Back in 2011, ESPN and the NCAA agreed to a $34 million per year media deal that gave ESPN the right to broadcast championships in 29 different college sports. The list of sports included every single college sport played by women. As time went by, it became increasingly clear this media deal dramatically undervalued the rights to women’s sports. After all, in 2024 dollars, that 2011 deal would only be worth $47.6 million, or just $1.64 million per sport (equal to $47.6 million divided by 29 sports). A report commissioned by the NCAA itself in 2021 argued that the media rights to women’s college basketball alone were worth between $81 million and $112 million.
In 2023, when the 2011 media rights deal was finally expiring, the NCAA had an opportunity to collect far more money. And in January of 2024, the NCAA proudly announced that this mission had been accomplished! NCAA President Charlie Baker told the Associated Press: “Yes, it’s a bundle, but it’s a bigger bundle that will be much better.”
Yes, that’s the quote. And yes, the NCAA agreed to a bigger and better bundle that is going to be much better!! Problem solved!
Not exactly.
When we delve into the numbers, however, we do see the agreement is technically bigger. Previously, the NCAA had a 14-year deal that paid $34 million per year, or $476 million across the entire agreement. The new deal is worth $920 million over eight years, or $115 million per year. Yet the new deal also covers 40 sports (up from 29 previously). So, it might look like the NCAA is now getting $2.875 million per sport (equal to $115 million divided by 40 sports). Or as Baker said, “bigger and better!”.
But the math doesn’t quite work as Baker’s quote suggests. Remember, the report given to the NCAA in 2021 said that women’s college basketball is worth between $81 and $112 million. The NCAA and ESPN ultimately didn’t agree with that value. Baker and the NCAA did hire a media consultant (Endeavor’s IMG and WME Sports) that “estimated about 57% of the value of the deal — or $65 million annually — is tied to the women’s March Madness tournament.”
That isn’t quite $81 million per year. But the people at Endeavor said they were pretty sure that the 2021 report overestimated the value of women’s college basketball. If we take Endeavor at their word (they didn’t show their math!), we learn something odd about all the other sports played by women. Remember, back in 2011, the NCAA sold the media rights to 29 sports for $34 million per year. Once again, in 2024 dollars, that worked out to $1.64 million per sport. If we believe Endeavor, then the right to women’s college basketball sold for $65 million and the rights to 39 sports that are not women’s college basketball were sold for $50 million ($115 million less $65 million). That means, all the other sports were valued at $1.28 million each in 2024 (equal to $5o million divided by 39).
And that means, according to the NCAA and its media consultants, the value of women’s volleyball, women’s gymnastics, and softball all went down from 2011 to 2024!
One has to wonder how that could be possible. After all…
- The NCAA Women’s College World Series Finals in 2024 attracted 2 million viewers. This was up 3% from the previous ratings record set in 2015.
- The 2023 NCAA championship match in women’s volleyball attracted a record-setting 1.69 million viewers.
- In 2022, the NCAA women’s gymnastics final was bumped to an earlier start to accommodate an NHL broadcast. The women’s final attracted 922,000 viewers, a mark that was 15% higher than the NHL broadcast in the more favorable time slot.
To put all these numbers in perspective, the NHL averaged about 500,000 viewers per regular season game in 2023-24. And the Stanley Cup playoffs in 2024 averaged 1.8 million viewers per game. For these ratings, Disney (parent company of ESPN) and Turner (parent company of TNT) agreed to pay $625 million per year to the NHL.
Remember, ESPN got all of women’s college sports—and much of men’s college sports (except for football and men’s basketball)—for just $115 million per year. How could the NHL package be worth five times what we see for women’s college sports? And how could the rights to men’s college basketball be worth $1.1 billion per year, while the rights to women’s college basketball are only valued at $65 million? After all, the women’s basketball final in 2024 actually attracted nearly four million more viewers than the men’s final.
And once again, how did the value of women’s volleyball, women’s gymnastics, and softball actually go down?
All of this suggests that the NCAA left quite a bit of money on the table. For people who have only heard the story about markets primarily told in ECON 101, this must seem impossible. It reminds one of a very old joke told by economists:
Two economists are walking down a street and see a $20 bill lying on the sidewalk. The first economist says, “Look at that $20 bill.” The second says, “That can’t really be a $20 bill lying there, because if it were, someone would have picked it up already.”
This isn’t exactly funny (economists aren’t known for their ability to tell jokes!). But this story does capture a fundamental idea for many economists. Decision-makers tend to be rational, and markets tend to be efficient. Therefore, money is not left on the table (or the sidewalk!).
This view isn’t just prevalent among economists. At least, a story that likely started with economists tends to be believed by people everywhere. If you tell someone that a leader in business made a mistake that costs millions, you will immediately be asked: “How is that possible?”
There is a very simple answer to that question. Human beings don’t always try their hardest and can make mistakes. And markets, which can at time force people to try harder and correct their mistakes, are often not very efficient.
This is especially true when markets are not competitive. As Adam Smith observed back in 1776: “Monopoly… is a great enemy to good management.“
As economists have known for decades, the NCAA is a monopolistic cartel. One of the many problems with monopolies, as Adam Smith understood, is that the people who lead monopolies don’t have to be good managers.
This appears to be the story with how the NCAA sold the media rights to women’s college sports.At the very end of the article detailing the NCAA’s media right deal was this sentence: “The deal was also struck within ESPN’s exclusive negotiating window and never brought to the open market.”
And there’s our answer.
Charlie Baker and the NCAA didn’t shop the rights to women’s college sports. Markets can be efficient when there is competition. But if you take away the competition, the power of markets vanishes.
In contrast to the NCAA, the NHL shopped their rights to multiple companies and got multiple offers. Baker and the NCAA didn’t get a very good deal because they only bothered to negotiate with one company (ESPN), leaving out potential bidders such as Turner, Amazon, and Netflix. Yes, the NCAA did get more for women’s college basketball. But it doesn’t look like they got as much as they could have. And one doesn’t have to be a math major to see that the NCAA managed to get less for women’s volleyball, women’s gymnastics, and softball than they were getting before. Apparently, no one with the NCAA managed to take a few moments to break out a calculator to see that this happened.
How is that possible? Once again, monopolies are the enemy of good management. If a small farmer in a competitive market makes a serious mistake, there is a good chance the farmer goes out of business. Competition can be a very harsh teacher.
But Charlie Baker and the NCAA are not small farmers. The NCAA isn’t going to go out of business because they failed to negotiate a very good deal for women’s sports. The NCAA will continue to exist and likely continue to tell us that women’s college sports doesn’t generate much revenue. Of course, that isn’t true. Women’s sports do, in fact, generate substantial revenue. But right now they are doing this for ESPN. As Lindsey Darvin at Forbes recently reported, by January, advertising for the broadcast of the women’s March Madness had already sold out. Advertisers know there are going to be millions of viewers for the women’s college basketball championship, and they definitely are willing to pay ESPN to address that audience.
But the women in college sports aren’t going to see all that money. Charlie Baker decided to leave it on the table and prove Adam Smith was right!