April 13, 2023

Last week culminated one of the most upset-driven March Madness basketball tournaments in memory. The University of Connecticut Huskies knocked off the San Diego State Aztecs to claim the national championship. The tournament is divided into four regions, and there are 16 teams in each region, seeded by their ranks. The top four ranked teams are each #1 seeds, teams ranked 5 through 8 are #2 seeds, and the same process is applied until 64 teams are placed. Then, the teams are matched up based on those rankings, so #1 plays #16 in their region, #2 plays #15, #3 plays #14, and so on. The winners of those games play each other until there's a champion.

While UConn may not be viewed as a total dark horse, they were a 4-seed – which means there were at least 12 teams ranked higher. San Diego State, making their first appearance in the finals in their history, came in as a 5-seed. The 2023tournament had many notable features:

• The first time the Final Four did not feature a number 1, 2, or 3 seed.
• A 1-seed (Purdue) was knocked off by a 16-seed (Fairleigh Dickinson) for only the 2nd time ever.
• A 2-seed (Arizona) lost in the first round for only the 11th time ever.

Part of the thrill of March Madness are the office betting pools that accompany the event. Fans compete by picking all 63 games of the tournament. Points are awarded for each winning pick. Points values increase as the tournament progresses. This provides participants with a rooting interest in every game.
March Madness upsets are one of the most thrilling components of the NCAA Basketball Tournament. Every year, lower-seeded teams attempt to “shock the world” by knocking off higher ranked opponents. These upsets are what make the tournament special, and they are a big reason why the tournament is so beloved by fans.

Upsets are not uncommon, particularly during the early rounds of the tournament. Lower-seeded teams often have a chip on their shoulder, eager to prove themselves and knock off the favorites. Admittedly, many of these teams that manage an upset early on, go on to lose the following game.

One of the most famous upsets in March Madness history occurred in 1985, when 8th seeded Villanova defeated the heavily favored Georgetown Hoyas in the national championship game. The Hoyas were led by future NBA star Patrick Ewing, and many experts predicted that they would easily come out on top. But Villanova played the game of their lives, shooting an astounding 78% from the field to win 66-64. In 2018, another major upset took place when 16th-seeded University of Maryland-Baltimore County (UMBC) knocked off top-seeded Virginia in the first round. Virginia was considered one of the best teams in the country that year. but UMBC refused to be intimidated, playing with a level of intensity and confidence that stunned Virginia. UMBC trounced Virginia 74-54, becoming the first 16th-seeded team to win a game in the NCAA Tournament.

In addition to making great “human-interest” stories – since upsets often occur by lesser-known schools, upsets also have a significant impact on the tournament itself. These games “shake up” the bracket and provide more opportunities for lower-seeded teams to make a run. When a higher-seeded team is knocked out early, it creates a power vacuum that other teams can exploit. This leads to even more excitement and drama as the tournament progresses.

Such unforeseen upsets are often referred to as “bracket busters” since those who selected the losers feel as if they are hopelessly out of the competition. While on the surface this may seem like the case, the fact is that the later games are scored higher when determining the overall winner of most bracket competitions. So, as disappointing as it may be to have your team bust out early, all is not lost.

It is estimated that more than 25 million brackets were filled out in 2023 for the March Madness tournament. Not surprisingly, this year all 25 million were busted (no one had a perfect bracket) going into the Final Four. What was surprising though, was after the first weekend, only .003% of brackets were perfect –that is what a couple of major upsets will do.

The article above is an excerpt from the Q3 Quarterly Market Commentary. Here is a link to the most recent issue. Complete the form below if you would like to get this emailed to you each quarter.