NEW YORK — March is a month of many traditions. The flowers start budding, welcoming spring's arrival. The men's college basketball tournament, known as March Madness, dominates office conversation for three weeks. And worker productivity steadily drains away, as employees focus on the tournament instead of the bottom line. Or so the story goes.
For the first time, most games in the 2006 National Collegiate Athletic Association tournament will be broadcast online for free. That's one reason why consulting firm Challenger, Gray & Christmas has estimated March Madness will cost $3.8 billion in lost productivity. But that estimate should be taken with a boulder of salt.
In 2005, Challenger, Gray said March Madness would cost $889 million. That number quadruped this year because a Gallup poll indicated that 41% of Americans — more than 58 million U.S. workers — are college basketball fans. Previously, the firm had estimated a much lower number of fans.
Nevertheless, the games will surely combine with the warming weather to distract employees from their spreadsheets. Workers have always spent time checking scores, chatting about the games and participating in office betting pools. But the free online broadcasts could take office time wasting to a whole new level.
While CBS has offered the games online since 2003, the company has always charged for access. But TV networks are chasing their viewers online, and advertisers have started to follow. As a result, the first three rounds of the championships — 56 out of 64 games — will be available on the Web, supported by advertising instead of viewer dollars.
"We're moving into the next era of technology in terms of being able to pull up shows and programming that used to be on TV," says John Challenger, the consulting firm's CEO. "This is one of the first big events that is part of what the future's going to look like."
Maybe. Online sports broadcasting is still "a grand experiment," according to David Card, an Internet media analyst with Jupiter Research. Sporting events don't look good on small screens, so watching on a computer is difficult. "It's not at all clear how the viewing patterns will evolve, especially at work," Card says, adding, "I'm just not sure how good it will look and how long it will take to log on."
Last year, when it cost $19.95 to watch the games online, less than 25,000 people participated, according to Alex Riethmiller, a spokesman for CBS SportsLine.com. This year, they have enough bandwidth for 200,000 people to watch at once. Once that capacity is reached, fans will form a virtual waiting line. "This product could very well be absolutely packed on game days, especially during the first couple of games on March 16 and 17," Riethmiller says.
Will that really add up to $4 billion in lost productivity? Using data from Internet tracking firm Hitwise, Challenger, Gray calculated that 58 million workers would spend 13.5 minutes online every day for 16 business days. The average American wage is $18 an hour, so every 13.5 minutes costs $4.05.
But not every college basketball fan has Internet access at work. That Gallup poll might be vastly overestimating the number of fans; other surveys have found that far fewer Americans follow men's college basketball. And many workers would have wasted those 13.5 minutes anyway, playing FreeCell or Googling their ex-girlfriends.
According to Nielsen/NetRatings, during the first week of last year's tournament, almost 7.9 million people logged on to four of the biggest college-basketball Web sites. That's about 14% of Challenger, Gray's estimate. Of course, millions more might visit college Web sites, news sites or other sources of March Madness information.
What's an employer to do? "Embrace it," Challenger says. Organize a company pool. If you don't want workers to gamble, offer a prize for the winner. And sponsor a raffle for non-basketball fans.
And employees should be wary, because many bosses track Internet use. According to a survey conducted by the ePolicy Institute and the American Management Association, 26% of bosses have fired employees for improper Internet use, and 76% are monitoring Web connections.
Employees surf at their own risk, says Nancy Flynn, the ePolicy Institute's executive director. "Before you slack off work and log onto the Net to check out March Madness," Flynn advises, "I would check out my employer's Internet policy."
© 2012 Forbes.com