Invitation to Big Dance a Boon to Smaller Colleges and Universities
A spot in college basketball’s major tournament is not just a dream come true for the players; it’s also a huge boost for less-fancied schools.
Playing in March Madness, which kicks off in full on Thursday, may be a familiar ritual for Duke University or the University of Kansas, perennial high seeds for the NCAA men’s matchups. But for Robert Morris University, Virginia Commonwealth University and University of North Carolina at Asheville, among other smaller colleges and universities, the benefits can be enormous.
The experience of these schools shows how big a deal sporting success can be — not just in terms of enrollment or alumni donations. The increasingly professional approach of athletic departments means a bump in merchandising royalties and licensing deals.
“No one can forecast the specific business impact on schools making the tournament, but it can mean tournament-revenue payouts, increased brand exposure and national recognition, which can boost student applications and also revenue from licensed-merchandise sales,” said Ben Sutton, president of IMG College, which handles licensing and sponsorships for many top Division I schools.
VCU, one of the biggest underdog stories in recent years, saw its royalties jump 219% after last year’s March Madness, when the 11th-seeded team reached the Final Four. Royalty income during the fiscal quarter following the tournament was larger than any full year in the college’s history. The school’s number of licensees has risen to 163 today, from 126 before last year’s tournament run, according to IMG College.
After a 17-year gap, Robert Morris made the NCAA tournament in 2009 and 2010, losing in the first round both times. But despite the early defeats, the school’s merchandise sales jumped as much as 50% during March Madness, said Pat Cavanaugh, chief executive of Pittsburgh-based Crons, which was the school’s apparel-maker. Though the spike didn’t last after March, sales afterward were higher than before the tournament.
A difference between the big and small schools is the loyalty of a smaller school’s fan base, Cavanaugh said: “The reach may not be as wide, but the fans buy several items.”
Top sellers are usually items such as fleeces, T-shirts and pants. This year, Crons is outfitting UNC-Asheville, launching a new design on Wednesday for the team to wear during the tournament.
Cavanaugh commented that just making the Big Dance ramps up interest among the students and alumni and helps admissions efforts. Butler University saw a 41% increase in applications after the Indianapolis school’s team made the tournament’s championship game in 2010.
A team needs to make the tournament’s third round, known as the Sweet Sixteen, for national attention, he added. In the hope of capitalizing on that level of interest, Crons has a number of designs ready to push out in case UNC-Asheville makes it that far.
Last year was only the second time the school had made the tournament, and merchandise sales doubled this year, according to Cavanaugh, though that was also due to a new arena and on-site store.
Rolling with it
It’s long been true that sporting success is a way to raise a school’s profile — both locally and nationally — and generate an increase in enrollment. For instance, after the heroics of George Mason University’s team, when the 11th seed made the Final Four in 2006, out-of-state applications to the Washington, D.C. school were up 54%.
But private (typically smaller) schools can benefit disproportionately. With Butler’s team making the championship game in each of the past two years, the university saw a 25% rise in season-ticket sales following the 2010 tournament, as well as record merchandise sales and donations to the athletic department. A university-commissioned study said Butler’s run was worth $639 million in publicity for the school through television, print and online exposure.
“It’s hard to get students to pay attention, for example, to even hiring a Nobel Prize-winning physicist, but doing well in sports can do that,” said Devin Pope, assistant professor at University of Chicago Booth School of Business and co-author of a study linking sporting success with higher enrollment.
Pope’s paper also found that quality of applicants is about the same as before; it’s not as if students with low SAT scores all decide they want to hit a sports-focused college.
Despite that, the jury is still out on whether college-basketball programs are worth their cost, Pope said. Among the top schools, 44% lost money on their men’s basketball programs in 2010, according to the NCAA, and the average program spent $1.44 million on its coaching staff.
“You hear a lot about the intangibles that people talk about with sports programs — about bringing students together and teaching values,” he elaborated. “Ultimately, I think it’s up to each university to decide if it’s worth it.”