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.