March Madness Makers and Takers

March Madness Makers and Takers

NCAA President Mark Emmert gestures while speaking at NCAA headquarters in Indianapolis, Thursday, Aug. 7, 2014. The NCAA Board of Directors overwhelmingly approved a package of historic reforms Thursday that will give the nation's five biggest conferences the ability to unilaterally change some of the basic rules governing college sports. (AP Photo/Michael Conroy)
NCAA President Mark Emmert gestures while speaking at NCAA headquarters in Indianapolis, Thursday, Aug. 7, 2014. (AP Photo/Michael Conroy)

 

(Bloomberg) – Twenty five years ago, the NCAA decided something had to be done about March Madness money. The year before, CBS agreed to pay a record $1 billion to broadcast the 1991-1997 tournaments. That was fine with the powerhouse basketball schools that routinely made it into the postseason: Under the rules at the time, they divided most of the revenue based on the number of games they won.

Conference officials feared that without a change, a handful of schools would get rich while others got nothing, and the student athletes competing in the tournament would face increasing financial pressure to win games.

So in 1990 the NCAA created the “basketball fund,” a plan intended to more fairly divvy up tournament revenue and parcel it out among the country’s Division I schools.

The new plan cut the amount of the payout that’s directly tied to teams’ wins and losses. Most of the tournament’s TV revenue is now earmarked for things like academic programs and financial assistance for student athletes. Even schools that don’t play in the postseason get a cut.