March Sadness: Is the NCAA Tournament Ruining Our Economy?

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Kentucky's John Wall
Every year in March, the NCAA Tournament rolls around. There are 64 games, and at the end a champion is crowned and we watch a [montage]( with Luther Vandross. In the interim, it is the greatest gambling event for the entire country. [Brackets]( are filled out, and employees stop working throughout the day to make sure that the team they picked to win is not going to lose to Eastern Tennessee State.

But at what price? Often at this time we are barraged with statistics about how much productivity is lost as a result of the tournament. Typical of such stories, the Boston Globe reported in 2006:

A Chicago firm that tracks workplace issues estimates that employers will lose $3.8 billion in wages paid to workers who will be too busy cheering their teams on through the brackets to build spreadsheets or write reports on their desktops by the time the championship game is played April 3.

”Even people who do not follow college basketball for the entire season can easily get wrapped up in the excitement of March Madness,” said John A. Challenger, chief executive of Challenger, Gray & Christmas.

That’s right, the firm, Challenger, Gray & Christmas estimates that we are losing $3.8 billion as a result of March Madness. As our economy struggles to regain its footing, can we really afford to blow nearly $4 billion on college basketball games? Well, probably not. Fortunately, as numerous media critics have pointed out, the Challenger, Gray & Christmas estimate may not be entirely on the up and up. Here’s Slate’s Jack Shafer:

I’m happy to report that Challenger’s estimate is as loosey-goosey as they come. For one thing, he misjudges the size of the dedicated college hoops audience. In 2005, for instance, the NCAA championship game drew 23.1 million households, according to Nielsen. The year before, only 16.6 million households tuned in to the championship game, which indicates that many so-called fans have only a casual interest in the tournament. Many are happy to tune out the tournament’s biggest game if it’s a blowout, or if the matchup doesn’t interest them. Also, many nonfans and casual fans who participate in office pools experience reduced interest in the tournament as it proceeds and the teams they bet on get knocked out.

In concocting his lost-productivity estimate, Challenger doesn’t acknowledge that “wasted time” is built into every workday. Workers routinely shop during office hours, take extended coffee breaks, talk to friends on the phone, enjoy long lunches, or gossip around the water cooler. It’s likely that NCAA tourney fans merely reallocate to the games the time they ordinarily waste elsewhere. Likewise, many office workers who don’t complete their tasks by the end of the day stay late or take work home. If fans who screw off at work ultimately do their work at home, the alleged “loss” to productivity would be a wash.

In other words, the idea that each game of the tournament is costing the country $59,375,000 is rather absurd, and Challenger, Gray & Christmas seems to have gotten the memo. This year they’ve dialed their estimate back to an equally arbitrary figure of $1.8 billion ($28 million per game!). What is the lesson here? Don’t trust an estimate about how much the tournament costs coming from a firm that specializes in “large staff reductions” about how unproductive your employees are. Also, companies that hire Stanford employees don’t have to worry about any extra lost productivity this year. We need any edge we can in this economy.

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