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The Economics of March Madness: The Tourney May Not Hurt the Economy as Much as You Think

Getty Images Sports/Streeter Lecka

Plenty of managers around the country are going to spend the next few weeks seething, as they catch employees watching basketball and checking NCAA brackets during the workday. But they shouldn’t get too upset. March Madness may actually be good for the economy—and for individual companies.

Yes, the tournament will be a major distraction. Nearly one-third of Americans plan to watch games at work this year, according to a survey from the consumer site RetailMeNot. One in five men said they’d go to a bar to watch at lunch. And that’s only people who will actually tune in. Many more—86 percent of workers, according to a 2013 MSN survey—will check brackets or scores intermittently throughout the day.

As you might expect, that workplace distraction has an economic cost. And it could be as high as $1.2 billion for each hour of “lost wages,” according to a calculation by the consultant firm, Challenger, Gray & Christmas. But the real costs may not be so high. The firm multiplied the number of workers who will watch games (50 million from a 2009 Microsoft survey) by the average hourly wages ($24.31, according to the Bureau of Labor Statistics). That’s a pretty simplistic calculation—it assumes, for example, that workers would have spent those hours working instead of following basketball. Plenty of workers may simply spend less time on other worktime diversions, like Twitter or Facebook.

Meanwhile, some companies will get new business from the tournament. Hotels and restaurants in the 14 cities that host games will gain the most, thanks to traveling fans cheering on their teams. But even businesses in non-host cities can benefit. That same RetailMeSurvey found that 28 percent of fans will spend $100 or more if their team makes it to the Sweet 16. They might spend it on new hoodies or hats—or, in some cases, on new large-screen televisions.

Some firms obviously have nothing whatsoever to do with sports, directly or indirectly. But even for them, the tournament can have economic upside. March Madness can increase morale and camaraderie among coworkers. That can boost productivity—maybe not right away, but when the games are done. And until then? There's not much managers can do anyway, except fill out a bracket and be part of the fun.