Financial Implications Of College Football Playoffs

By Greg McFarlane | January 18, 2012 AAA
Financial Implications Of College Football Playoffs

It's an early winter ritual, right up there with changing to snow tires and cursing your parents for not choosing somewhere warmer to live. The endless college football debate: why does the sport have such an illogical and confusing postseason? Why not a playoff? Like most real-world scenarios that seem to make little sense on the surface, the explanation has lots to do with money. (For related reading, see How Much Revenue Do College Sports Produce?)

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Major college football - formally known as National Collegiate Athletic Association Division I, Football Bowl Subdivision - is played by 120 schools across the United States. The schools range from the legendary (Notre Dame, Michigan) to the perpetually competitive (Oklahoma, Boise State) to the also-ran (Florida Atlantic, Nevada-Las Vegas), with corresponding levels of prestige. The more prestigious the school, the greater the capacity for its football team to generate revenue. At the end of each season, the consensus two best teams of the 120 meet in the Allstate Bowl Championship Series championship game and enjoy an $18 million payday. As for the remaining 118, just about any team with a winning record and a booster community will collect a check for playing in a postseason bowl game that will have no bearing on the championship. That check can easily turn a school's red season into a black one.

Decades ago, a handful of elite teams would close out their seasons by meeting in bowl games at warm-weather, neutral, permanent sites. First there were four bowls – the Rose, Orange, Sugar and Cotton. Then came the Sun. Then the Fiesta. Today there are 35, each with a corporate sponsor, and the high-school letterman who dreams of one day playing in the Meineke Car Care Bowl of Texas or the San Diego County Credit Union Poinsettia Bowl is not being honest with himself.

Each bowl pays its combatants a flat fee, which derives from the substantial ticket handle and TV ad revenue that the bowl's organizers hope to generate. The Rose Bowl, played in its mammoth 92,542-capacity namesake since the First World War, promises its participants $17 million. The other longstanding bowls pay similar amounts, while the minor bowls pay anywhere from $500,000 to $4.25 million.

Best of the Best
Logic would dictate that like almost every other sport in existence, major college football choose its champion by qualifying the best available teams, then having them play each other until one remains standing. Under such a system, there wouldn't be any point to, nor place for, a Valero Alamo Bowl between 12th-ranked Baylor and unranked Washington. With so many schools, and the sport's brutal nature demanding that players rest for a week or so after each game, it'd be cumbersome to create a playoff system. Cumbersome, but possible. College football's second tier (officially styled "NCAA Division I, Football Championship Subdivision") has such a system, whittling its 125 member schools into a single-elimination field of 20 and, ultimately, one undisputed champion.

Few people pay to watch FCS football, as contrasted with FBS football, where many of the elite schools vastly outdraw their NFL counterparts. Notre Dame receives around $9 million annually just for having its home games televised nationally, while Brigham Young receives between $1 million and $2 million per game for a similar TV package. Meanwhile, newly crowned FCS champion North Dakota State doesn't even televise all of its games. (For additional reading, see Top 4 TV Sports Deals Of 2011.)

Thirty-five bowls means that 70 of 120 teams can each claim they had a successful season, from Alabama all the way down to Utah State. A playoff system would make it harder for any program to justify a fair-to-mediocre season to potential recruits. "2011 Beef 'O' Brady's Bowl champions" sounds more impressive, however faintly, than either "eliminated in the second round of the playoffs" or "didn't come close to qualifying."

Current Configuration
Under the current configuration, in which the BCS championship game participants split $18 million, corporate sponsors and TV networks salivate at the prospect of being part of the festivities. Sponsors would be less inclined to offer generous amounts for generic playoff games devoid of pageantry. "The Outback Steakhouse Northeast Region Semifinal" doesn't have the same ring to it.

For many schools, a major bowl payout can be the biggest financial windfall of the year. Few incentives are as powerful as a check with six or seven zeroes on it, especially when the school collecting it doesn't even have to go through the logistical chore of hosting the game itself. Even if the school has to share the money with other teams in its conference, playing in a major bowl is still more than worthwhile.

What about the minor bowls, which typically attract either smaller schools having good seasons or notable schools having disappointing ones? Well, there's a reason those games are largely played in the Sun Belt and not the Upper Midwest. Bowl administrators can reward school executives with free trips. The school executives can bring the boosters and hangers-on along. The games might barely break even for the participating schools' athletic departments, but college football's higher-ups aren't the first people to have discovered the benefits of enjoying the revenue for themselves while spreading the expenses out among other parties.

The Bottom Line
A major college playoff would make competitive sense, but even in a sport where everyone gets paid except the people performing the labor, a playoff system wouldn't necessarily make financial sense. At least not with regard to the decision-makers' own interests. The current setup might seem capricious and arbitrary, but it isn't. Nor will it be changing anytime soon. (For related reading, see Recession-Proof Sports Leagues.)

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