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Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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Kent's Sports Blog: Follow the Money

| BY Kent McDill

Thanks to two reporters from Bloomberg Business, we can now know just how all of that money the NCAA gets for its men’s basketball championship tournament gets distributed.

Pay attention, because there is a lot of money to pass around.

Just in terms of the television contracts that the NCAA has with broadcasting entities, the organization received $700 million in 2014. That amount is distributed to the 350 schools in the NCAA’s Division I, and every school gets a piece of the pie, whether they make the tournament or not.

The plan devised in 1990 calls for most of the TV revenue to go to academic programs and financial assistance for student athletes at those schools. But a little over 25 percent (last year it was a total of $194 million) go into the basketball fund, which is distributed based on whether schools are in the tournament, and just how they do in the tournament.

Under the current plan, teams earn a “unit’’ for every tournament game they play; a team that goes to the championship game would earn five units. Each unit is worth a specific amount, and that amount changes every year. But the funds are not doled out to the schools; they are added together based on a school’s conference, and the conference then distributes the money earned through units to its members.

Conferences can divide up the basketball funds any way it wants, although the NCAA suggests the schools split the unit funds evenly, and most conferences do in fact do that.

The reporters state that every unit won in the 2015 tournament will be worth $1.6 million, because the fund is spread out over a six year period. That is a large hunk to any school in a conference represented in the final game, as the Southeastern Conference expects to be with Kentucky the prohibitive favorite to go all the way.

The goal of the basketball fund is to make sure the TV revenue is split among the Division I schools while rewarding those conferences that have strong basketball programs. The six power conferences in basketball – the Big 10, the Big 12, the SEC, the Atlantic Coast Conference, the Pac-12 and Big East – have 20 percent of the programs but are expected to receive about 60 percent of the basketball fund this year.

The six power conferences have been collecting schools lately, with even historically independent Notre Dame going into the ACC this year in basketball, but schools with poor basketball programs get rewarded the same way the good basketball schools do. The story from Bloomberg Business picks on the Northwestern University Wildcats, who have never made the NCAA tournament in basketball, but will get the same money from the tournament that the perennial tournament participants Michigan State gets.

Obviously, smaller conferences get less funds, and usually only have one entrant into the tournament (whereas power conferences can sometimes get as many as seven). Butler University recently left the small Horizon League for the more powerful Atlantic 10, taking its perennial NCAA appearance (and units) with it, while Gonzaga, given some love as a possible Final Four team this year, is reportedly considering leaving the West Coast Conference for the Big East (even though Gonzaga is located in Spokane, Washington).

This unit system that calls on conferences to split winnings evenly among its members is about as fair as you can get, without just splitting all the monies evenly between all 350 schools. That, of course, would not be the American way, and it would affect the best part of the NCAA tournament, when a small school underdog beats a major basketball power.

Knowing the Kentucky Wildcats are not going to get any more money for winning the title than the Missouri Tigers this year does not stop me from rooting against the Wildcats. But it does please me that they are not going to be rewarded more highly for the way coach John Calipari does things in Lexington.