How the economics of the 2021 NCAA Tournament affect FSU

The NCAA Tournament is a cash cow for the NCAA. Since it owns and controls the Tournament, the NCAA doesn’t 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.

When the NCAA signed its 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). So each team can earn a maximum of five Units in any one Tournament (six for the First Four), 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 Leonard Hamilton’s Florida State Seminoles?

The tourney that will be dropping out this year had been the best in Atlantic Coast Conference history. The ACC played in 21 eligible games, which is remarkable, considering the previous year saw only nine games. Then 2016 happened. The ACC earned 25 units, which broke the 2009 Big East record of 24.

In 2017, the ACC earned a very respectable 18 units, and then that went to 21 again in 2018 (thanks FSU!), before dropping 19 in 2019. Unfortunately, the 2020 tournament is going to roll through the years as a fat zero.

Regardless, here’s how that distribution looked after last year. Each unit from this year’s tournament is worth in the neighborhood of $300,000, 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 $275,000.

So last year’s conference distribution was $28,600,000, or $1,906,666 per team. FSU had brought in $2.48 mil over the six-year window, and thus was slightly subsidizing ACC teams. Nine teams all brought in less than they received, including the goose eggs laid by the Georgia Tech Yellow Jackets and Boston College Eagles.

This year the 2015 results will be replaced by 2021. So while it might be fun to watch booger-picking Jim Boeheim and the Syracuse Orange get bumped, it’ll cost the ‘Noles some cash.