Wednesday, December 10, 2008

Playoff Revenue...

One of the arguments in favor of a playoff is that it would make a ton more money for schools, conferences, and everybody involved. People usually point to the NCAA Men’s Basketball tournament as proof, saying that a football tournament would be even more popular and lucrative. It might well be, but they're missing one important point – the revenue that the schools and conferences make from the BCS bowls alone is already more than 50% higher than the revenue they make from March Madness. How can this be? Let me show you.

Right now, the NCAA is in the middle of a contract with CBS that pays $6 Billion for the rights to broadcast the NCAA Men’s Basketball Tournament. The contract is from 2003-2013, 11 years, so it’s worth approximately $545 Million per year. The current BCS contract with FOX is worth $80 Million per year – a seemingly paltry sum in comparison. In 2011, ESPN gets the rights and the figure they’re paying is (rumored to be) $125 million per year, or $500 million for the 4-year cycle. That’s still nowhere near $545 Million per year. Those numbers are easy to compare and point unequivocally in favor of a college football playoff. It's a no-brainer, right? Wrong - as with most college football issues, it's a brainer that needs to be looked at and discussed from different sides. Here’s some other numbers that you might not have seen before.

Check out the description of how the March Madness revenue is divided up. Or if you want to go to the source, the NCAA’s official revenue distribution plan is here - go to page 8 to see how much each conference received in the last five years from March Madness.

Not nearly as much as you thought, huh? Where’d all that extra money go? Browse through that whole thing and you’ll get a good idea of their budget.

Now compare that to the revenue from the BCS for the last five years. Again, these numbers are coming directly from the NCAA. What do you think now? On average, the five BCS bowls brought in almost $6.4 Million more per conference per year than March Madness did. Here’s a summary chart:

March Madness vs BCS money, 2002-2006
Conf Sport 2002 2003 2004 2005 2006 5-Year Avg % More
ACC football $16,562,222 $17,015,556 $16,247,847 $16,594,445 $18,088,675 $16,901,749
ACC BBall $9,802,279 $9,867,470 $11,250,770 $13,118,505 $14,149,120 $11,637,629
difference $6,759,943 $7,148,086 $4,997,077 $3,475,940 $3,939,555 $5,264,120 45.2%
Big10 football $21,062,222 $22,028,780 $16,295,461 $21,094,444 $22,588,675 $20,613,916
Big10 BBall $12,285,523 $13,250,603 $13,379,294 $13,774,430 $13,087,936 $13,155,557
difference $8,776,699 $8,778,177 $2,916,167 $7,320,014 $9,500,739 $7,458,359 56.7%
Big12 football $16,977,977 $21,515,556 $20,795,460 $16,594,445 $18,088,675 $18,794,423
Big12 BBall $9,148,794 $10,854,217 $12,923,182 $14,430,355 $14,325,984 $12,336,506
difference $7,829,183 $10,661,339 $7,872,278 $2,164,090 $3,762,691 $6,457,916 52.3%
BigEast football $16,562,222 $17,015,556 $16,247,847 $16,594,445 $18,088,675 $16,901,749
BigEast BBall $9,018,096 $10,431,326 $11,858,920 $12,790,542 $14,856,576 $11,791,092
difference $7,544,126 $6,584,230 $4,388,927 $3,803,903 $3,232,099 $5,110,657 43.3%
Pac10 football $21,477,977 $17,528,780 $16,247,847 $16,594,445 $18,088,675 $17,987,545
Pac10 BBall $9,932,976 $10,008,434 $9,122,246 $10,494,804 $11,849,888 $10,281,670
difference $11,545,001 $7,520,346 $7,125,601 $6,099,641 $6,238,787 $7,705,875 74.9%
SEC football $16,562,222 $17,015,556 $16,247,847 $16,594,445 $22,588,675 $17,801,749
SEC BBall $9,540,885 $10,713,253 $12,010,957 $11,970,636 $13,087,936 $11,464,733
difference $7,021,337 $6,302,303 $4,236,890 $4,623,809 $9,500,739 $6,337,016 55.3%
All football $109,204,842 $112,119,784 $102,082,309 $104,066,669 $117,532,050 $109,001,131
All BBall $59,728,553 $65,125,303 $70,545,369 $76,579,272 $81,357,440 $70,667,187
difference $49,476,289 $46,994,481 $31,536,940 $27,487,397 $36,174,610 $38,333,943 54.2%

And that’s just the five BCS bowls – that doesn’t include the 30+ other bowl agreements that the BCS conferences have.

The BCS conference commissioners aren't looking at the contracts, comparing basketball’s $545 Million per year to football’s $80-$125 Million per year. They're looking at the actual revenue their conference gets, comparing basketball’s $10-13 Million per year to football’s $17-$20 Million per year. To them, THAT'S the no-brainer.

Yeah yeah, schools and conferences do get a lot of the rest of that March Madness $545 Million per year in some way or another from the NCAA. But that money comes with a lot of strings attached: first, they have to deal with the NCAA to get it, and second, most of it is earmarked for things like Academic Enhancement, Grants in Aid, and Sports Sponsorship. Bowl money doesn't go through the NCAA - there's $0 set aside for the their administrative costs. Are the BCS conference commissioners really going to give up their monopoly of power over the bowl revenue just to make a bit more that they'd have to filter through the NCAA? Doubtful.

Now do you understand a bit more of why they're against a playoff?

14 comments:

Anonymous said...

Your comparison doesn't really tell us anything -- how does basketball money typically compare to football money?

If basketball brings in less revenue than football during the regular season, but narrows the gap in the post-season, your argument completely fails.

Ed Gunther said...

The regular season doesn't matter when you're talking about March Madness & the Bowls. And I'm not saying that a football playoff wouldn't bring in a ton of money. I'm saying that if you look at the revenue from a BCS conference commissioner's perspective, the current football post-season brings in 50% more than the current basketball post-season. So trying to use the argument of "you'd make a ton more money" as a way to motivate the commissioners toward a playoff doesn't work - the football postseason already makes a ton more money compared to the basketball postseason.

As far as the regular season goes, I don't have any data on those contracts or revenue. But even so, I'm not sure how the idea that basketball narrows the gap in the post-season applies to football playoff motivation. Care to elaborate?

Howard said...

I think what anonymous is saying, and the question I have as well, is that if basketball makes less money (period, end of story) than football, this argument is somewhat irrelevant. The regular season money does matter because lets say football brings in about 50% more in the postseason (as you determined above), but they bring in 75% more in the regular season, then that means that BBall's profits increase relative to football's in the postseason, due to the ridiculous popularity of March madness. The same thing might happen in the event of a football playoff system - just imagine if that hypothetical 75% more extended into the postseason.

Regardless of that, your argument that just because they're already making a lot more money than BBall doesn't make sense either, because those profits could increase with a playoff (or they could decrease, I don't know), and they're surely in favor of that. And also, as anonymous alluded to, and as I did as well, football could just make more money in general than basketball (I'd believe that it does), so these gaps aren't reflective of anything meaningful about the success of the sports' current playoff systems (or lack thereof).

Anonymous said...

Your applying the numbers wrong. The Basketball revenue per conf seems low because it is divided among 327 D-1 schools. D-1 Football only has 119 schools. Broken down evenly, Basketball makes $1.66 mil per school from its playoff ...Each Football school would only make $1.05 mil.(at the Fox rate of $125 M). That doesn't make sense with the popularity of Football.
Plus, its ridiculous to discount money that has "strings attached". That is still a lot of money that the schools want. But you also ignore bowl payouts and hours of TV time in your evaluation. (More games = more money. Hoops plays a lot of games). You miss alot.

Anonymous said...

The bowl payouts are a joke and should be ignored. The highest (non-BCS) is $8.5 million for the two teams. That is about what an SEC/Big 10/Big 12 team makes per home game in ticket sales alone. Plus you count that the ticket prices are higher and you add the TV rights they could control...a lot of money goes to "bowl people". Some bowls only pay $1.5 million. Basically what I'm saying is that the schools could make more money hosting their own games than what the bowl people payout.

Ed Gunther said...

Ah, okay - thanks, Howard. From that angle, Anonymous' argument about profit increase does make sense. It seems we're coming at the overall same point from different sides. I'm attempting to counter one viewpoint (some fans') with another (the commissioners'). Imagine the following back and forth.

Fan - "College basketball has a playoff and makes $545 Million each year. College football doesn't and makes $120 Million each year. Therefore, if college football had a playoff they'd make a lot more money."

Commish - "Not having a college football playoff net me $17-20 Million per year, while the college basketball playoff nets me $10-13 Million per year."

You, Howard, say that "these gaps aren't reflective of anything meaningful about the success of the sports' current playoff systems (or lack thereof)" - I agree completely. I'm pointing out the fallacies in the fan's money argument, while you're pointing out the fallacies in the overall argument.

Now, if someone were to find the data, crunch the numbers, and say something like...

Fan - "College Basketball makes $5 Million per conference in the regular season but $10-13 Million per conference for the post season, while college football makes "$15 Million per conference in the regular season but $17-20 Million per conference for the post season. Therefore college basketball's playoff increases revenue over 200% from the regular season while football's non-playoff only increases revenue 15% from the regular season."

I can see that argument swaying the commissioners, but to my knowledge nobody has those amounts or has made the argument to them that way. (And I doubt that the money actually works out that way.)

I agree that they're in favor of more profits, but there's more to it than that - it's complex, like everything else. There's tradition, power, and a host of other issues that come into play. So while money is big, probably the biggest, it's not the only part of the equation.

As far as applying the numbers wrong, I'm not. The basketball revenue per conference is just that - per conference. They have to divide it between their 9-12 members, not the 327 members of D1-A. Go back and look closer at the NCAA links in the post.

I'm not discounting all of that money left over from the $545 Million - I'm saying that the commissioners have to play nice with the NCAA regarding it. They can do whatever they want with the bowl money, and that's a lot of power. By not bringing the NCAA into the football post-season fold, they have a lot more control - it would take A LOT of money for them to give up some of that power.

You're point about ignoring the bowl payouts and hours of TV time supports my point that it's not just about money - it's more complex than that. (But in case you're wondering, the hours of TV time for March Madness is about 65.6 hours of games. For bowls it's about 15 - you do the math and see who gets the most bang for their buck.)

I might miss on some things, but these numbers are right there in black & white.

Anonymous said...

Why would a playoff system have to go through the NCAA anymore than the bowl games do? Couldn't the BCS run a playoff rather than the NCAA

Ed Gunther said...

An excellent question. The short answer is because the NCAA Board of Directors controls how many games teams can play each year.

Back in 2005 there was a bunch of discussion, hoopla, and politicking when the NCAA decided to let schools add a 12th game to their season. The main argument was that it would cut into academics too much, but the Board decided to allow it anyway.

A playoff would undoubtedly include adding at least one and as many as three or four games to the schedule, which the NCAA most likely isn't going to allow to happen. So even though the NCAA doesn't have anything to do with the bowls, they have a lot to do with the overall structure of the season and how programs are (supposed to be) run.

Anonymous said...

I dont get your comparissons!!! If college basketball brings in less money in the regular season but in the post season catches up your argument is completly wrong. There should be a playoff!!! Go Oklahoma!!! Sam Bradford is a BEAST!!!

Anonymous said...

Imagine the Network money when more then 1 game is relevant. When you have 7 games that all go into determining the national champion. Not just one. Oodles of money!!

Eremya Mike said...

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Eremya Mike said...

The summary chart explain every affirmation ;)

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price per head services said...

It is impressive that BCS makes more moeny than March Madness. I expected the other way around.