Cinderella. March Madness. The biggest upset in the history of college basketball.

Return on investment? Stay with me here.

A lot of people across the country never heard of the University of Maryland Baltimore County before they defeated No. 1 Virginia on Friday night and became the first No. 16 seed to ever win a game in the NCAA Tournament.Now, UMBC and the Retrievers are a household name.

And it’s going to pay off for them big time. (Just to start: their twitter account gained tens of thousands of followers in 2 hours!)

How did UMBC make an investment? Let’s start with their state-of-the-art $85 million Events Center that opened this year. How did that help? Focus on two areas there:

  1. Getting better players and improving the talent level of the team. It’s easy to sell high school students on the allure of playing in a sparkling new building
  2. Hiring a great coach. Ryan Odom is in his second year as the head coach at UMBC. In the year before he took over, they won nine games. In his two years as the coach, they have won 46 (!) games.

How is it going to pay off? Let’s look at something called the Flutie Effect.

THE FLUTIE EFFECT

In 1984, when Boston College upset No. 1 Miami on a Hail Mary from Doug Flutie, it led to something called the Flutie Effect. After that win, college applications from high school seniors increased by 16 percent and then by an additional 12 percent the following year. >There are a number of other examples where success in college athletics leads to an increase in applications, donations and merchandise revenues for universities:

– In 1998, Gonzaga was struggling with undergraduate enrollment (2,800). The men’s basketball program won three games in the 1999 NCAA Tournament and has continued its athletic success since. In 2004, the president said the basketball team’s success was responsible for building a $23 million arena. In 2016-17, undergraduate enrollment was at 5,160 (average GPA and SAT has also increased) and they were close to completing a $250 million fundraising campaign.

– Johnny Manziel won the Heisman Trophy as a freshman at Texas A&M in 2012. The college football team’s success led to $740 million in donations for the fiscal year, $300 million more than the previous high.

– Other schools that reaped the benefits of successful victories are Appalachian State (15 percent bump in applications, 317 percent increase in revenue), George Mason ($677 million in free media attention and 350 percent admission increase) and  VCU ($3.4 million increase from out-of-state tuition.).

Some were one big win, others were sustained success.

There are certainly examples in the business world. Look at companies that go on Shark Tank or get a celebrity endorsement on social media. They take advantage of their moment of attention and capitalize!

What Can We Learn?

The lesson? Focus investments (time and revenue) on the potential ROI. Determine the amount of risk that you are comfortable with and go from there.

What is your goal? (Remember, it needs to be a SMART goal). Focus your investment and strategy around reaching that SMART goal. Does your company want to get 50 more applications per week? Does your staffing agency want to acquire 10 new clients this month? Put your investment in the part of the company that will bring back the ROI.

While ever business or school that makes an investment isn’t guaranteed to get the same ROI as UMBC, Gonzaga or Appalachian State. We do know that every business or school that DOESN’T make an investment will be getting very little ROI.

Remember that at your next financial meeting or strategy planning session. The payoff is well worth the investment.

 

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