout will be at least $ 39.9 million.

Even if you do not have deep runs in the tournament, the units are valuable for leagues that are not top ranks. The Washington Post found that smaller conferences can earn 25-50 percent of their total revenue from NCAA tournaments.

Paying out leagues

According to the NCAA, conferences are being asked to distribute money evenly, but they are not obliged to do so. This is good for a team like Rutgers, which now has the biggest tour-drought of the Power-5 schools, since 1991 no longer in big dance. Rutgers still earns the money from the success of his Big Ten colleagues, but does not directly contribute to it. In this way, the NCAA tournament is almost exactly like college football with even sales distribution of postseason funds.

But some leagues become creative with the distribution of funds and condemn the push of the NCAA.

"The standard of living, if you will, is really dependent on the men's basketball tournament," said Tom Yeager, commissioner of the Colonial Athletic Association. Yeager's conference has its own complicated formula for the basketball fund: the conference keeps the money guaranteed every year thanks to the automatic tendering process, and more money is halved, with half divided among the 10 schools and the other half was competitively distributed through an "Excellence Fund".

But the payout structure is a problem for some teams.

This puts independent teams in a tight spot. Since they are not in a conference, they can not rely on other teams to support them with units in a bad year. This was the case for Notre Dame before it went into league in the 1990s. From 1991 to 1995, the Irish missed the tournament and it hurt them in the payouts. But missing out on the tournament this year will hurt a lot less in the paperback because they're getting a ton of money from other ACC teams.

There are currently no teams that are independent in Division I basketball, and the model of revenue distribution is a major deterrent to leaving a league.

But if you are a bell-crank of a conference, then a consistent payout structure can feel unfair. Think of Gonzaga, who is now a mainstay of the NCAA tournament. That's big money for the West Coast Conference. Gonzaga usually gets the car bid for the big dance, but the Bulldogs often advance in the tournament and earn extra units. From 1991 to 2015, Gonzaga earned his league 36 units. The rest of the league together earns 40 in the same span of time. The free ride of the Zags earned WCC teams against coach Mark Few.

"We need to talk long and hard about the money distribution (NCAA tournament) that we make for the league," said Wenige, "and if they do not spend it on basketball, we do not have to be sponsoring swimming at these schools or whatever they have, they are not all there. "

Gonzaga earns the overwhelming majority of the WCC units, but still has to share some of that money with schools that are not nearly earning, like Pepperdine or Pacific. Moving to a league that could generate more units, such as Wichita State with the AAC and Davidson and George Mason with the A-10, could be a significant financial hurdle.

While it might be more lucrative for some leagues and teams than others, the NCAA tournament is a major monetary effort for anyone in the college's basketball ecosystem.


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