Post by darvon on Mar 14, 2010 12:00:39 GMT -6
Today's gedanken:
Would it be financially sensible for the BCS schools (all 11 conferences) to pull out of NCAA Men's Basketball Tournament and create their own, with only BCS members?
The NCAA has just under 1300 schools. These are divided into Divisions 1, 2 and 3. Division 1 is 342 schools, leaving 950ish in D2/3. The D1 schools are divided into those offering a D1A Football team (BCS) and those that do not, which are sometimes called D1AA and D1AAA. We will group those to into what we call D1AA, which total about 220 schools. We will further divide the 120 D1A schools into two pieces, the schools of the 6 conferences (plus NotreDame) which formed/control the BCS, which we will call D1POWER (or D1P) and the rest, who are given yearly contracts with the BCS and share somewhat in the BCS revenue, which we will call D1Lite (or D1L).
Let’s Recap:
D2+3 950 schools
D1AA 220 schools
D1L 50 schools
D1P 70 schools
95% of the NCAA revenues come from March Madness. 85% from the CBS TV deal, which is about $600M this year and 10% from tickets, merchandising, et al.
Of the total NCAA expenses as a percentage of revenue:
5% are used for administration and overhead
17% for NCAA wide member programs, like catastrophic insurance
10% for running all Championships
7% in straight cash payment to D2+3 schools in several programs
61% ($450M)in straight cash payments to D1 conferences, with about $150M in a pool distributed based on participation and success in March Madness.
So about $450M goes to the 30 conferences in the D1.
So the $150M in D1 March Madness Money is split by performance, ranging from $1.5N to $19M. The D1AA conferences get in the range of $1.5-5.5M. D1L conferences range between $4-9.5M, and D1P from $13-19M. The remaining $300M is split into 6 other distribution pools which have criteria which gives more to the D1P schools than the D1A schools. All totaled it looks like this.
Example:
Big10 = 13.8M+.6M+.2M+10.5M+3.5M+.6M+3.2M= 32.4M in 2010
Ivy League= 1.2M+.4M+.2M+0M+4.0M+.3M+.9M= 7.0M in 2010
So the D1P conferences tend to get about 30M from the NCAA March Madness, TV and Tickets.
The D1L get about 20M and the D1AA get about 10M.
Which means that the BCS conferences (D1P and D1L) get about 280M from March Madness total.
So the operative question is what if the BCS seceded from the March Madness?
First, let’s calculate the dollar value per programming hour of March Madness
$600M / total prog hours = $600M / 75 hours = $8M/hour
Although ratings are HIGHER (and thus more valuable) with BCS schools, let’s take a simple proration by screen hours for the BCS teams (D1P+D1L)
The $154M that the NCAA divies up by performance (“The Basketball Fund”) is divied up in that manor. The BCS schools get $110M out of the $154M. So first pass, a BCS Madness would garner about 70% of the value ($420M) of a NCAA March Madness to a population of 38% of D1 schools. But how many hours would be reasonable to produce in a BCS Madness?
120 teams= 32 contestants = 64 programming hours (no overlap)
= 64 * $8M = $480M which is in the ballpark of our other estimate.
11 automatics of conference Champions
11 automatics of conference winner, not Champion
10 at large.
BCS Madness = approx $450M (1st pass)
Assuming we dole out the money 2 parts to D1P conf and 1 part D1L conference, we get about $50M for a D1P conference and about $25M for a D1L. The difference ($35M for a D1P and $20M for a D1L) is LARGE, especially to the D1L. Marshall’s TOTAL athletic budget is $12M, this represents a bump of about 20%. For Pitt ($40M) it’s a 10% bump for their ENTIRE budget.
Now let’s do a second pass on the value of BCS Madness.
Let assume the ratings value of a BCS team is 2x that of a non-BCS team. i.e. a non BCS team has a draw value of “1” then a BCS team has a draw value of 2.
According to the 70% fund distribution, 70% of the teams playing are a BCS team. Thus the average game has two teams, each of which have a 70% chance of being a BCS team. Thus the team has a draw value of (on average) 70% x 2 + 30% * 1 = 1.7 and a game has a draw of 3.4.
But a BCS game has a draw of 4.0, thus we can scale our first pass value by 4.0/3.4 or 1.17.
So our value of $8M/hour is boosted to $9M/hr and our 64 hour tourney has a value of $576M today. Which boosts the D1P conference cut to $60M and D1L to $30M
Is $45M enough for each D1P conference to rock the boat? That’s about 1/2 to 1/6 of their total TV revenue.
It aint chump change.
Would it be financially sensible for the BCS schools (all 11 conferences) to pull out of NCAA Men's Basketball Tournament and create their own, with only BCS members?
The NCAA has just under 1300 schools. These are divided into Divisions 1, 2 and 3. Division 1 is 342 schools, leaving 950ish in D2/3. The D1 schools are divided into those offering a D1A Football team (BCS) and those that do not, which are sometimes called D1AA and D1AAA. We will group those to into what we call D1AA, which total about 220 schools. We will further divide the 120 D1A schools into two pieces, the schools of the 6 conferences (plus NotreDame) which formed/control the BCS, which we will call D1POWER (or D1P) and the rest, who are given yearly contracts with the BCS and share somewhat in the BCS revenue, which we will call D1Lite (or D1L).
Let’s Recap:
D2+3 950 schools
D1AA 220 schools
D1L 50 schools
D1P 70 schools
95% of the NCAA revenues come from March Madness. 85% from the CBS TV deal, which is about $600M this year and 10% from tickets, merchandising, et al.
Of the total NCAA expenses as a percentage of revenue:
5% are used for administration and overhead
17% for NCAA wide member programs, like catastrophic insurance
10% for running all Championships
7% in straight cash payment to D2+3 schools in several programs
61% ($450M)in straight cash payments to D1 conferences, with about $150M in a pool distributed based on participation and success in March Madness.
So about $450M goes to the 30 conferences in the D1.
So the $150M in D1 March Madness Money is split by performance, ranging from $1.5N to $19M. The D1AA conferences get in the range of $1.5-5.5M. D1L conferences range between $4-9.5M, and D1P from $13-19M. The remaining $300M is split into 6 other distribution pools which have criteria which gives more to the D1P schools than the D1A schools. All totaled it looks like this.
Example:
Big10 = 13.8M+.6M+.2M+10.5M+3.5M+.6M+3.2M= 32.4M in 2010
Ivy League= 1.2M+.4M+.2M+0M+4.0M+.3M+.9M= 7.0M in 2010
So the D1P conferences tend to get about 30M from the NCAA March Madness, TV and Tickets.
The D1L get about 20M and the D1AA get about 10M.
Which means that the BCS conferences (D1P and D1L) get about 280M from March Madness total.
So the operative question is what if the BCS seceded from the March Madness?
First, let’s calculate the dollar value per programming hour of March Madness
$600M / total prog hours = $600M / 75 hours = $8M/hour
Although ratings are HIGHER (and thus more valuable) with BCS schools, let’s take a simple proration by screen hours for the BCS teams (D1P+D1L)
The $154M that the NCAA divies up by performance (“The Basketball Fund”) is divied up in that manor. The BCS schools get $110M out of the $154M. So first pass, a BCS Madness would garner about 70% of the value ($420M) of a NCAA March Madness to a population of 38% of D1 schools. But how many hours would be reasonable to produce in a BCS Madness?
120 teams= 32 contestants = 64 programming hours (no overlap)
= 64 * $8M = $480M which is in the ballpark of our other estimate.
11 automatics of conference Champions
11 automatics of conference winner, not Champion
10 at large.
BCS Madness = approx $450M (1st pass)
Assuming we dole out the money 2 parts to D1P conf and 1 part D1L conference, we get about $50M for a D1P conference and about $25M for a D1L. The difference ($35M for a D1P and $20M for a D1L) is LARGE, especially to the D1L. Marshall’s TOTAL athletic budget is $12M, this represents a bump of about 20%. For Pitt ($40M) it’s a 10% bump for their ENTIRE budget.
Now let’s do a second pass on the value of BCS Madness.
Let assume the ratings value of a BCS team is 2x that of a non-BCS team. i.e. a non BCS team has a draw value of “1” then a BCS team has a draw value of 2.
According to the 70% fund distribution, 70% of the teams playing are a BCS team. Thus the average game has two teams, each of which have a 70% chance of being a BCS team. Thus the team has a draw value of (on average) 70% x 2 + 30% * 1 = 1.7 and a game has a draw of 3.4.
But a BCS game has a draw of 4.0, thus we can scale our first pass value by 4.0/3.4 or 1.17.
So our value of $8M/hour is boosted to $9M/hr and our 64 hour tourney has a value of $576M today. Which boosts the D1P conference cut to $60M and D1L to $30M
Is $45M enough for each D1P conference to rock the boat? That’s about 1/2 to 1/6 of their total TV revenue.
It aint chump change.