NCAA's Cinderella mythThe disparity between the powerhouses and underdogs in the NCAA tournament can be seen most clearly in the schools' revenues and profits.NEW YORK (CNNMoney.com) -- The popularity of the the NCAA Tournament has been tied to its Cinderella stories. But in this fairy tale, the Cinderella teams are showing up at the ball dressed in rags. This year there are 31 teams not in a major conference, so called mid-major schools, that were included among the 65 teams in the tournament. But only 13 of those 31 teams, or 42 percent, reported a money-making basketball program in the 2005-2006 academic year, according to the figures that colleges and universities file with the Department of Education. 
As a group, those 31 teams had average basketball revenue of $2.1 million, and a narrow average profit after expenses of $297,220. By comparison, the 34 major conference teams in the tournament had average revenue of $9 million, and a profit of $3.7 million. That gave them an average profit margin of 40 percent. Most CEOs would flatten their own grandmothers on the way to the basket if they could score that kind of profit. Only five of the major conference schools in this year's tournament reported a loss on men's basketball. Granted, money does not necessarily equate with on-court success in March, part of what makes the tournament so popular. The University of Louisville, for example, is the team in this year's tournament with the highest revenue ($21.5 million) and profits (nearly $15 million) during 2005-2006. But it didn't even make it to the tournament last year, despite its resources. Everyone's favorite Cinderella team last year, George Mason University, slipped from a narrow profit in 2004-05 to a narrow loss last year, and didn't make it back to March Madness this time around. George Mason made it to the Final Four last year. And defending champ University of Florida was no where near the top in terms of revenue or profits last year. It ranked 22nd among the major conference schools in terms of revenue with $6.8 million, and near the bottom of its peer group in terms of profit, with just under $1 million. But money does play a role in how much a school can spend to recruit talent and make them a perennial power. Since the billions of television dollars from CBS (Charts) are split between conferences based on the number of games their member schools get to play, the formula is likely to continue to help the rich get richer. Even a major conference school not in the tournament could be cashing a bigger check this year than a mid-major school that wins a game or two. And thus the teams that make it to Atlanta for the Final Four this April are almost certain to be ugly stepsisters with their deep pockets, not the Cinderellas. The University of Memphis, with $4.7 million in revenue and a narrow profit margin of less than 5 percent, is the only mid-major school to have a better than No. 4 seeding. Beside Florida, the other three No. 1 seeds in this year's tournament all have revenue of $11.2 million or more. One of them -- the University of North Carolina, is No. 2 behind Louisville in both revenue ($17.2 million) and profits ($12.5 million). Still even relatively modest financial results at Florida give it a huge edge over almost any mid-major school. Among those schools, only Eastern Kentucky University, with $10.8 million in revenue and $3.8 million in profit, and Xavier University, with $8.3 million in revenue and $4.9 million in profits, pocketed more than Florida. Thursday's first upset was almost scored by tiny Davidson College, a North Carolina school with less than 1,700 students and a break-even basketball program that had $1.5 million in revenue last year. It led the University of Maryland, an ACC power, early in the second half before coming up short. I'm not going to suggest that Maryland won because it had $10.4 million in revenue and profits of $6.9 million. But it sure didn't hurt. |
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