March Madness teams compete for share of $200 million

VCU's Final Four run in 2011. (Photo courtesy of BizSense reader Igor Jekauc. )

VCU’s Final Four run in 2011. (Photo courtesy of BizSense reader Igor Jekauc. )

As they take their shot at March Madness glory, University of Virginia and Virginia Commonwealth University have a lot more on the line than just school pride and new banner for the rafters.

A share of a nearly $200 million purse is up for grabs for VCU and UVA over the next three weekends during the NCAA tournament.

The deeper each team goes, the more money they have the chance to collect in that year and over time. And those checks can be more than six figures per win for the teams and even more for their conferences.

But the payouts from NCAA tournament appearances don’t look the same on the balance sheet for every school. VCU could net more than UVA for every game it plays. The difference lies in the methods each school’s conference uses to divvy up money the leagues takes in.

“I’ve been involved with four different conferences and it’s been done four different ways,” said VCU Executive Associate Athletic Director Jeff Cupps.

The NCAA distributes the money the tournament earns each year, about $188.3 million for last season’s event, directly to its member conferences. The NCAA pays its conferences each year in increments it calls “units.” One unit corresponds to one NCAA tournament game appearance. And each unit garners a payday for the conferences that year and the five years following that tournament appearance.

Once the conferences have their share (checks went out in April last year, according to the NCAA), each league is free to distribute the money between its member schools as it sees fit. The NCAA recommends dividing the money equally between each member institution. And some conferences, including UVA’s Atlantic Coast Conference, do just that.

“Every team in the ACC receives the same payout whether you’re in the tournament or not,” University of Virginia spokesman Jim Daves said. “Your success in the tournament helps contribute to a bigger pot, but that pot is split evenly.”

The schools’ basketball distribution, as well as conference TV deals, football bowl payouts and all other athletics-related revenue the league brings in, make up the pot.

The ACC received $17.68 million for the 2011-12 NCAA basketball tournament. Divided by the 13 teams that played in the league at the time, UVA, Virginia Tech and the rest of the ACC schools would collect $1.36 million each.

At last year’s unit value of $245,500, every NCAA tournament game appearance UVA racks up this year would be worth $1.47 million over the course of six years. Divide that between the now-14 other ACC schools and you’re left with approximately $100,000 headed to Charlottesville over six year for each Cavalier game over the next three weeks. And The NCAA did not respond to questions regarding what the per-unit payout will be for this year’s tournament.

The Atlantic 10, the conference VCU plays in, has a different split. The league’s revenue sharing structure sets aside 25 percent of its basketball-related revenues to divide equally between all of its schools, regardless of performance. The remaining three-fourths are distributed to member teams based on their individual tournament performance, Cupps said.

“That’s pretty aggressive,” Cupps said of the 75-25 model, and the chance at a greater reward for individual tournament success was one reason VCU jumped from the Colonial Athletic Association to the Atlantic 10 two years ago.

Several Atlantic 10 representatives and fellow member school athletic department employees did not respond to calls and emails with questions on the exact mechanics of their revenue-sharing system. And because VCU is only two years into its Atlantic 10 tenure, Cupps couldn’t provide a precise estimate on what each NCAA tournament appearance could net the Rams.

Using the same $1.47 million figure from 2012 over the six year payout of one NCAA tournament game, only $367,500 would be split equally between the 13 schools in the Atlantic 10. The remaining $1.1 million would go into that separate pot that is divided for schools based on NCAA tournament performance.

The Atlantic 10 earned $7 million from the NCAA for the 2012 basketball tournament, the last season before VCU made the jump from the CAA. The Atlantic 10 also managed to land six teams in the tournament this year compared to the CAA’s lone bid, so the pot VCU has its hand in now will be much larger than the CAA money it shared with member schools two years ago.

The Atlantic 10’s basketball pot also includes revenues related to its conference tournament, entry and exit fees paid as teams join and leave the conference and other basketball-related takings.

Both Daves and Cupps added that winning NCAA games can bring in money indirectly from several sources, including the potential for increased sponsorships and private donations to the athletic program.

“Any time you’re receiving exposure on this scale, there are indirect benefits to it,” Daves said. “The reputation of the basketball program grows, it could potentially influence someone to want to give a donation or a gift or increase their level of donation.”

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