March Madness is Here: Who Will Profit?

How Does The NCAA Tournament Affect The Stock Market?

Last night I debated John Challenger of Challenger, Gray and Christmas, the firm that each year comes out with that March Madness lost wages study. (Check the video if you'd like to hear it all). John was a tremendous sport to deal with me, as I’ve been a long time critic of the numbers his organization puts out. This year’s number is $1.2 billion in loss productivity from the working public spending their work time doing everything related to the tournament. That’s down from their “conservative estimate” of $3.8 billion last year because this year’s number only took into account employees that had online access and could therefore watch the games or check scores. Guess what? It’s still not accurate. Why? Because I don’t see any real evidence as to what was affected. Is my April issue of Men’s Health five pages smaller because the staff didn’t work as hard? Is it harder to get a haircut because my barber is working fewer hours? One thing the tournament doesn’t seem to affect is the stock market -- a place where sports fandom is probably at a height among sectors of business that don’t have anything to do with sports themselves.

The average New York Stock Exchange volume goes up by an average of 4.4 percent on the first day of the tournament -- as compared to the previous 20 days, according to Birinyi Associates. The second day shows even more action, as volume goes up an average of 14.9 percent as compared to the previous 20 days.

I was curious as to how these two days -- presumably the most “unproductive” -- compared in terms of volume to the average daily volume on days that year, which might be an even better metric. So I had our own Robert Hum run the numbers. The first two days of the tournament combined? Up an amazing 23.8 percent in volume when compared to daily volume in that year.

So Wall Street isn’t slowing down.

CBS, YouTube and the NCAA: A Partnership Made in Heaven
The NCAA Men's Basketball Tournament is set to start less than an hour from now and fans have many options to check in on how their bracket is doing -- from online scoreboards to watching live on CBSSportsLine's March Madness On Demand. But if you want to see highlights and missed the games, you won't have to wait until SportsCenter. CBS Sports, the rightsholder of the tournament, the NCAA and YouTube have announced a partnership whereby gameclips and highlights will be uploaded to the video site to a special NCAA channel -- minutes after they are broadcast. So does this make Google a March Madness stock play? Well, not necessarily. The clips will be sponsored by Pontiac, but it's not clear that Google is sharing in that advertising revenue. At this point, we know that the NCAA and CBS get a cut. No details yet on Google's part.

The End Of An Ere
It was only a couple years ago that I thought erectile dysfunction drugs would soon surpass alcohol sponsors as the sector that spend most on sports marketing. Rafael Palmiero had become an endorser of Viagra and Mark Martin's car was tagged with the brand. I couldn't go to sleep at night thanks to the folks at the male enhancement drug Enzyte, who won the award for being the only company to buy more ad time on ESPNEWS than Tom Emanski. The NFL signed a deal with Levitra, in which Levitra's marketers GlaxoSmithKline and Schering-Plough , were forced to be ridiculously vague about what their drug does despite the multi-million sponsorship fee -- remember the guy throwing a football through a tire? Even still, fathers cringed when they saw the ad during game broadcasts, knowing their sons were going to ask them what the advertisement was talking about. But it appears as though these days are over. Terry Lefton of the Sports Business Journal reports that Pfizer is ending its Viagra five-year relationship with Major League Baseball and it looks like the PGA Tour’s deal with Cialis is soon to expire. This comes after the NFL ended its deal with Levitra last year. We can all breathe a sigh of relief now.

Wanna Bet?
The World Series of Poker is reportedly preparing for 10,000 entrants to the World Series of Poker this year, which would be a 14 percent increase from last year. Last year, the WSOP had a record of 8,773, but with the U.S. gambling crackdown and with some sites -- who gave away many of the seats -- saying goodbye, I see no way they’re topping last year’s total. We’ll check back this summer.

Questions? Comments?