Daily Archives: March 22, 2009

It’$ $o ea$y.

One fairly common argument made in the BCS/playoffs debate is that the Masters of the (college football) Universe are spectacularly bad business people because they’ve purposefully elected to leave tons of money on the table by refusing to embrace a playoff for D-1 football.  Typically, Exhibit A in this discussion is the contract the NCAA negotiated with CBS for the basketball tourney – an impressive $6 billion for 11 years, which works out to $545 million per year.

Contrast that figure, the argument goes, with the TV deal for the BCS.  Even under the new, touted arrangement with ESPN, college football stands to be paid $125 million per year.  Do the math:  $545 is much, much more than $125; therefore, college football is cheating itself out of lots of money by failing to move to a full-blown playoff model.

In reality, the math isn’t as convincing as it’s made out to be, writes the Birmingham News’ Ray Melick.

… The NCAA has to answer for its $545 million to 327 Division I schools that are part of 32 basketball-playing conferences. The split is a convoluted formula of sixths and thirds and halves, not to mention administrative costs – the NCAA Tournament accounts for 96 percent of the NCAA’s annual revenue.

The BCS, with its 63 members in six conferences, is much cleaner and financially more rewarding.

Take the Southeastern Conference. According to NCAA records, for a five-year period from 2002 to 2007, the SEC received an average $11.5 million per year from NCAA Tournament money.

During that same five-year period, the SEC picked up an average $17.8 million per year from its BCS share – and that does not include the non-BCS bowl revenue the SEC also took in.

That was typical for each of the six BCS conferences, all of which brought in at least $5 million more on average from BCS football than the NCAA postseason tournament.

Melick doesn’t touch on it, but those numbers don’t include the moneys the conferences receive for their regular season TV contracts in each sport.  Factor those in, and the gap is even larger.

Melick looks prescient with this comment:

Despite the belief that there is a ton more money to be had out there for a full-scale Division I college football playoff, there is also the belief that it will be difficult to keep the NCAA from getting involved. Several years ago, the NCAA’s own economists warned the organization that it is in a potentially dangerous economic position and needs to find alternative revenue in the event that future NCAA Tournament broadcast rights become less lucrative than the current one.

Why so, you ask?  Well, because the NCAA is weighing the possibility of that situation right now.

The N.C.A.A. has a major decision to make within the next 12 months: stick with its 11-year, $6 billion contract with CBS to carry the men’s basketball tournament through 2013, or exercise an option to get out after next season.

Options like the N.C.A.A.’s exist to permit leagues or other sports organizations to capitalize on better financial markets than existed when a deal was signed.

But the economy is so weak that only the most optimistic forecaster can spot more than vague stirrings of a recovery by March 2010. If the N.C.A.A. opts out, then it will exchange the certainty of CBS’s fees in 2011, 2012 and 2013 — above the annual average $545 million — for the hope of a March Madness free-agent payoff. Tough choice.

CBS’s $6 billion bid looks overly rich nine-plus years later, but the network was protecting its turf…

The NCAA, like a hooker on the street corner, is looking for a way to entice some new blood – in this case, ESPN – into the hotel room for some paying action.  As part and parcel of its approach, nothing is off the table.  Including expansion of the tournament field.

Another way to lure ESPN after 2010 — and provide CBS some financial relief from the last three years of onerous rights payments — is to expand the tournament to 72 or 96 teams. The N.C.A.A. could then sell ESPN some games (though not all the new, least valuable, early rounders) and still satisfy CBS with the Final Four and other games.

By my math, that would result in roughly 20-25% of the D-1 basketball programs being made eligible for the postseason tournament.  (In case you’re wondering, that translates into something along the lines of a 24-school to 32-school D-1 football playoff.)  And that percentage amount isn’t really out of line compared with many other postseasons.  As I’ve said before, tournament expansion is an historical fact in American organized sports.

Feel free to reassure me in the comments that a D-1 football playoff could never expand beyond four, or eight, or whatever number of schools you think makes the ideal format.  But before you brush this off, remember that this is America.  Pretty much anything is available if you’re willing to pay enough money for it.  And then, once you get it, it’s usually never enough.



Filed under BCS/Playoffs, It's Just Bidness