Return of US college basketball no slam dunk

The US men’s college basketball championship, an American television ratings bonanza also known as March Madness, is stretching the limits of how much calamity it can embrace.

On Friday the first of 64 teams will begin playing in the roughly two-week tournament that is the financial linchpin of the National Collegiate Athletic Association with media rights worth $702m. The “madness” moniker derives from the unpredictability of six rounds of single-elimination basketball games. 

The organisers are going to great lengths to stave off a potential Covid-19 outbreak among participants, which would risk sacrificing the broadcasting and advertising fees tied to the event.

After last year’s tournament became one of the first sporting events to be cancelled at the onset of the pandemic — with about 85 per cent of the NCAA’s expected annual revenues evaporating as a result — the need to stage the basketball championship in 2021 is urgent.

“This really does drive the economic engine for college sports all across the country,” Donald Remy, chief operating officer of the NCAA, told the Financial Times. 

As a result of the 2020 cancellation, the NCAA last year slashed planned disbursements to more than 300 top-flight member universities from $600m to just $225m, funds which would have gone towards the administration of so-called non-revenue sports such as athletics, volleyball and gymnastics. Loss of revenue insurance payouts totalling just $270m did not cover the March Madness shortfall, leading to budget cuts and salary reductions at the NCAA head office in Indianapolis.

“We were in the seventh month of our fiscal year when everything was cancelled,” said NCAA chief financial officer Kathleen McNeely, “so the fact that we ended 2020 with only a $55.8m net loss is pretty astonishing.”

As such, ensuring that the 2021 tournament could go ahead became a matter of financial necessity for the organisation, which codifies competition rules and stages championships for some two dozen other collegiate sports.

Planning began as early as last spring. In a departure from tradition the event will be based solely in one city — Indianapolis — in an effort to mitigate contagion.

The March Madness basketball tournament is hugely popular with media rights worth $702m © Brian Spurlock/Icon Sportswire/ Getty

Covid-19 protocols for the tournament stipulate that all participants, from players and coaches to trainers and equipment managers, must present seven consecutive negative test results before their arrival in Indiana. The stringent framework has already eliminated a perennial tournament favourite, Duke University from Durham, North Carolina. Should a team be forced to drop out due to Covid-19 during the tournament, its challenger would automatically advance.

The precariousness of the March Madness tournament comes during a growing debate in the multibillion-dollar US college sports industry over how its athletes, amateurs who do not share in the financial spoils, should be compensated.

Collective annual revenues among the best-performing collegiate programmes topped $8bn in pre-pandemic times, according to the Knight Commission on Intercollegiate Athletics.

On March 31 the US Supreme Court is scheduled to hear oral arguments in a potentially landmark antitrust case, NCAA vs Alston, which could determine the scope of the governing body’s authority in deciding collegiate athlete compensation.

The case originated as a class-action lawsuit in which plaintiffs argued the NCAA illegally places caps on earnings for athletes. Current NCAA rules stipulate that college athletes must not be compensated for their participation beyond scholarships and associated costs of attending university.

The case is likely to determine a precedent for how much authority the NCAA can wield when governing college sports, particularly in relation to athlete compensation. The body said it considers itself subject to antitrust governance in the US, but does not regard the Alston case as a referendum on so-called amateurism rules. “One of the questions at the core of the case is not whether or not amateurism should exist, but who gets to determine what it is,” Remy said. 

Geo Baker, a player for the Rutgers University basketball team, tweeted on Tuesday that “you can definitely be grateful to play this game while also understanding there’s more that should be on the table.” He launched a hashtag shared by other prominent college players, #NotNCAAProperty, to highlight that they are not paid to play.

Meanwhile, the NCAA has yet to decide whether to join the US sports betting boom.

After another US Supreme Court ruling in 2018 struck down a federal ban on sports gambling and states began legalising the practice, professional leagues and teams have quickly licensed their data for betting. That trend has accelerated during the pandemic, as revenue-strapped states such as New York look for new streams for taxation.

Indiana’s Mackey Arena is prepared for the 2021 NCAA Men’s Basketball Tournament © USA Today Network/Reuters

The NCAA says it does not currently have plans to license its own data to legal sports books, despite the fact that March Madness is already among the most popular informal betting events in the country.

Each year millions of people make informal wagers among friends on so-called brackets, pieces of paper completed with predictions of the winner of each game in the tournament. Some 47m Americans are expected to place bets on March Madness this year, including 37m expected to complete a bracket, according to the trade group the American Gaming Association.

“We’re monitoring the landscape,” Remy said. “We certainly understand monetisation of data other enterprises have pursued . . . [but] as an organisation, we’re a little different than a professional organisation, because what we provide is an opportunity to pursue academics while also pursuing sports.”

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