Business of the Madness!

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In this week’s edition of Learning The Venture, we’re going to be taking a look at the business of arguably the most exciting sports event of the year; March Madness!

If you’re anything like me (and probably 99% of the basketball loving population), your bracket has been completely busted since Day 1 and now you’re just committed to finishing (like every year).

March Madness is an amazing 12 days of college basketball, we truly get to see the best that the sport has to offer. Every year is different, a different underdog, a different Cinderella story, a different buzzer-beater (or two).

What also continues to amaze, is the business behind this incredible tournament and what makes it tick, not only for itself, but stakeholders such as sponsors, and athletes, particularly with NIL (name, image, and likeness) deals running rampant.

Now, without further ado, let’s get stuck in!

For those of you who may not be familiar with college basketball, March Madness is the Division 1 Men’s and Women’s Basketball Tournament, which takes place in, you guessed it, March and finally culminating in April.

As a basketball fan, I truly believe it is the best basketball event in the world. It combines everything a fan of the sport wants to see - you get the flash and excitement of a freshmen-led Kentucky squad coupled with the maturity, poise, and elite tactics of an upperclassmen filled Villanova or Florida team, all while watching the smallest Division 1 school in the country break hearts and brackets!

The tournament is currently entering its second week, with Sweet 16 and Elite Eight games next up on the schedule, so we’re only in store for some more great basketball until the final on April 8th.

Apart from the phenomenal athletic display the event offers, in 2024 there is now immense opportunity for sponsors and athletes alike to profit from the tournament like they have never before.

NIL Madness

As most of you might be familiar with, in 2021 the NCAA changed one of their long-standing rules which now allows athletes to profit off of their name, image, and likeness, otherwise known as “NIL”. This rule change allows athletes to license their NIL rights to businesses, in exchange for paying the athlete to appear in advertisements or through social media.

As you can imagine, this has drastically changed the business landscape of college sports, albeit for the better.

Considering March Madness is one of the biggest tournaments in all of sport, it only makes sense that sponsors see it as a potential goldmine through NIL partnerships with competing athletes.

According to bleacherreport.com, the Round of 32 games on the first day of the tournament was the most watched first day of the second round ever, with an average of 10.8 million viewers across the rights holder channels, TBS, CBS, TNT, and truTV.

Keep in mind that this is only from the first day of the second round, we haven’t even gotten to the Elit Eight or Final Four yet.

The magic of the tournament is such a key ingredient in the sponsorship world of March Madness. For example, Purdue center Zach Edey who is being touted as a first-round pick in the 2024 NBA draft, currently has an NIL deal in place with New York based startup Daps, which will see him earn $810,000 in endorsements, according to msn.com. Purdue face off against Gonzaga tonight in the Sweet Sixteen matchup, and should Purdue emerge victorious and Edey continue to perform as he’s done so far, it’s safe to say Daps made the right deal!

The link in success with athletes performing well on court and their brand partners benefitting is quite obvious. NIL makes this process so much easier and cleaner for all involved, and is a scheme that really does benefit all parties.

If you build it, they will come…

However, the Madness works in other ways as well, one in particular that has been apparent for almost two decades; admissions.

According to forbes.com, after successful runs in the Sweet Sixteen, Elite Eight, Final Four, and eventually the finals, National Champions saw increases in their average application rates, which ranged from 7% to over 11%, year on year.

Similarly, 2016 National Champions Villanova University saw a 22.3% increase in admissions during the 2017-2018 school year, after Kris Jenkins hit his famous buzzer beater to defeat the University of North Carolina (forbes.com).

I’ve always found this to be the most interesting part of the ‘business’ side of March Madness.

For someone who was recruited to Division III and played for the U16, U18, and U20 Bermuda National Basketball Teams, I got into the sport quite late. I remember the very first tournament I ever watched was the 2012 National Championship where the Anthony Davis-led Kentucky Wildcats beat the Kansas Jayhawks. Maybe being from Bermuda I never thought of having some kind of affinity with any university, but in that moment watching the students going absolutely mad, I definitely thought “I should go there".

This is where sport really is special, truly.

To follow a team through what would be 6 games if they win, and to feel so much emotion that it led you to commit 4 years of your life to that institution, is pretty amazing.

This is the kind of emotion and commitment that brands are wanting to connect with through their partnerships with these athletes. For someone to decide their academic future based on the performance of a school’s basketball team is something to take advantage of, that kind of loyalty exists within sport that NIL provides an avenue towards.

Thank you for reading this week’s edition of Learning The Venture, to any new readers I hope you enjoyed, and I invite you to join our roster by subscribing below!

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Check you later!

Jason