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Economics of the 2016 NCAA basketball tournament

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It pays (literally) for your conference to do well

Thomas J. Russo-USA TODAY Sports

The Tournament is a cash cow for the NCAA. Since it owns and controls the Tournament the NCAA does not have to split revenue with corporate sponsors as in football and baseball, and as a result over 90% of the NCAA operating budget is derived from this event alone.

When the NCAA signed their first billion+ contract with CBS, the schools (especially the non-basketball powers) lobbied for a more equitable system to distribute that money than the free-for-all that was in place. Thus, the "basketball fund" was born.

The basketball fund shares most of the tournament revenue (after the NCAA brass take their cut) with every conference. And the conferences split that money with their members.

Every team that participates earns money based on the number of games they play. But the NCAA didn't want announcers doing their best golf imitation and informing the viewers how many dollars were on the line for each late game free throw. So they instituted a six-year rolling window where the conference results are averaged across this year's event and the previous five, which diminishes the value of any one game. Every game that a team participates in is considered a ‘Unit' (with the exception of the Final and the game following a play-in game). So each team can earn a maximum of five Units in any one Tournament, and the value of each Unit is determined by the Revenue Distribution Plan written by the NCAA. Got it?

So what does this mean for FSU, and since the ACC splits the money evenly, are the Noles propping up other programs or vice versa?

Last year's tourney was the best in ACC history. The ACC played in 21 eligible games, which is remarkable, considering the previous year saw only nine games. Already in 2016 the ACC is guaranteed to play in at least 13, so times are good.

Regardless, here's how that distribution looked after last year. Each unit from this year's tournament is worth $265,791, though past units are not worth quite as much. For simplicity, we'll average them out and assign each unit (game played) with a value of $258,000.

2010 2011 2012 2013 2014 2015 Total Value
Duke 5 3 1 4 1 5 19 $4,902,000
North Carolina 4 4 2 2 3 15 $3,870,000
NC State 3 1 1 3 8 $2,064,000
Florida State 1 3 2 6 $1,548,000
Virginia 1 3 2 6 $1,548,000
Notre Dame 4 4 $1,032,000
Louisville 4 4 $1,032,000
Clemson 1 2 3 $774,000
Miami 3 3 $774,000
Maryland 2 2 $516,000
Wake Forest 2 2 $516,000
Georgia Tech 2 2 $516,000
Syracuse 2 2 $516,000
Boston College 0 $0
Virginia Tech 0 $0
Pittsburgh 0 $0
13 12 11 10 9 21 76 $19,608,000

So last year's conference distribution was $19,608,000, or $1,307,200 per team. FSU had brought in $1,548,000 over the six-year window, and thus was slightly subsidizing ACC teams, though not nearly to the tune of North Carolina or Duke. Eleven teams all brought in less than they received.

This year the 2010 results will drop out to be replaced by 2016. So it will be fun to watch Yale take down Duke, but if that happens it will cost the Noles some cash.