Photo by Isabella Yalif

Every year, 68 schools for both the men and women make the NCAA’s basketball tournament, commonly known as March Madness. This tournament uses a single-game elimination format to pit the top 64 Division 1 basketball teams against each other, with teams advancing in bracket style play. Teams exit upon their first loss, until one team remains undefeated and is crowned the national champion for the year. This tournament garners widespread viewership across America, and as such generates a lot of money for NCAA, which in turn is shared with the participating schools. This year, both Vanderbilt’s men’s and women’s basketball teams made their respective tournaments, and Vanderbilt Business Review decided to look into what this means financially for Vanderbilt, as well as for other programs. 

The System and its Implications

In a typical year, the NCAA men’s tournament pulls in around $700 million between ticket sales and TV revenue, of which 60% is sent to schools, with the NCAA keeping the rest. This money is then divided between conferences based on complicated mathematical formulas that reward conferences on how their teams performed. The key aspect of this system is the idea of a “unit.” A singular unit is a game played by a team, with teams that make it further in the tournament earning more units for their conference. At the end of the tournament, each D1 conference who had teams earn units is awarded a portion of the pot of earnings that was set aside by the NCAA for the participating schools. Each unit a conference earned nets them a check for about $2 million, paid out over the next six years to the conference. From there, each conference can do what it wants with the money. Conferences do not disclose the ways they use this money, although representatives have given a general picture of what happens. Some conferences split it up evenly between every member school’s athletic departments regardless of if they made the tournament or not, some reward the schools who brought in the money with a larger share of the “unit” fund, and others use the money to cover their own operating costs. 

Clearly, having one of your schools make the big dance is a huge financial boon for conferences, but the impact it can have on smaller conferences is especially significant. Let me explain. College athletics is largely dominated by the “Power 4” conferences, the SEC (which Vanderbilt is a member of), the ACC, the Big 10, and the Big 12. The schools in these conferences have the largest budgets of all the schools in Division 1 athletics, and typically make a lot of money from their football programs, and thus their money from this “unit” fund is less significant as a percentage of their total income. However, for a small conference without nationally televised football programs and huge media rights deals, earning money from the “unit” system is a huge boon for them, and the members of their conference. The extra money a conference can pull in from a surprise run to the Elite 8 can mean millions of extra dollars that can go into funding the conference’s operations and improving the athletic programs of its members. 

New Strides

Previously, only the men’s system used this revenue system, with the women’s tournament not using a revenue sharing system. However, as of a unanimous vote in January, this same “unit” structure is coming to the women’s tournament. A unit in the women’s tournament is set to be around $100,000 this year, however the pool of funds for the tournament is set to increase over the coming years, thus raising each unit’s value. This change comes as part of a wave of changes that resulted from a review of the NCAA’s gender equity in 2021 finding unfair differences in the handling of the men’s and women’s tournaments. Some other changes included allowing the women’s tournament to brand itself as “March Madness,” and expanding the tournament from 64 to 68 games (meaning it includes “First Four” games). As women’s college basketball continues to see an explosion in popularity, it is likely that further change will be seen. 

So What Happens to Us?

So what does this mean for Vanderbilt? This year, the SEC sent a record 14 schools to the men’s tournament, more than any other conference ever has in history. This included two of the four total No. 1 seeds, Auburn and Florida, who both made the Final Four. As of the beginning of the Final Four round, the SEC has earned a whopping 35 units, which also breaks the previous record of 25 units earned by the ACC in 2016. Although the SEC now has the discretion on how to distribute this whopping $70 million their teams earned from this year’s tournament, Vanderbilt will assuredly see a portion of this fund, which will in turn help improve its athletic programs and hopefully set the school up for more future tournament runs that we as Vanderbilt fans can enjoy.