As March Madness kicks off in the basketball world today with Michigan State taking on Valparaiso, business across the United States will be preparing to kiss away hundreds of millions, potentially billions in lost productivity.
TV channels on the other hand are looking to haul in over a billion dollars in ad revenue.
ValueWalk's Raul Panganiban interviews Kirk Du Plessis, Founder and CEO of Option Alpha, and discuss Option Alpha and his general approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with Option Alpha's Kirk Du Plessis
For the uninitiated, March Madness is a grand tournament held between 64 of the best college basketball teams, usually in the last 2 weeks of March. Winners advance through the tournament while losers are sent home packing. The last team standing is crowned the college basketball champion.
March Madness is no small business. The total value of ad revenue during March Madness generates 1 billion dollars, easily outstripping the Superbowl. The entire NFL post-season only generates only about $980 million and the NBA’s post season hauls in less than $600 million in ad revenues.
March Madness is considered by many to be the greatest event in sports. While no single game may draw in as many viewers as Superbowl, the combined viewership of of March Madness’s 64 games tops a half billion views. Each game averages at least 8 million people. That means that March Madness easily outdoes the 100 million or so views for the Superbowl.
And because many of the games fall during work hours, that means many people are either sneaking a peak at their games online, skipping off for a long lunch at the local sports bar, or simply calling in sick all together. Don’t believe people will call in sick to watch a game? A poll found that 12 percent of respondents admitted to doing just that. “March Flu” will spread through employee ranks as suddenly an abnormally large number of people will be calling in sick. Phones will suddenly become a point of fascination as people monitor scores, and lunch breaks will suddenly last 2.5 hours or more.
Estimates vary, but at a minimum March Madness is believed to cost businesses at least $175 million dollars in lost productivity. This number was laid out in a report by Challenger, Gray & Christmas, a respected executive outplacement firm. The report also found that up to 3 million people will be spending up to 3 hours a day following their favorite teams and the most exciting games.
If you’re looking to minimize any potential losses or workplace disruptions, the best method might simply be to embrace the Madness. Some businesses set up projection screens in staff rooms, and encourage employees to check in on games and scores. This keeps people in the office and while some employees may skip out for a few minutes to catch a game, most will remain dedicated to work.
Trying to prevent employees from joining the madness is likely a lost cause for most business. At the end of the day most businesses won’t see any actual impact on their bottom line. Most of the lost work gets made up and rested employees can actually be more productive. So the best option might be to embrace the tournament and encourage employees to watch games, but also remain in the office.