Maybe that business model isn’t quite dead yet.

You keep asking why ESPN shells out the big bucks for college football.  ESPN sees the answer in numbers like this:

Consider the St. Petersburg Bowl (formerly the Beef O’Brady’s Bowl) that took place at 11 a.m. Eastern in St. Petersburg, Fla., on the Monday after Christmas. The setting was Tropicana Field, a baseball stadium that holds more than 40,000 fans. The game drew only 15,717 attendees and ended with 6-7 losing records for both Mississippi State and Miami of Ohio.

However, it garnered 2.045 million viewers for ESPN, which is close to what Comcast’s CMCSA, +0.40%  NBC managed for a rerun of “Hairspray Live” (2.45 million viewers) that night. Yes, a terrible bowl game that started at 8 a.m. on the West Coast put in a better prime-time performance than network shows that actually aired in prime time.

This wasn’t an anomaly, either. Between Dec. 17 and 26 — well before the college football playoffs — only one bowl game that ESPN and its Walt Disney Co. DIS, -0.06%  sibling networks ABC, ESPN2 and ESPNU aired failed to draw 1 million viewers.

We’re junkies.  It’s that simple.

What’s more interesting is that, for once, the NCAA and schools may be taking note of our addiction and reacting to it in real time.

… An audit of the 2012-2013 college bowl season by the NCAA found that 35 bowls gave out $300.8 million to conferences, while individual schools reported spending $90.3 million on bowl trips.

The NCAA report found that bowls received $445.6 million in gross receipts and spent 26% of that sum on operating expenses, keeping only 7% of the total. However, schools participating in bowls ate $12.1 million in unsold tickets, for an average of $173,479 in losses per team. While big-conference schools with major athletic revenue can take that hit — especially if they’re playing in one of the premier bowl games — it’s tougher for schools with less sports income to cover those costs. Unfortunately, it’s those schools that end up playing in lower-tier regional bowls.

However, starting in 2015, the NCAA began arguing that the new playoff system now functions as a sort of revenue-sharing model that helps take pressure off of the small-conference teams and the lesser bowls. That year, after receiving reports from the 39 post-season bowl games and the schools that took part in them, it was determined that the bowls distributed $505.9 million to participating conferences and schools. The schools, meanwhile, spent $100.2 million to take part in bowl games. The NCAA presented this as a net profit of $405.7 million. While there’s little evidence that any of the above makes it easier for smaller schools to travel to and participate in lower-tier bowls, it gave ESPN the go-ahead to streamline the process a bit.

Of ESPN Events’ 13 bowls, five — New Mexico, Bahamas, Boca Raton, Idaho and Camellia — pay out less than $500,000 per team, which is divided among all schools in that team’s conference. Only four of its bowls — Texas, Celebration, Las Vegas and Birmingham — pay out $1 million or more, and Birmingham only pays that to one team from the Southeastern Conference.

In other words, the economic structure of the postseason is shifting from focusing on asses in the seats to eyeballs on the tube.  ESPN is more than happy to bring that change of course to fruition, naturally, because that’s how Mickey gets paid.  And if the small fry don’t like it, tough shit.  They’re not where the money is.

However, if that number seems a little light, it’s likely because ESPN is paying a whole lot more for rights to the bigger college bowl games. It paid $7.2 billion for exclusive rights to college football’s playoffs through 2026. It pays another $80 million a year through 2026 for the Rose Bowl alone and billions more in deals with college football’s Atlantic Coast Conference ($3.6 billion), Southeast Conference ($2.3 billion), Big 12 ($2.5 billion), PAC-12 ($3 billion) and Big 10 (nearly $1.2 billion). Why pay so much for college football in particular, you ask? Because it’s one of the last safe bets.

In 2015, NFL games accounted for all of the top 25 broadcasts and 46 of the top 50. One of those outliers was a Michigan State-Alabama football playoff game shown by ESPN. That said, ESPN faces a whole lot of competition for those properties, with Fox paying for the other half of Big 10 rights, its pick of games and the rights to the Big 10 championship. But ESPN knows its future lies in the rights to live sports broadcasts, and it’s loading up on them no matter the cost to the rest of its programming.

In the short run, you might welcome that.  After all, are Keith Olbermann, Rachel Nichols, Jason Whitlock, Skip Bayless and Bill Simmons going to be missed?

But the next thing to consider is what happens when ESPN turns that same logic towards college football’s regular season.  The conferences and schools can mumble all they want about preserving the live fan experience, but money talks and the loudest money comes from their broadcast partners.  Just ask the NFL.

Sports attendance has been either flat or falling for much of the past decade, even as live sporting events continue to outperform other broadcast or streamed entertainment. After nearly having to take three playoff games off television in 2014 thanks to its blackout rule requiring 100% attendance, the National Football League owners began phasing out attendance-based blackouts team by team in 2014 before shelving them altogether in 2015. With total revenue of more than $10 billion — including $1 billion a year apiece in broadcast rights from NBC, CBS CBS, -0.40%  and Fox through 2022 and $1.5 billion a year from AT&T-owned T, -0.28%  NFL Sunday Ticket provider DirecTV, also through 2022 — the NFL and its owners are beginning to realize that attendance is becoming a smaller part of the game-day equation.

It’s just one more reason to acknowledge that the game as we know it is slipping away from us in its current form and there’s not much we can do about that, because we’re a part of the problem.  In other words, enjoy it while you’ve got it.

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16 Comments

Filed under College Football, ESPN Is The Devil, It's Just Bidness

16 responses to “Maybe that business model isn’t quite dead yet.

  1. Gaskilldawg

    Okay, we are moving to the point where Sanford is the studio and we in attendance are extras.

    Extras in a movie production get norminal pay. They do not have to contribute to a fund to be entitled to pay to be in the background shot. If folks in section 104 are extra shouldn’t we get paid to be there rather than pay to be in the background shot?

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    • JCDAWG83

      I’m sure the tickets will have an image and likeness release on the back whereby the ticket holder agrees to waive any compensation for being shown.

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  2. I’m envisioning a studio football field in the future with green screen fans.

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  3. TimberRidgeDawg

    Is dependence on TV revenue going to eventually kill the goose that lays the golden egg?

    Falling live attendance has been an oft discussed topic especially with millenials who don’t seem to exhibit the same passion for sports as a group when compared to earlier generations. Children who don’t grow up as avid football fans and don’t develop an emotional attachment to the game through live experience are just as likely to find some something else to watch as adult over time. Their kids will take their cues from them. As older generations fade out, there will be lower percentages of the surviving generations that are football fans until at some point interest in football as a national pastime could be replaced by something else. Toss in the concussion issues and declining participation by youth in general and extrapolate out over a few generations and football could be replaced by futball in the hearts of fans at point in the fairly distant future but at least visible as speck in the distance if you look hard enough.

    Part of what makes watching a football game exciting on television is the sold out stadium and the roaring crowd that signals that this is a must see event. A half empty stadium conversely says nobody really cares that much about the game so why should I watch it. The viewership drops and what happens as the media money dries up and nobody is buying tickets? Live attendance is a canary in coalmine for the health of the sport. Nothing is guaranteed if those in charge are not good stewards fo the game.

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    • JCDAWG83

      Great comment and my thoughts exactly. As the inclination of fans to attend games drops, so will the inclination of everyone to watch the games. Once the tipping point is reached where the public finds other things to do it is more interested in, football attendance and viewership will go into a death spiral.

      I also wonder how long will it be before we see smaller, less wealthy football programs say “thanks, but no thanks” to low level bowl games? How long will programs be willing to lose money they really don’t have to lose in order to provide profitable programming for tv networks?

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      • A question I have been asking for a lot of years now. Eventually, the school should get tired of losing all that money, while tv profits. Must admit, I do not get it. If I were a university or college president, at some of the schools, I would say, “we are out of here.” Probably get fired though.

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  4. DawgPhan

    I think of it as the difference between being at a concert and watching that concert on a stream. It’s one way to do it, but not my preferred way of doing it.

    Being at a big game is a lot of fun, far more fun that being at home watching a big game.

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    • The Truth

      You hit on another key point with your comment: “Being at a BIG [emphasis mine] is a lot of fun.” Better find a way to schedule more big games and fewer Nicholls, Directional Louisianas, and the like if you want to keep the crowd.

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      • And there in was the final straw for me. Watching UGA or UW play good teams live and in person was great. To take a day away from nice weekend hiking, pay a lot, to see Portland State, Nicholls, Southern, UC Davis, or some Div 2 school did it for me.

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  5. HVL Dawg

    As I said on here several years ago:

    In the future you will be able to sit at home and watch yourself sitting in the stands at a live football game.

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  6. JasonC

    Makes the boondoggle of financing fancy new stadiums on tax payers’ backs seem worse than ever. Good thing the Braves, Falcons, Marlins and Baylor managed to get their deals done.

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  7. This new world is eventually going to push me to the golf course on Saturdays in the fall. I took two of my kids to Florida for New Year’s rather than watch the game (although I did listen to it off and on on the drive). I still haven’t watched it on DVR and have probably only watched in total less than a full game of bowl season and the playoff games.

    Larry Munson is dead and I don’t feel so good myself.

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  8. Nashville West

    My take on the NFL gutting the blackout rule is that it was necessary for the NFL return to Los Angeles,the second biggest TV market. My recollection is that most games were blacked out in LA during the last year the Rams and Raiders were in town. Definitely a big hit on ratings.

    It’s Mickey’s world, we all just live in it.

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  9. SouthGaDawg

    I foresee in my grandchildren’s era that people will watch virtual reality football. It will be all CGI – no real people. Real football will be outlawed due to CTE. They won’t use a clunky VR headset. By that time, folks will have VR implants that they can turn on and off by blinking their eyes. With the VR concept, people can become part of the action. This might be a dramatization, but maybe it isn’t.

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