March Madness is big business for the National Collegiate Athletic Association (NCAA), when its most anticipated basketball games tip off and sports fanatics scramble to fill out tournament brackets and place bets in office pools. The NCAA typically pulls in about $1 billion each year in revenue from media rights, merchandise licensing, ticket sales, and corporate sponsorships associated with the three-week tournament.

And the games aren't just a revenue generator within the collegiate ecosystem. In 2023, 68 million Americans wagered an estimated $15.5 billion on the tournament, according to the American Gaming Association.

What Is the Size of the Pot?

Basically, March Madness is the NCAA's bread and butter. In the 2022-2023 season, college athletics' governing body earned $1.28 billion in revenue, with broadcast rights to the men's Division I basketball tournament alone accounting for roughly $900 million of that. On the surface, that seems like cause for outrage, especially in light of how much the players earn: nothing.

While players make no money from March Madness, they can now get paid for endorsement deals, following a U.S. Supreme Court ruling in 2021. This was after the NCAA blocked players from earning money for decades.

How Tournament Money Gets Divided

The NCAA doesn't keep all of the money it receives from March Madness-related media and marketing deals but distributes much of it to its member sports conferences, based on the number of tournament games their teams played in.

The conferences then divide the money among all their teams, using their own formulas. In 2023, for example, Southeastern Conference (SEC) teams played in 17 tournament games and earned the highest estimated payout of $34 million. Big 12 conference teams were next, playing in 16 games and earning an estimated $32 million, according to Sportico.

Of course, each conference wants to see as many of its member schools in the tournament as possible, to raise the payout that it receives. For smaller, lesser-known conferences, that money can represent a major portion of their annual income.

When a surprise team that is virtually unknown makes it through multiple rounds, the payout can represent a much-needed cash injection for its conference. For larger conferences, however, such as the Atlantic Coast Conference (ACC) or the Big Ten, the money is more like financial icing on the cake than a major source of revenue.

How Earnings Are Shared Within Conferences

The NCAA urges conferences to divide the money equally among their member schools, and many conferences do just that. Larger conferences, which have multiple sources of income, routinely divide up most of the money and send it to their member schools' athletics programs. Smaller conferences, however, may count on that money to cover their own expenses. Only whatever is left over goes to member schools.

The Bottom Line

There's been plenty of criticism over the years regarding the funding model used by the NCAA. The colleges receive only a portion of the money they generate through sports competitions, and the players see none at all. However, new NCAA rules and state laws have made it possible for at least some athletes to benefit from the marketing of their names, images, and likenesses. Meanwhile, antitrust-law challenges to the NCAA's power to enforce its rules could soon make March Madness a whole new ballgame.