Brad Stevens: the economics of a Cinderella coach in the Final Four

Sports and economics don't mix very well.

It's hard to understand how the NCAA can rake in nearly $640 million, almost all of it from TV rights for college basketball games, and yet virtually all college basketball teams lose money.

Why donors keep pouring money into these money-losing operations, rather than, say, chemistry or English literature, is beyond me.

Nevertheless, economics can be a useful way to see if what we think we know about sports is actually true. So, as Butler prepares to take on Michigan State in Saturday's NCAA tournament semifinal, here's a look at the economics of a Cinderella coach.

Butler's young Brad Stevens fits the bill. He quit a job in marketing to volunteer as an assistant to Butler's basketball coach. He was set to start working at Applebee's to make ends meet when a basketball job opened up at Butler. That led to an assistant coaching spot and, three years ago, the head coach position.

In his third year, Mr. Stevens has taken Butler, already a good team, to its first-ever Final Four.

As you might expect, he is paid a lot less than the older, more experienced coaches at the three other major-conference teams in the Final Four. His 2010 compensation hasn't been officially disclosed (at least, our crack research librarian Leigh Montgomery couldn't find it). But in 2008, Butler paid him a little under $400,000 in salary and benefits, according to Guidestar.org.

So let's use 2008, when all four coaches were recruiting and training the teams now vying for the championship, as our benchmark. Compensation for the other Final Four coaches was $1.6 million for West Virginia's Bob Huggins, $1.7 million for Michigan State's Tom Izzo, and $3.6 million for Duke's Mike Krzyzewski. (This is what the schools paid their coaches, not what they earned through ohter activities.)

To put those numbers into sports terms, Butler paid Stevens roughly $1,500 for every point his team scored through the first four rounds of this year's NCAA tournament. By contrast, Duke paid Mr. Krzyzewski about $12,500 for every point his team scored through the first four rounds.

That's not really a fair comparison. Stevens coaches in a mid-major conference. Krzyzewski toils in one of nation's most competitive major conferences. Stevens is just starting his career. Krzyzewski has been an enormously successful coach, winning three NCAA championships and appearing in 11 Final Fours.

There's something to be said for paying for consistently high-calibre performance. No. 1 seeds, like Duke, often march through the tournament, blowing away opponents, while Cinderella teams often eke out unlikely wins.

Viewed that way, the Duke-Butler comparison becomes a little more even.

Duke has outscored its opponents by 64 points so far in the tournament. So Duke paid its coach $56,250 for every margin-of-victory point. Butler outscored its opponents by 31 points, which means $12,500 for each margin-of-victory point.

The other two Final Four schools also stand out using this measure. At $28,500 for every margin-of-victory point, Mr. Huggins looks like a great bargain for West Virginia, The team outscored its opponents by 56 points in the first four rounds, almost as much as Duke, but pays more like Butler.

Mr. Izzo, by contrast, cost Michigan State a whopping $130,750 per margin-of-victory point. His team outscored its opponents by only 13 points.

That doesn't take away from Izzo's exceptional record at Michigan State, winning one NCAA championship, being runner-up last year, and making six Final Four appearances.

It's just that by those standards, this year's Michigan State team has underperformed. It came in to the tournament as a No. 5 seed, the same as Butler. And it has acted more like a Cinderella team than Butler has (beating Tennessee by just 1 point to reach the Final Four).

Butler has been so scarily good this season (fewer losses than any of the other Final Four teams and appearances in the national rankings) that some commentators suggest Butler doesn't deserve the Cinderella moniker.

So what distinguishes a true Cinderella team? Here are two criteria on my list: They have to overperform to get to the Final Four. And their coaches come cheap.