The Economics of The College Football Playoff

From the College Game Day crew hyping up the big day at six in the morning, to the game winning field goals in the late PAC-12 match-ups around 11 pm, Saturdays revolve around one of our nations most coveted traditions that is college football. The historic stadiums, the tailgating, the pacifying voices of Brent Musberger and Kirk Herbstreit all initiate boundless excitement across the nation. Yet at the culmination of each electrifying regular season, fans are left with feelings of utter dissatisfaction and uncertainty.

courtesy of google images

Courtesy Google Images

The BCS bowl system is plagued by companies who sponsor certain bowl games, allotting certain amounts of money to the two teams participating. For the 35 bowl games that occur annually, the average profit for each one of these games is $0.6 million dollars which is a minuscule amount compared to the $15.8 million a single team makes on average each year. How can such a profitable industry produce such a small amount of profit during the climax of the season? It disgusts me to see franchises like Discover and Vizio who sponsor top 10 bowls, and pay millions of dollars to the teams participating before they even play. It significantly detracts from the competitive nature of these ‘epic final games’, but in reality the teams have nothing to play for.

3019688

Courtesy Google images

This year is different. A new era of how we consume the American pastime at its pinnacle of the season is upon us. The initiation of The College Football Playoff is one of the most economically intelligent designs in all of sports. In 2012 when the decision to have a four-team playoff was born, commercials and sports shows instantly began the hype. “Who’s in?” became the advertising motto of the new playoff system, and with it a new sense of excitement among fans.

Economists and television consultants value a playoff system around $600 million to $1.5 billion per year which is significantly higher than the $125 million per year the BCS currently receives annually from its contract with ESPN for the national championship, Fiesta Bowl, Orange Bowl and Sugar Bowl combined. Interestingly enough, the two semi-final games are still under the names of Rose and Sugar bowls but the atmosphere and connotations of these games from here on out will be drastically altered. The decision to place these two semi-final games both on the same day is going to make New Year’s Day without doubt, the most profitable day the College Football industry has even seen. The College Football industry as a whole generates a profit of 1.1 billion dollars annually receiving large quantities of money from TV deals, ticket sales, and advertising. This number is projected to skyrocket by hundreds of millions of dollars with the addition of the three playoff games.

courtesy Google images

The finale of the jaw-dropping, heart-lurching college football season will no longer be about the allocation of cash to the bowl eligible schools. No longer do we have to argue whether the winner of the Chick-Fil-A bowl or Fiesta Bowl was the true championship deserving team. This year it’s all about football, we finally get to fully celebrate the beautiful game that is college football in its entirety from start to finish.

Works Cited

“College Football’s Big Bowl Games Earn Small Profits.” Forbes. Forbes Magazine, n.d. Web. 18 Nov. 2014.

“Playoff Would Be a Big Moneymaker.” ESPN. ESPN Internet Ventures, n.d. Web. 18 Nov. 2014.

Sports, George Schroeder. “Power Five’s College Football Playoff Revenues Will Double What BCS Paid.” USA Today. Gannett, 16 July 2014. Web. 18 Nov. 2014.

Advertisements

One thought on “The Economics of The College Football Playoff

  1. jamesel2014 says:

    Goood looks on the USC cheerleading babes photo, but aside from that I think this New Year’s Day I’ll be sacrificing a significant amount of hours watching the championship games (although the Arizona Wildcats let down thousands of Arizonians that could add more revenue to the estimated $600 million). It is interesting how the BCS committee finally decided that creating a playoff series would generate more revenue, because it obviously worked with other sport related events like the Superbowl or March Madness or the NBA finals.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s