The Financial Windfall of Making the MBB NCAA Tournament

At this point in the NCAA men’s basketball season, the field for the end-of-season NCAA tournament is becoming clearer with each passing day. One major surprise this year is the probable inclusion of Northwestern, which has never been selected before.

For the members of the Northwestern community, making the MBB NCAA tournament will be a cause for celebration and pride. For athletic department staff, it could mean a little more. Calculating the total financial impact of making the most-watched college sporting event is an imprecise task, but there are some known figures that can be crunched.

Right away, the NCAA rewards conferences for the number of teams they have in the NCAA tournament, regardless of teams’ performances. Making an appearance alone, even if a school lost in the first round, netted conferences $1.67 million in 2014. In 2016, that number was $1.59 million. Those payouts to conferences increase as teams win throughout the tournament. For example, a run to the Final Four was worth $8.2 million to a conference with a school participating.

Needless to say, the Big 10, the conference to which Northwestern belongs, is thrilled to have another representative in the NCAA tournament earning it money. Regardless of how the Wildcats perform, they’ve netted their conference an additional seven-figure payday.

But how much will those on campus in Northwestern’s athletic department reap as a result of this unprecedented run? That answer varies from conference to conference. Many conferences split the money between their schools evenly, regardless of their participation in the NCAA tournament. The Big 10 does this, and so Northwestern has been enjoying the success of its conference mates for many years. This is not the case with all conferences (the CAA, for example, has a different formula), but it is relatively common.

So unless Northwestern makes a run and thus drastically increases the payout to the Big 10, the money the school receives from the “basketball fund” is not substantially different from what it would make if it missed the NCAA tournament. What is significant, however, are the non-monetary, intangible benefits that come from March Madness.

Known casually as “the Flutie effect,” the impact of a run in the NCAA tournament can be profound for schools, even outside the athletic department. For example, sixteen of the twenty schools that participated in the Final Four from 2009 to 2013 experienced an above-average growth in freshman applications the following year (12.9% vs. national norm 4.2%). For Cinderellas Butler and Wichita State, they saw their applications surge 41% and 81%, respectively, the year after Final Four appearances. It is simple math to understand that more applications allow for higher standards of admission, yielding a more academically-competitive student body.

Coverage during March Madness also yields free exposure for the school during prime times and with key demographics. For example, it has been estimated that Butler and George Mason each received more than $450 million in media exposure during their deep runs in the tournament.

For their first NCAA appearance, Northwestern stands to gain a bit from the basketball fund handed out by the Big 10. Where the real windfall for the university comes is in the exposure and public recognition earned by being included in college sports’ biggest spectacle.