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March Madness: An Athletic Director’s Sweet 16

Posted by srr50 on March 17th, 2008 under Basketball

Trips has given us his thorough and exceedingly logical look at who makes the Sweet 16 in this year’s March Madness, but how about the top seeds for the place closest to Athletic Director’s heart — the pocket book.

While coaches and players chase that elusive National Championship, the administrators are chasing their school’s piece of the 6 Billion dollar TV contract. It wasn’t that long ago that the basketball tournament was considered to be like many other National Championship events hosted by the NCAA — basically a loss leader. But that began to change in 1979.

Larry Bird and Magic Johnson began their incandescent rivalry in the championship game that year, and College Basketball hasn’t been the same since. Johnson’s Michigan State team defeated Bird and Indiana State in front of over 30 million TV viewers. It remains the most watched college basketball game in history. And it allowed the NCAA and college AD’s to see that basketball could be a money maker.

Three years later ESPN signed on to telecast first and second round games. It was the 4-letter network’s first contract for a major NCAA sport, and it increased businesses for motels and hotels across the country that first week of the tournament as fans flocked to markets where ESPN was shown.

CBS took over the TV rights in 1991 and now distributes $545 million a year to the NCAA and colleges for the tournament. The network is doing just fine. Over 95% of the commercial inventory for the event was sold before a team was selected, but don’t worry, if you would like to buy a 30 second spot in the Final Four, you can get it for $1.4 million, if you hurry.

Since 1979, schools have used the football model (ramped up recruiting, an arms race over facilities, star salaries for coaches, etc.) to try and turn their basketball programs into money makers. So going into this year’s tournament, which teams a producing the best net revenue?

Here is a look at the top 16 net-revenue producing basketball programs in the tournament for this year. The figures come from a government website, Equity in Athletics. They are for the 2006-07 school year. Gross revenues include ticket sales, media rights, conference and tournament income as well as alumni contributions. The expenses include all operating expenses as well as any funds directed toward facility upgrades.

#1 Seeds     Gross Revenue            Net Revenue

  1. Louisville $23, 216, 728               $17, 134, 624
  2. Arizona $16, 710, 417                   $13, 218, 203
  3. North Carolina $17, 218, 199      $11, 582, 681
  4. Wisconsin $14, 332, 269              $9, 017, 035


If he so desired, Rick Pitino could afford to change suits at the half of every game.

#2 Seeds Gross Revenue         Net Revenue

  1. Texas $14, 678, 656              $8, 084, 493
  2. Indiana $12, 288, 500          $7, 346, 243
  3. Xavier $9, 421, 233              $7, 279, 903
  4. Kansas $13, 223, 255           $7, 053, 022

When Rick Barnes interviewed for the Texas position his main question was just how strong was the administration’s committment to having an elite program. He got the answer he was looking for, and has helped fill in the details to help bring Texas unprecedented success, on and off the court.

#3 Seeds Gross Revenue              Net Revenue

  1. Michigan St. $13, 225, 963      $6, 818, 573
  2. Purdue $9, 565, 497                $5, 880, 800
  3. Duke $13, 410, 114                  $5, 400, 048
  4. Marquette $13, 061, 279        $5, 068, 088

Only four Big Ten teams got an invite to the Big Dance, but all four are among the Top Ten revenue producers in college basketball.

#4 Seeds Gross Revenue               Net Revenue

  1. Georgetown $11, 534, 863       $3, 934, 109
  2. UCLA $9, 108, 587                   $3, 845, 812
  3. Tennessee $7, 301, 964           $3, 690, 617
  4. Clemson $7, 395, 101               $3, 499, 176

Some of the schools in this year’s tournament reported losses for their basketball programs in 2006-07. Two were of particular note: Notre Dame said they ran a $250,000 deficit last school year, while USC reported a $400,000 loss on their basketball program.

There were other prominent programs that didn’t make the tournament this year. The two teams who met in last year’s national championship game are not in the field this time around. Florida reported revenues of over $9 million, with just over $930,000 in profit. Ohio State would have bumped Texas down one spot on the #2 seed line with a healthy net revenue of $8,900,000 on almost $13 million in general revenue. Syracuse missed out on the tournament again, but they can sooth their hurt feelings with $7 million of net revenue.

There are other well-known programs in the tournament this year whose bottom line didn’t get them into this Sweet 16. Connecticut’s bottom line showed a profit margin of just over $1.3 million.

And what of Kentucky? While their cross-state rival was setting the pace, the Wildcats were just outside our Financial Sweet 16 with a little over $3 million in net revenue.

Of course there are other advantages to having a loyal fan base that are priceless.

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8 Responses

  1. NBMisha said:

    March 18th, 2008 at 3:52 am

    Not a type of analysis one sees every day… many thanks for that.

    Gratifying, in a greedy way, of course, to see UT now in the top 5. I guess that correlates both to solid popularity, and the current commercial astuteness, if not anal retentiveness, of the the athletic administration.

  2. Facebook User said:

    March 18th, 2008 at 6:43 am

    srr50 – Would UT have to give up some money to have a better home court advantage?

  3. Minnesotahorn said:

    March 18th, 2008 at 6:53 am

    Excellent. Thanks a bunch Srr.

    Kentucky’s number is surprising. What was their gross revenue? With the ginormous Rupp Arena filled every night I would’ve assumed they’d be near the top.

  4. srr50 said:

    March 18th, 2008 at 8:41 am

    Sailor: In order to get a better home court advantage, UT would need to blow up the Erwin Center and start again — and that ain’t gonna happen.

    MH: Kentucky had over $12 million in gross revenue, with expenses coming in at just over $9 million.

  5. Minnesotahorn said:

    March 18th, 2008 at 9:04 am

    So in-state rival Louisville brought in over $10 million more in revenue. I wonder why that is.

  6. 8straight said:

    March 18th, 2008 at 9:27 am

    In the name of Bob Weltlich, who needs net profit.

    I kind of understand that it would be fun to have a 9,000 seat arena that you cram 10,000 into but the crowd has a lot more to do with the atmosphere than any building. You don’t need another building to have an advantage.

  7. srr50 said:

    March 18th, 2008 at 9:56 am

    So in-state rival Louisville brought in over $10 million more in revenue. I wonder why that is.”

    Louisville is taking advantage of a sweet deal. The state owns Freedom Hall, and Louisville pays a rental fee. They collect annual fees for 20 luxury boxes, concessions and parking for each game. And they recently boosted the price for a luxury box up from$50,000 to $75,000.

    Rupp Arena is owned by the City of Lexington, and Kentucky only gets of the revenue from signage in the Arena.

    Lousville can also charge a yearly $1,500 PSL fee for courtside seats. That’s for current season ticket holders. If you are new, and want season tickets, you must also pony up $150,000, but they will let you pay that out over a five-year span.

    There is a potential bonanza on the horizon for the Cards, as the new Louisville Waterfront Arena is scheduled to be open in 2010. The new 22,000 seat arena will triple the number of sky boxes to 60.

  8. Sarge said:

    March 26th, 2008 at 12:15 pm

    UK has a hockey team?

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