An Impact of the NCAA Tournament?

One of the more amusing reasons why sports are not boons to local economies is that they drive more unproductive watercooler discussions at the office. As another case in point, consider the upcoming NCAA Tournament:

The NCAA men’s basketball tournament costs CBS $6 billion over its 11-year deal to air the games. But March Madness is costing more than half that — $3.8 billion — in lost worker productivity this year alone, according to an estimate that’s been repeated on CBS, in the Boston Globe and by the Associated Press.

The estimate comes from Chicago-based outplacement firm Challenger, Gray & Christmas Inc., which last year said March Madness would cost businesses a mere $889 million. (I wrote about it last March.) The firm assumes that all workers who are college-basketball fans will surf the Web for news about the tournament (it further assumes that all workers have Internet connections), and that the time they spend isn’t made up for elsewhere in the workday. Thus, Challenger figures the “cost” to businesses is equal to the salary paid to those workers while they’re surfing.

…Not exactly. Last year, Challenger relied on a survey from the NCAA in 1997 that found 22.9 million Americans are college-hoops fans, meaning about 14.3 million working Americans follow the sport (Challenger used Census stats on the proportion of Americans in the work force). This time, Challenger used an unrelated Gallup poll, conducted in 2004, that yielded a number four times larger than the NCAA’s for the proportion of Americans who are fans of the sport.

Gallup’s managing editor, Jeffrey M. Jones, told me in an email, “I don’t agree with the estimate,” citing the concern that not all self-identified fans will surf the Web, even if they can. He added, “To be fair, they probably should compare how much is lost to productivity by surfing the Web or sports sites on a typical day, and subtract that from their estimate since companies probably lose money every day by employees surfing the web, not just during March Madness. They also mistakenly assume that there will be lost productivity over a three week period. There are only two days where there are games during the working day, the rest are at night and on the weekends.”

$3.8 Billion? That’s about a 0.023% decline in Nominal GDP for this year.

Me-thinks that people would find other ways to pass the time at work in the absence of the NCAA tournaments (or sports, for that matter). Besides, if someone is stuck on the answer to a problem, perhaps all that’s needed to clear the mind is a little rousing chat about whether so many mid-majors should be allowed in the tournament.

The column points out that David Nicklaus is skeptical too.

HT to Hypothetical Bias.

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Author: Phil Miller

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