March Madness is the NCAA’s biggest money maker, but it’s also lucrative for conferences. That’s because the NCAA bases certain aspects of its annual distributions calculations on basketball performance in its men’s postseason tournament.
A unit system tallies how revenue is distributed through two key NCAA funds, which will distribute a combined $222.5 million to conferences this year. Units are awarded for each game played, minus the championship. A school can earn a maximum of five units for its conference in a single March Madness run.
This year’s units carry a $337,141 annual value, according to the NCAA. That number changes each year, typically increasing by about 3% annually. The current year’s value will be applied to units earned by conferences over the previous six tournaments.
Since units are paid out in annual distributions over a rolling six-year period, each one earned during the 2021 tournament will be worth a total of at least $1.68 million for the recipient conferences by the time it is fully paid out in 2027. While the NCAA encourages conferences to share this money equally among member schools, it isn’t required.
Take Gonzaga, for example, a perennial NCAA tournament contender. Over the last six years and five tournaments (given 2020’s cancellation), the Zags have earned a total of 19 units for the West Coast Conference. In 2021, they’ll get paid for each. Next year, the four units they earned in their 2015 Final Four run (one unit for qualifying, and three more for beating North Dakota State, Iowa and then UCLA before falling to Duke) will expire after running their six-year course. They’ll be replaced by at least one 2021 unit given the Bulldogs bid to this year’s tournament, plus however many more the team earns during its 2021 run.
That means that even if Gonzaga loses its first round game in a tragic one-seed upset and only walks away from this year with one unit, the WCC would still get paid for 16 units next year (the 15 still rolling over from 2016 on, plus the 2021 addition) at a rate of at least $337,141 each.
That’s a $5.4 million+ payday already because of past seasons’ successes.
COVID did disrupt some of this, as no 2020 units were awarded (each would have been worth $282,100). Instead, that’ll be a zero for its full six-year cycle, or through 2026 in the NCAA’s calculations. While each unit earned this year and over the next five years will still be paid out over a normal six-year span, conferences won’t be able to collect the full potential of distributions until 2027 because of the zero filling the 2020 tally, which might explain the bump in value for this year’s tallies.
Sportico will be publishing one short business highlight every weekday during the three-week NCAA tournament.