March Madness has become the signature spectacle of the spring season in the United States. The 65-team basketball tournament invades offices, packs local bars, and captivates the attention of sports fans across the country – from the amateur to the most grizzled veteran.
It is also the nation's most lucrative sporting event.
While the Super Bowl holds the crown as the most watched sporting event in America, the rights to the tournament, which are owned by CBS, are said to bring in over $2 billion in revenue. And that figure pales in comparison to the amount of money that gets poured into bracket pools across the country and fills the books of Las Vegas bookies every year.
The NCAA tourney will rake in roughly $650 million this year – $167 million of which will be divided among all the league's conferences. But that's just the beginning, because the NCAA is likely to opt out of its $6 billion contract with CBS at the end of this year's tournament and sign an even bigger deal with another network.
When it signed its agreement with the NCAA 11 years ago, many analysts thought that CBS overpaid. But the terms of the deal have turned out to be much shrewder than first thought, because CBS scored new-media rights, which includes the right to broadcast games over the Internet.
CBS started putting live games online in 2003, but charged users $15 for access. It wasn't until 2006 that CBS began broadcasting games online for free. The audience and the rewards were modest at first, but soon advances in broadband infrastructure and computing capabilities have attracted scores of online viewers.
The network streamed 8.6 million hours of video from last year's tournament, and took in $32 million in advertising revenue. That's a 700% jump from the $4 million in online revenue CBS generated in 2006. CBS reportedly made $4.76 per television viewer last year, and $4.26 per online viewer. This year, the network expects to have its highest number of online viewers ever, somewhere between8 and 10 million.
"The original intention was to put the early rounds on the web when fans are not around a TV and give them a chance to watch at work," Jason Kint, senior VP-general manager for CBSSports.com, told Ad Age.
And they're doing just that. About 7.5 million people watched NCAA tournament games online last year – and just about all of that traffic came during work hours.
But that has caused some consternation among employers who fear that employees are frittering away valuable work hours by betting in office pools and watching games online.
Madness or Morale Booster?
About 45% of adult Americans participate in filling out tournament brackets, according to a 2009 survey by MSN. In fact, we learned yesterday (Thursday) that President Barack Obama has completed his. The commander-in-chief has Kansas topping Kentucky in the finals.
"Pools are the Coca-Cola secret formula of why the NCAA Tournament has become the quintessential sporting event of this era," says John A. Challenger, whose outplacement company conducts an annual survey of the tournament's impact on workplace productivity.
Chicago-based outplacement firm Challenger, Gray & Christmas makes an annual game of estimating the cost of NCAA tournament to businesses. The firm estimated that $1.8 billion worth of work was lost to March Madness in 2009. However, Challenger said Wednesday in U.S. News and World Report that that his firm would not be researching the drain on productivity this year.
"In this economy, employees are disinclined to do anything that might put their jobs at higher risk than they already are," wrote Challenger. "Meanwhile, employers have bigger issues to address than whether a few workers are using work time to fill out brackets or sneaking peeks at games online. Companies would be better served by allowing this minor distraction during these anxiety-producing times…In the current environment, any attempt to estimate the impact of March Madness on productivity would be counterproductive and inappropriate."
Indeed, there is an ongoing debate over whether March Madness detracts from productivity or builds team chemistry in offices around the country.
"I'm not going to be OK with employees streaming it on a computer," Thomas Vanderbilt, president of marketing and public-relations firm T. Vanderbilt, told the Seattle Times. "A few extra breaks to check the TV? I'm OK with that. I'm not cool with you doing it at your cubicle, with your headphones on. You get lost in it."
T. Vanderbilt uses software called Spector Pro to track every Web site visited by its 16 employees and flag inappropriate use. The software also blocks streaming video.
Other companies have come to embrace the annual tradition. Carol Conway, president of CRS Technology participates in an office pool and lets employees check scores and view games during the day – though she admits there's a slight drop in productivity.
"We experience a similar type of dip in productivity during fantasy football season," Conway told News-press.com. "But it's to be expected. Everybody works hard, but you also need to play hard."
In his op-ed piece in U.S. News, John Challenger recommended companies at least consider letting employees wear team apparel, work more flexible schedules, maintain an office bracket, and keep a television on in the break room.
"Companies can use this event as a way to build morale and camaraderie," he said.
News and Related Story Links:
- U.S. News & World Report:
No March Madness Workplace Productivity Loss: Recession Is the Big Bracket Buster
- Seattle Times:
Time to stop the Madness at work?
NCAA college basketball Tournament invades the office