Trading Off Uncertainty for Revenue with the Pod System

So far, we’ve discussed the governance structures of sports leagues, focusing much of our attention on the peculiar governance policies of Division I men’s basketball, a league that must leverage strong fan support to offset its unwillingness or inability to keep the best eligible athletes in its league and to increase uncertainty of the contests it produces. In this final chapter, we want to study the implications of the Division I tournament’s adoption of the pod system, a clever organizational design that the tournament has used since 2002. The Selection Committee’s power has increased yet again following the switch to the pod system as it has become less constrained by geography since the change. Unsurprisingly, the committee has used the pod system to provide resource-rich teams with more opportunities to play closer to home. With game results, attendance figures, and television ratings, we measure the costs of this system—reduced uncertainty of first-round contests—against the benefits the NCAA has accrued- increased attendance and better television ratings of first-round and second-round games. Unlike the Basketball Fund and the expansion of the tournament, which have affected the long-run level of competitive balance in Division I, the pod system has allowed the Selection Committee to alter more effectively the short-run outcomes of each tournament.1