NCAA March Madness begins Thursday morning, and when the games tip off it marks the start of one of the richest months in sports. But while people around the U.S. begin to stare at scores, check their brackets, and make initial payments on their office pools, let’s take a look at where the real money is made.
Two years ago, at the end of the 2016 men’s college basketball tournament, CBS (CBS - Free Report) and Time Warner’s Turner extended their already-massive March Madness rights deal. The previous 14-year, $10.8 billion deal was set to end after the 2024 tournament. The new contract tacked on eight years and $8.8 billion, and now runs through 2032.
The new deal pays an average of $1.1 billion per season, up from $770 million on the current contract, for the roughly three week basketball extravaganza. This is clearly a lot of money to pay for the rights to broadcast and stream just 63 games—not including the play-in games.
Yet both CBS and Tuner understand that this continued investment is a well-calculated risk at a time when advertisers flee linear television in favor of Facebook (FB), Google (GOOGL - Free Report) , and other online outlets. Their bet is that live sports will remain a viable money-making business for the foreseeable future.
The most recent deal also includes language that will see CBS and Turner own the exclusive rights no matter how people actually consume March Madness content in 2030.
“Whatever new platforms develop, we have all of those rights,” CBS Sports Chairman Sean McManus told the Wall Street Journal in 2016. “If people are watching on a skinny bundle, a phone or Apple (AAPL - Free Report) TV, we have the ability to exploit all of those rights going forward.”
CBS and Turner share these rights across an array of channels, alternating which network broadcasts the Final Four and championship game. TBS will broadcast the climax of the college basketball season this year, while fans will be able to watch almost all of the games live on streaming services and March Madness Live—though login information is required for TBS, TNT, and truTV games.
The NCAA pulled in a record $1.06 billion in fiscal 2017, which includes tournament broadcast rights, as well as tickets sales—$129.4 million, including the NIT—and roughly $60 million in marketing rights deals.
This money is then used to fund scholarships, stipends, medical insurance, travel, and a slew of other programs for most non-revenue generating sports across the country.
The NCAA Tournament is played at a nearly perfect time in order to generate the most viewership and buzz. The NFL season is over, MLB is just staring to gear up, and the NBA playoffs are still about a month away. Therefore companies pour millions of advertising and marketing dollars into March Madness.
Capital One (COF - Free Report) is one of the biggest sponsors again this year, with hundreds of commercials scheduled to appear while its name remains splattered all over the official NCAA tournament website—including “The Capital One March Madness Bracket Challenge.”
AT&T (T - Free Report) and Coca-Cola (KO - Free Report) are the two other “presented by” sponsors this year.
Aside from TV coverage, marketing, and advertising, the players themselves are also walking billboards for three companies.
Nike (NKE - Free Report) , Adidas (ADDYY - Free Report) , and Under Armour (UAA - Free Report) will be on display over the next three weeks on the chests, legs, ankles, and feet of nearly every athlete. These companies often provide schools and teams monetary benefits for winning or making it past a certain round of the tournament.
Check back later for a complete breakdown of which sportswear company dominates March Madness and how the other two stack up.
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