Betting on March Madness payoff
by John Hunt, The Oregonian
Wednesday February 25, 2009, 8:41 PM
Call it the new March Madness: trying to determine Oregon's reward for hosting the NCAA men's basketball
tournament in three weeks. The arrival of college sports' biggest show may not be quite the economic
bonanza some imagine. It also seems unlikely to be a dud, as some economists envision, because of the
national recession. The reality will likely be somewhere in between, but most -- including leading Oregon
lawmakers -- say it is worth the gamble.
When the Oregon Legislature did away with the Sports Action lottery game in 2005, it cleared the way for
the NCAA Tournament to return for the first time since 1983. But since that move, the state's budget has
dug itself a projected $3 billion hole. In hindsight, bringing March Madness -- and its fleeting revenue -- at
the expense of a lottery game and its consistent revenue -- may seem like a crazy idea.
"Everything's going south on us," said Senate President Peter Courtney, D-Salem. "But no, I don't have any
misgivings about it. We love our basketball here."
Countdown to the NCAA Tournament
Tournament games return to Oregon this year for the first time since 1983, and to Portland for the first time
since 1975. Follow along as The Oregonian counts down to the tournament. And many others who love
basketball will come here for the tournament. The eight schools that draw Portland seeds for the first- and
second-round games at the Rose Garden on March 19 and 21 will have a total allotment of 6,800 tickets.
Toss in a few hundred NCAA officials, future hosts, broadcast partners and corporate types, and it should fill
many hotels and restaurants.
Drew Mahalic of the Oregon Sports Authority, which pushed for the legislation to bring the NCAAs back after
its 26-year hiatus, said what he projects to be $10 million in economic impact, along with the possibility of
future NCAA events, make trading betting for basketball a no-brainer. But economists are wary of the
benefits of an event that will last no more than one weekend every few years and does nothing to help
Oregonians who don't live in Portland.
Robert Whelan, an economist with ECONorthwest consulting firm, said much of that $10 million will go to
the national headquarters of Marriott and Hilton and other hotel chains. And local fans who already bought
out all available tickets and will eat out nearby during the event are spending entertainment dollars that
would have gone elsewhere in the city if the tournament were not here. "It was stupid," Whelan said of
doing away with Sports Action. "I don't think it's going to be a net positive."
Sports Action funding
Sports Action allowed fans to bet on NFL games, but because the NCAA conducts competition in football, it
refused to allow its basketball tournament to be played in Oregon. The main purpose of Sports Action was to
help finance intercollegiate athletics, and it contributed anywhere from $900,000 to $2.8 million annually to
be divided among Oregon University System schools. In repealing the state's sports gambling, lawmakers
replaced it with 1 percent of the total lottery transfer -- or about $13 million for the current biennium that
ends in June.
So higher education actually gets more money, but the state still loses out on a few million general fund
dollars. That money will be hard to recover not only because of the falling economy but also because Sports
Action served a niche market -- the die-hard football fan who wants to pick games, watch them and
otherwise not gamble. "It didn't bring in huge numbers, but it was a loyal player base," Lottery
spokeswoman Mary Loftin said of the game that officially ceased operation with Super Bowl XLI in 2007.
"It's tough because it was a very different environment and community that Sports Action created."
Mahalic called getting rid of Sports Action addition by subtraction.
"It was a game that really did a disservice in its philosophy of gambling on sports to raise money for sports,"
Mahalic said. "Its demise is a benefit not just because Oregon is now eligible for the NCAA Tournament, but
I think it's healthier, really, for the whole state."
Too small for Final Four
Now that Portland is in the NCAA's good graces, there is a good chance it could be a regular tournament
host, even if it doesn't have a venue big enough to stage a Final Four. For first- and second-round games,
the NCAA looks for a city with a state-of-the-art arena, numerous high-quality hotels and a history of wellrun events. Portland passes the first two, and the University of Oregon, the host school, is working out
details from police escorts to ball boys to make sure the event runs smoothly.
Portland also has another advantage, according to NCAA executive vice president and Oregon grad Tom
Jernstedt. "There are fewer high-quality venues in the West than in other sections of the country," said
Jernstedt, who explained that his committee needs to see a cohesive operation, "everybody singing from the
same hymnal, so to speak," to improve Portland's chances for another shot.
Later this year, the NCAA will announce the 2011, 2012 and perhaps the 2013 sites, and Portland is eligible.
There is no limit to how often the NCAA can come to a city, and Mahalic said the Oregon Sports Authority
will make a repeat bid.
But although the tournament might return, Sports Action is unlikely to be revived. Doing so would take
another bill to make it through the House and Senate and past Gov. Ted Kulongoski. That leaves the Oregon
Lottery to come up with new ideas, such as $10 raffle tickets, to overcome its earnings that have been
slashed 20 percent in the past year, by the economy and by the smoking ban that cut video poker's profits.
"Hopefully the hotel industry is going to bring bags of money down there to quiet them," Whelan said of the
Legislature. "It's not an endless well of money, as they're starting to realize.
"You can't say, 'Well, we'll get rid of this and just make it up somewhere else.' There are no makeups
anymore."
-- John Hunt: 503-294-7643; johnhunt@news.oregonian.com
1. What is at stake for Oregon's economy by hosting the opening round of this year's NCAA men's
basketball tournament?
2. As a class, discuss how major sporting events can have a positive impact on the host city's economy.
Provide specific details to support your answers.
3. Is the situation outlined in this article unique to the Portland community or do other markets face
similar tough decisions when determining whether to bid on a sporting event?
4. The article suggests the tournament games will provide roughly a $10 million boost to the local
economy. How is this possible? Do you agree with those projections? Why or why not?
5. If the event fails to stimulate the economy as anticipated, do you think that will influence whether
Portland tries to attract the event again in the future? Why or why not?