Sunday, May 13, 2007

Money. Money money money

“A playoff would make a ton more money than the BCS does”


“What do you care?” &
“That’s theoretical – there’s no proof” &
“College football already makes a ton of money”

More than anything else, what must be understood about the vast majority of people who use money as an argument, either for or against a playoff, is that it is not the issue that they care about the most. People use the money argument because it supports a position they’ve taken based on one of the other issues which they do care about. How do we know this? Two simple reasons – first, how many people do you know who either benefit monetarily from college football currently not having a playoff or would benefit monetarily from college football instituting a playoff? I personally don’t know any. Sure we can theorize about the commissioners, and AD’s, and coaches, and TV networks, but relatively speaking there’s not many of them. But Joe Schmo who goes to the games, watches on TV, and argues on the internets isn’t going to see an extra dime either way. 99.99% of college football fans don’t make any money from the sport currently, and that wouldn’t change if we had a playoff. The second way we can tell that most people don’t really use money as their primary argument is because they argue AGAINST more money as much as they argue for it.

“The bowls are just a way for the rich to get richer”


“It’s not worth giving up the things that we’d lose”

See? Both sides use different parts of the money issue when it best suits their argument, and they’re not above flip-flopping to use the opposite point of view in the next breath. Tricky bastards. Let’s dig a bit deeper.

By far, the position most often taken by the pro-playoff side is the first one we saw, that a playoff would make a ton more money. The anti-playoff side has numerous road blocks that they’re gonna throw in front of this assertion, the first of which is questioning the assumption of playoff = money. As far as I can tell, there are no definitive economic studies or academic papers proving that a playoff would make more money. (I’ve searched, but I haven’t come up with any data that are substantial and/or reliable. If you know of any studies that you think do effectively prove this argument, let me know about them and I’ll gladly include them in this section.) I think part of the reason there are no definitive studies are because economic trends are much easier to study after the fact, and trying to predict the way the economic winds will blow in the future is notoriously hard, even with a ton of facts, past behaviors, computer models, etc. So why are so many people convinced that a playoff would make more money? Well, I think a lot of it comes from human nature and comparing like objects. On the surface, it is rather logical.

If college basketball has a playoff, and that playoff makes a ton of money,
then if college football has a playoff, that playoff will make a ton of money.

Simple! Some people even try to move up to the next grade level.

If the college basketball regular season makes $$$, and the playoff makes $$$$$$$$$$,
then if the college football regular season makes $$$$$$$, a playoff would make $$$$$$$$$$$$$$$$$$

That’s the way a lot of people think. Is it logically flawed? Yes, it requires a leap of faith, since there are big differences between college football and college basketball. But that doesn’t mean that leap automatically lands in the wrong place. Who knows, this type of comparison could be accurate. We just don’t know. And that’s the anti-playoff side’s next point. It’d be too big of a risk to take. A playoff might make more money, it might not. What they do know is that the BCS already makes a ton of money – they don’t have to use any predictions or guess at that. It’s a fact.

A lot of people like to point out the actual numbers from the basketball-football comparison. Looking at network revenue only, March Madness got $6 billion for 11 years ($545 million per year), while the BCS is going to be getting $500 million for 4 years ($125 million per year). It looks like a huge difference, but it goes deeper than that. Of that $545 million per year, each BCS conference has only seen only an average of about $12 million directly. For football, each BCS conference pulls in an average of about $18 million per year. (Here’s the breakdown in more detail if you want.) As stated in the comments section of that post, the point isn’t that the pro-playoff side is wrong and that from a different angle college football already makes more than college basketball – the point is that this argument, standing alone (from either side’s perspective), is incomplete because it doesn’t take other economic factors into account.

And that’s one of the main keys to understanding the money aspect of the argument – that all of the economics are bound together like a big spider web. If one section changes or moves, it sends vibrations to all the other parts, and there’s no telling how those other sections will react. If we examine some of the other sections, you’ll see what I mean. One of them is the regular season. We’ve already talked about devaluing the regular season from a competition perspective, but what about from an economic one? Would a playoff cause people to stop watching/attending/spending money at the September through November games? Would the networks not pay as much for the regular season games, knowing that the playoff is where the money will be? The pro-playoff side says no, the anti-playoff side says yes. Who knows. Maybe, maybe not. Another factor is the bowls. With that one we’re talking about not only bowl revenue from ticket sales and television contracts, but host-city revenue in the form of tourism (fans spending money, staying in hotels, eating out, etc.). As a lot of the anti-playoff crowd notes, fans aren’t going to go to multiple playoff games, taking multiple vacations – even the most diehard fans most likely don’t have the means to do that. A lot of people have a lot of money invested in a lot of different ways, and instituting a playoff would be a major risk for many of them. That’s just an economic reality.

Another economic reality is that most of the non-BCS teams don’t bring in nearly as much money as most of the BCS teams. This is something that the smaller schools try to sweep under the carpet when it comes to discussing the most fair way to share all of the aforementioned revenue. We’re getting away from the core pro-playoff vs anti-playoff argument here, but that’s only because that’s naturally where each side takes things – back to the haves vs have-nots arena. We noticed this a bit earlier when we were discussing the MountainWest’s recent proposition and how we need the rankings to make the competitive aspects of the sport fair. Now we’re going to examine that situation from an economic perspective. In general, everybody involved in college football – the conferences, the bowls, the schools, the networks, the beer vendors, the ticket scaplers, everybody – wants to maximize their revenue. First and foremost, they’re concerned about themselves and their own financial stability. If the on the field competition winds up fair or most everybody is happy, well that’s an added bonus. Greed? Sure. Selfish, kill-or-be-killed mentality? Yup. But everybody does it, so it’s okay. Let’s examine both sides here and see what’s going on.

The have-nots, the smaller, non-BCS conference teams, always try to tie the public’s desire for fair competition on the field to fair compensation in the marketplace, and they succeed at it when people don’t take the time to think about it and separate the two out. The more they can tie the two together, the better, since their only real argument is that the BCS is inherently unfair to the little guys competition-wise. It’s easy to claim that your conference or team is getting screwed when you don’t have an automatic invitation to the BCS, or when you get passed over for a bowl spot in favor of another team. The evidence they use are times when individual, non-BCS teams seemingly get the competitive shaft. Boise State is one of the winningest teams over the last six or seven years, but they’ve never been to the title game and they’ve only been to one BCS bowl. The have-nots will contend that this is because people are prejudiced against them from a competitive standpoint. The BCS schools have all the money and prestige, therefore they have an unfair competitive advantage.

The have’s, namely the BCS conferences and entities that do make the most money, have to tread carefully here since they run the risk of seeming greedy, elite, and/or too powerful. And there’s few things the public loves more than seeing a giant slayed by the underdog. This is why the BCS conference commissioners are reluctant to point out that despite the success of Boise State, Utah, Hawaii, and others, the fact remains that the BCS conferences win over 80% of their games with the non-BCS competition. It’s a solid response to why the BCS teams get more votes and higher rankings, even when they might have more losses or fewer wins. It is tougher to play in a BCS conference, statistically speaking. The commissioners are mostly too diplomatic to point this out – I’m not. They know that in general, the more they have to talk about the competition on the field, the worse they’re going to look. So the BCS conference commissioners take the non-competitive tack that whether we’re talking about putting fans in the stands, merchandise sales, and TV viewership, there’s a good reason for the huge financial difference between the haves and the have-nots. Why do you think there are haves and have-nots in the first place? If San Diego State had the following and overall fan-base support that Florida does, they’d be a money-making machine. They don’t, so they’re not. The BCS teams are the ones driving the economic success of college football as a whole, not the non-BCS schools. Therefore they deserve a bigger share of the revenue. The BCS schools might get more respect when it comes to bowls choosing who they want to participate (which is wholly based on economic concerns), but again, they can say that that’s because they’ve earned it and will bring the fans. The non-BCS schools cannot claim the same. In a nutshell, why should the BCS schools that bring in the vast majority of the money be forced to give a big chunk of it over to the smaller, non-BCS schools? This unfair marketplace argument is seemingly as sound for the BCS conferences as the unfair competition argument is for the non-BCS conferences.

So, can we concretely tie non-BCS conferences with a pro-playoff position, and the BCS conferences with an anti-playoff position? Pretty much. The non-BCS conferences know that under the current setup, they’re not getting included in the big bowls and they’re not making nearly as much money as the BCS conferences. How are they certain that they’ll make more money in a playoff? Well, they don’t have to be – they probably wouldn’t make less than they do now, and at least then they’d have a shot at the championship. The BCS conferences know that under the current setup, they have an advantage over the non-BCS conferences, both in terms of the rankings and competition as well as economically. The last few years of the BCS has made them a lot of money, more and more each year, so it doesn’t make sense, financial or otherwise, to risk that just for a few more bucks. That’s why the even if there's an extremely high probability that playoff = $$$$$$$$$$$$$$$$$$, that argument just doesn’t faze them.

Let's wrap this up.

Tradition and the Season <> Playoff Conclusions

1 comment:

Anonymous said...

$ is the main point. These are non-profit, "amateur" programs. Fan & alumni support, marketing revenue, & ticket sales should be kept by the school that earns it. BUT TV & bowl revenue should be shared equally by all teams.