If you’re somebody like me who really, really hopes the D-1 college football playoff never grows beyond the four-game format going into effect next season, you ought to take a moment to read Year2′s analysis of why he thinks that future growth is likely to take a long time to happen. His basic point is one I made a long time ago, that the movers and shakers managing the postseason are going to be careful about killing college football’s golden goose, regular season revenue:
It’s fairly safe to say, based on those Big Ten splits, that regular season college football is worth on average about $1 billion or more to the five major conferences annually. As big a windfall as the playoff is, it’s worth less than half of that per year.
The best part about that regular season money is that it’s guaranteed. Some amount of postseason money will always be owed to these leagues provided they structure the contracts that way, but some part of it is always going to be variable based on who participates. Some part of it, in other words, is out of conference commissioners’ control. Mere loss aversion alone suggests that conference commissioners and university presidents will find it more palatable to lean more heavily on guaranteed regular season revenue than on variable postseason revenue.
After all, it’s not all additive. At some point, if you expand the postseason enough then the regular season will go down in value. The extreme example of this is college basketball, where March Madness is worth an average of $771.4 million annually. Extrapolating from what we know of the Big Ten’s annual basketball income, regular season basketball is worth nowhere near that.
It’s a lucid, logical argument that I ought to find convincing (and, truth be told, did, once upon a time). And it should be especially so, because the same players calling the shots are the ones who have found themselves futilely chasing an ever larger set of March Madness brackets. Year2 sees something of the limit that was flashed when the networks rejected the proposal to grow to 96 teams…
… but we already see a hint of pushback from the TV guys in CBS’s new deal with the SEC. It takes two to tango, after all, and expecting an even larger windfall for an eight-team system requires assuming that the TV networks will shell out for it. The CFP deal ends a couple of years before almost everyone’s regular season rights deals will end. I’ll bet ESPN and Fox wouldn’t pay significantly more for an expanded playoff until then, when they at least have the option of bargaining down the value of the regular season rights deals a couple of years later.
… but, for a couple of reasons, I’m not so convinced.
First of all, I think that underestimates the degree to which guys like Slive, Scott and Delany are convinced they’re the sharpest people in the room. I look at them and see a bunch of 21st century Jed Clampetts who just happened to be in the right place at the right time controlling access to a product that consumers want and are willing to pay for, while most simply see the size of the contracts and are dazzled by the numbers. I suspect those on the college side cutting deals think they’re smart enough to know exactly how to calibrate the size of the postseason product to obtain maximum revenue generation. The problem, of course, is if it turns out they overshoot, there’s no way to get the genie back in the bottle. Let’s just say I lack confidence in the skills of a Mike Slive (who, let us remember, is getting the CBS pushback Year2 cites because he negotiated what turned out to be a below-market TV deal in the first place) to find that sweet spot.
Second? Well, simply, these are people who don’t handle crisis well. Heck, they don’t even identify crisis well. Remember, one of the reasons we’ve got this brand-spanking new playoff is a panic over what they thought at the time were declining postseason revenues that were causing the conferences to bleed money, and that’s turned out to be non-existent. So what happens when the next terrifying thing (another ratings drop, or an O’Bannon loss, perhaps) hits?
At this point, all I want is another five or six good years. If they manage to leave everything alone through the entirety of the new deal, I’ll consider that a win.