How the NCAA bought its basketball tournament in 1940 for less than the price of a used car today

One of the nation's most successful sporting events began as a financial flop.

Hastily planned and poorly promoted, the inaugural NCAA tournament in 1939 was such an afterthought that many teams that received invitations passed to avoid missing class time or to compete in the more prestigious NIT. Empty seats outnumbered paying customers during the quarterfinal and semifinal rounds, and even the title game between Oregon and Ohio State drew 5,500 fans to Northwestern's Patten Gym only because organizers let most of them in for free.

Unwilling to raise membership dues to cover the costs of running the tournament they founded, the National Association of Basketball Coaches instead accepted an offer from the NCAA to become financially responsible for future tournaments. In return, the NCAA only had to cover the $2,531 the initial tournament lost and grant free tickets to NABC coaches at future title games, a staggeringly low price for an event that has since become the centerpiece of American sports in March.

"It's easy for us to look back and say, 'How dumb could you be?'" former NABC executive director Bill Wall said. "Hindsight is great. Yeah, it was a dumb move, but how could anyone know at that time what the tournament would become?"

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The deal struck between the NCAA and NABC is one of history's great bargains. The NCAA tournament has grown from humble roots to an event that locks American sports fans in a three-week trance each spring, bringing office productivity to a standstill during the opening round, filling domed stadiums with fans for the Final Four and generating hundreds of millions of dollars each year in TV revenue.

Thanks to a 14-year, $10.8 billion media rights contract the NCAA signed with CBS Sports and Turner Broadcasting in 2010, this year's 75th edition of the NCAA tournament will rake in $702 million in TV revenue alone. Throw in ticket sales, and the men's basketball tournament accounts for more than 90 percent of the $797 million the NCAA is projecting as its total revenue for the 2012-13 school year.

Very few of today's coaches even know the NCAA tournament once belonged to the NABC, but previous generations often bemoaned the sale of the tournament.

Missing out on a windfall usually wasn't the biggest complaint since most of the revenue from the tournament either funds other NCAA championships and services or gets redistributed among the member schools. Instead NABC board members grumbled about not having the ability to shape and mold the tournament as they chose, especially whenever the NCAA made a decision that was unpopular with the coaches.

"On occasion, if the NABC was frustrated with anything going on with the NCAA tournament, there would usually be a few coaches who would say, 'Why the heck did we sell the NCAA tournament?'" said former NCAA executive vice president Tom Jernstedt, who worked at the NCAA from 1972 to 2010. "The majority of us got a chuckle out of it because the tournament was rolling along and doing very well by then, but that would come up half a dozen times, sometimes in jest, sometimes not."

[See bracket, play Tourney Pick'em]

It's difficult to blame NABC leaders for not seeing the NCAA tournament's potential for growth in 1939 because basketball was only starting to gain the traction needed to rival baseball, football and boxing in popularity.

Only a few years removed from the elimination of the jump ball between centers after every made basket and still a few years away from the jump shot overtaking the set shot, the sport was still shaking its peach basket roots and evolving into the high-flying game of today.

The catalyst for the first national college basketball tournament was a series of doubleheaders at Madison Square Garden pitting New York teams against top teams from other regions. The novelty of seeing how teams from distant locales stacked up against New York's best drew unusually large crowds, so in 1938, promoter Ned Irish and a group of fellow New York City sportswriters hatched the idea to form a six-team national postseason tournament known as the NIT.

At an NABC meeting soon after the first NIT, coaches from the West and Midwest railed against the NIT, arguing that New York sportswriters shouldn't be the only ones making money and determining who received invitations. As a result, Ohio State coach Harold Olsen, Kansas' Phog Allen and Stanford's John Bunn formed a committee whose purpose was to create a rival event.

"Phog wanted to make it more of something the entire nation could get behind, rally and support instead of just an East Coast thing," said Mark Allen, Phog's grandson. "He was very anti-East Coast and what he considered to be their monopolization of the game, and the NIT was an offshoot of what he considered to be that monopoly. It was his firm belief this game could catch on West of Pennsylvania."

The first NCAA tournament title game tipped off with little fanfare.

Ohio State, champions of a four-team regional in Philadelphia, and Oregon, winners of a four-team regional in San Francisco, traveled day and night via train to get to Northwestern's Patten Gym, the peculiar choice for the site of the game. Not only was it difficult for organizers to attract fans or media to attend Oregon's 46-33 victory over Ohio State, even some of the players who participated also weren't all that excited to be there.

“We didn’t want to go there because we didn’t want to miss the state high school tournament, which was the same week,” Ohio State captain Jimmy Hull told the Chicago Tribune in 1988. “Actually, when Olsen asked us, ‘How about playing in the NCAA?' our response was, ‘What’s the NCAA?' It was nothing to us.”

Even after the NCAA took ownership of the tournament the following year, the fledgling event wasn't going to survive long unless it started turning a profit. As a result, Allen suggested moving the title game to Municipal Auditorium in basketball friendly Kansas City and promised to do everything he could to ensure it wouldn't fail.

Almost as good a showman as he was a basketball coach, Allen promoted the 1940 title game and tournament for months and even spent his own money to help pay travel expenses for some of the teams invited to compete. Aided by the fact Kansas reached the title game before falling to Indiana by 18, the event was a success, drawing a sellout crowd for the title game and turning a profit as it has every year after.

"The key was getting it to basketball country," said Joe Vancisin, executive director of the NABC from 1975 to 1992. That gave it its start, and it grew."

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The evolution of the tournament's popularity was a gradual process aided by shrewd leadership and a good product – and the 1951 point shaving scandal that rocked New York's best programs and damaged the credibility of the NIT. The NCAA tournament eclipsed the NIT in prestige by the 1950s, increased its following as TV made the games more accessible in the 1960s and gained mainstream appeal in the ensuing decades as expansion made memorable upsets possible and ushered in the David-versus-Goliath narrative.

One question that's interesting to ponder is whether the trajectory of the tournament would have been any different had the coaches not handed over ownership to the NCAA. It's difficult to answer that with any certainty, but there's reason to believe it might not have grown as fast.

Jim Haney, current NABC executive director, said his organization's lack of funds to pour into running the tournament might have stunted its mushrooming growth in its early years. He noted that members of his organization were probably better suited to their current role of suggesting rules changes to improve the game than they would have been administering and promoting the tournament.

Jernstedt also suggested active coaches might not have run the tournament as wisely as a men's basketball committee that always consists of administrators from diverse backgrounds. The example he cited was the many times during his 38-year tenure at the NCAA that coaches argued to rapidly expand the NCAA tournament because more teams getting bids meant more coaches with greater job security.

"Every time that topic came up, the coaches were always eager for expansion for obvious reasons, but the committee's obligation was the quality of the game," Jernstedt said. "In the early years of the NCAA, [Walter] Byers used to say NCAA championships were never intended to be all-comers meets or tournaments. They are for those individuals and teams who have a viable opportunity to compete for a national championship. That was the philosophy we took."

Though previous generations of NABC members undoubtedly regretted the sale of the tournament at such a bargain price, today's coaches have since recouped the financial losses of their predecessors in some ways.

The 68 coaches whose teams made the 2012 NCAA tournament earned an average annual salary of $1.4 million in part because having a top college basketball program guarantees schools millions of dollars in exposure, alumni donations and ticket revenue. Were it not for the booming popularity of the NCAA tournament, coaching salaries never would have risen so high.

"There's no question there has been an explosion of interest and coaches have definitely benefited," Haney said.

It doesn't make the sale of the NCAA tournament look any more shrewd, but it's surely a nice silver lining.

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