What is March Madness – and the nonprofit that manages the mayhem?

The annual college basketball spectacle known as March Madness has arrived.

Millions of people will tune in to the three-week tournament to see who’s the best team in the U.S. And millions more will wager a few bucks to take part in an office pool in which they try to pick the winner. Even presidents have been known to take part in the madness.

But behind the hype is a lot of cash. Just as journalists are trained to follow the money, so are economists like me. So let’s take a closer look.

From final draw to Final Four

March Madness is a single-elimination tournament in which athletes from 68 Division I teams compete in seven rounds. The tournament begins with a bracket draw, held on March 11, and then dwindles down to the Sweet Sixteen, the Elite Eight, the Final Four and the championship game in San Antonio on April 2.

The nonprofit National Collegiate Athletic Association, or NCAA, formed the tournament in 1939, when just eight teams competed.

While the phrase “March Madness” was first coined in Illinois in 1939 to describe its state high school basketball tournament, it wasn’t used for the collegiate gathering until 1982.

Follow the money

Perhaps more interesting than the tournament itself is the organization that runs it.

The NCAA generates a huge amount of money, taking in almost US$1 billion a year. The vast majority comes from March Madness and the television and marketing revenue it generates.

Current NCAA President Mark Emmert earns over $1.9 million a year, more than every public college president and all but 11 private school leaders.

His salary, however, is easily eclipsed by college coaches. Duke’s Mike Krzyzewski earns $8.98 million a year, and at least 49 others make more than Emmert.

By comparison, the university professors who educate these student athletes – the purpose of college after all – earn a fraction of the salaries of the coaches and Emmert. A full professor at a public doctoral institution earned an average of $126,000 in 2016.

So what else does the NCAA do?

The NCAA states that it helps more than 480,000 student athletes “succeed on the playing field, in the classroom and throughout life.” As such, it touches the lives of more students than even the biggest university in the country, the University of Phoenix, which educates 195,000.