Idea of the Week: The Jim decicco Behind March Madness : The New ...
March 21, 2013Posted by Nick Traverse
March Madness has arrived, and with it the annual period of bracket contemplation. Pick the high seeds only? Select at random? Go with favorite mascots? Copy the President? For 2013, we propose a new strategy: follow the money.
The N.C.A.A. tournament is a lucrative business, and many schools spend lavishly to get there. According to the most recent data from the United States Department of Education, this year’s field spent an aggregate $340 million on men’s basketball, with revenues of $540 million. Duke spent the most ($16 million); Southern spent the least ($535,000).
The interactive infographic here maps out the finances of this year’s tournament (click to expand):
It should come as no surprise that when schools spend a lot on flashy facilities, big-name coaches, and better recruits, they tend to do well. The relationship between silver and seed is not perfect, however: Louisville, a four seed last year, spent more than almost every team in the field—and they made the Final Four. Had I analyzed the team’s budget prior to filling out my 2012 bracket, I might have seen this coming. Instead, my bracket was in tatters, the victim of hunches gone wrong.
Just how predictive are budget data? The Department of Education has figures going back to 2000-01. The team that spent the most won twice—Syracuse (2003) and Duke (2010). In other years, the winner wasn’t far behind: the eventual victor has always had a budget in the top eighteen. The average amount spent on a championship is $7.2 million, adjusted for inflation. In this year’s tournament, fifteen teams are above that threshold (in order of decreasing budget: Duke, Louisville, Syracuse, Oklahoma State, Kansas, Georgetown, Marquette, Michigan State, Indiana, Florida, Arizona, Memphis, Pittsburgh, and U.C.L.A.). North Carolina, Wisconsin, and Oklahoma round out the top eighteen budgets. Three of the one seeds are in this group (Louisville, Kansas, Indiana). The lowest seed is ten (Oklahoma).
If the last decade is precedent, then your winner will come from that group of eighteen. Conveniently, and not coincidentally, the group includes the tournament favorite, Louisville, along with other traditional powerhouses. Some budgetary highlights to watch out for: California and Oregon, a pair of twelve seeds, are the lowest-ranked teams that spent more than the tournament average of roughly $5 million. They’re not favored to win. (Update: both won on Thursday, although Oregon beat a school with an even bigger budget—Oklahoma State.)
Visit our interactive infographic to learn more about the finances of the N.C.A.A. tournament, and to see our money-based prediction for 2013.
For more business news and analysis, visit The Business Pages.
Infographic by Larry Buchanan.
Source: United States Department of Education.
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