Another NCAA Men’s Basketball season has come to a close as Louisville defeated Michigan in the championship game last night in Atlanta.

As we turn the page on another season, it’s worth pointing out just how lucrative a tournament appearance can mean for a school especially if said school exceeds all expectations and goes on the proverbial Cinderella-esque run.

For those entrusted with marketing and advertising such a school, the financial impact such a run can be astonishing and quite beneficial in the ol’ piggy bank.

ImageWithout opening a Pandora’s box re: should college athletes be compensated, put this in your pipe and smoke it: Last year in 2012 sales from licensed collegiate retail items came in at $4.62 billion which ranks it second only to Major League Baseball in total licensed revenue.

The statistic is courtesy of the Collegiate Licensing Company, the licensing affiliate of IMG College, the nation’s largest collegiate marketing firm.  The $4.62 billion represents the the apex of a 10-year growth spurt that has seen collegiate licensing spike every year but one (2009) to increase from $2.9 billion in 2004.

Ben C. Sutton Jr., President of IMG College says schools of all sizes benefit tremendously from getting into the Big Dance. “An invitation to the NCAA Men’s Basketball Tournament is a big deal for schools, particularly the perennial ‘Cinderella stories,” he said. “Whether a school is an established powerhouse, or a David slaying a Goliath, the impact of getting an invite to ‘the Dance’ benefits universities any number of ways, including stronger licensed merchandise sales.”

Sutton shared with me some examples of those Cinderellas and just how they benefited from their improbable runs in the tournament:

  • George Mason & VCU – In 2006 and 2011 the Patriots and the Rams made runs to the Final Four, respectively.
    • George Mason saw an increase of 143% in licensing revenue in the same year they made it to the Final Four
    • And online sales of licensed George Mason retail items were 200% higher than Florida, LSU, and UCLA (the other Final Four participants)
    • For VCU in the quarter after the tournament ended they experienced their largest royalty generating quarter in school history
    • In fact their quarterly licensed revenue was more than any they had seen in any year prior to making the Final Four
  • Butler – In 2010 the Bulldogs not only made it to the Final Four, they made it all the way to the championship game. Despite losing to Connecticut the Bulldogs scored big time in the licensing pocketbook as sales in the Butler bookstore alone increased 500%. And according to Dick’s Sporting Goods, in the 5 days leading up to the 2010 Final Four, Butler was the #1-selling school of all Final Four participants – among powerhouse schools Duke, West Virginia and Michigan State.

Not Just Active Students

Of course not all the revenue that comes streaming in is from those who are actually attending a given university. As Marty Brochstein, SVP Industry Relations and Information, Licensing Industry Merchandisers Association tells it, it’s the alumni too and there’s always a human element to wearing your team’s colors proudly.

“Collegiate licensing is built on emotion, It might be the fond memories of or pride in your alma mater, but a huge percentage of the business is built on athletic success,” said Brochstein. “Just look at the crowd at any March Madness game, or the championship events in any of the other collegiate sports. You’ll see an awful lot of school colors!”

He also says that schools are getting smarter and taking advantage of the digital age. “Major universities have gotten much more sophisticated in how they approach the merchandising business, whether in the growing array of products they license or the retail distribution channels they populate, including much greater availability through online retail that makes products that much more available outside their immediate home markets.”

As for the schools themselves they know full well the financial reward that comes with an invitation to the tournament and subsequent extended run.

“For many programs, March Madness ranks up there with the holiday season and football kickoff in terms of importance for the licensing program, ” says Kris Kassell, Associate Athletic Director, External Operations at Gonzaga University. “Because of the anticipation of March Madness, particularly when a team is having a good season, a long tournament run can easily trigger one of the top licensing events over the course of the year.”

Even a more established school and brand can reap the rewards of a success March Madness run. “We have clearly felt the effects of the national championship” says Jason Schlafers, Senior Associate Athletics Director, University of Kentucky, last year’s champion. “Over the past year, there has been unprecedented retail interest in our licensed products. Many factors  lead to a successful licensing program, but you certainly cannot minimize the effect of athletics success in driving revenue.”

Sources: ForbesDallas News