NCAA Tourney to be played in Empty Arenas.
The NCAA announced today, via President Mark Emmert, that the 2020 NCAA Basketball Tourney will be played as scheduled, but without fans in the stands.
Even as this is a first, the NCAA Division 1 Basketball Tourney is too big an event, too prosperous, too important an event for the organization to cancel. The “Dance” as it is commonly referred to brings in over a Billion dollars annually to the NCAA and is the associations’ primary revenue source.
Last season the tourney reportedly brought in over one Billion dollars as revealed by several media sources. Other division tourneys and women’s tourneys are not included in these figures. This source below reported a bit less revenue.
Viewership for the 2019 championship game surged 23% over the previous year. Last year the NCAA pulled in $933 million in revenue from media rights fees, ticket sales, corporate sponsorships, and a proliferation of television ads anchored around the three-week-long tournament.
Participating teams receive “Units” per game played, up to a maximum of 5 units. Each unit equalled $280,300 (132 Units) in the 2019 tournament and are paid out for 6 years. Teams are paid via the Basketball Fund, which is a portion of the annual monetary take. In 2019 the Basketball Fund was approximately $370 Million. The NCAA claims to keep 4% ($37.3 Million) for operating expenses and annually doles out rest to member Div. 1 institutions ($526 Million). As it stands the NCAA cannot afford to cancel the Div 1 Basketball Tourney which is its’ primary revenue stream.
So the NCAA will do okay without fans in the stands. CBS and Turner will still gain their Billion dollars in ad revenues. Participating teams will get their units. So who will get hurt by the move to a fanless tournament? The cities who campaigned and won the right to host tournament events will take the hit.
During the 2015 NCAA tournament, Seattle was chosen as one of the host sites, and the Seattle Sports Commission developed high tech computer software to estimate the economic benefit of hosting the NCAA tournament. This software estimated “$7.8 million in economic benefit and $957,000 in tax revenue for the greater Seattle area.
As was outlined, there are many benefits to being a host city during the NCAA tournament. Although each city will see some sort of economic stimulus from hosting during the tournament, there are a multitude of factors that could impact the amount of economic benefit from hosting including the matchups that are generated, the proximity of participating schools to host sites, and the size of the fan bases of the respective participating schools. Depending on these factors, some host cities will have a greater economic impact to their area than other cities, however, most experts are in agreement that hosting the NCAA tournament will create a substantial economic stimulus for the hosting city and surrounding areas.
Fourteen US cities will play host to the rounds of 64 and 32, as well as the four play-in games which are in Dayton, OH (2016). Home to the “First Four” for the last several years, Dayton has seen nearly $66 million poured into its local economy since 2001. In Providence, it’s estimated that the local economy will generate about $3.5 million, and in Philadelphia nearly $18 million when they host the East Regional next week.
The city of Houston (2016) is expecting to generate $300 million in revenue during the Final Four, which will help taxpayers feel better about the $8 million subsidy provided to by the state of Texas. This is the third time in the tournament’s 78-year history, that the “Space City” will host the Final Four.
So even with the old figures from earlier 2015 & 2016 tournaments, it is plain to see that the Host Cities will be the ones taking a hit on the chin in an NCAA Tourney without fans in the seats. Whatever amount(s) of predicted host revenues are now up in smoke and unless these site hosts had the foresight to get event insurance, they will lose both upfront sunk costs as well as the projected windfalls they had planned for.
The 2020 NCAA Div 1 Basketball Tournament will make history on several fronts it seems.