Yahoo Sports Why financial fallout from coronavirus will likely lead to College Football Playoff expansion
The SEC takeover of the 2012 Bowl Championship Series title game – LSU vs. Alabama – led directly to the implementation of the College Football Playoff. The waves of conference realignment from 2010-14 tied directly to the desire to sweeten upcoming or existing television contracts. When congressional scrutiny found the Bowl Alliance in the late 1990s, the BCS was created for the 1998 season.
Every recent seismic shift in college athletics can be tied to an obvious trigger.
After interviews with a dozen officials around college athletics, it’s highly likely we’re amid another pivotal moment in the sport. The inevitable financial strain that will accompany the fallout from the COVID-19 pandemic is expected to help trigger an expansion of the College Football Playoff.
While momentum had been building toward expansion – a WatchStadium.com poll showed 88 percent of athletic directors were in favor – the ability to create a robust new revenue steam for schools amid tight fiscal times has the sport’s powerbrokers forecasting an expanded playoff as a likely reverberation from COVID-19.
“I think we were moving in that direction anyway,” said a conference commissioner. “Could it be accelerated by something like this? It’s a good point. Revenue is going to be an issue. It’s not on the front burner yet, but it’s a legitimate question.”
Multiple college sports officials mentioned they’ve been so locked in on taking care of their own campuses and leagues – including planning financial contingencies – that any conversation about the CFP’s future appears months away.
CFP executive director Bill Hancock stressed no decisions are imminent, but it’s also notable that he didn’t shoot down the notion. “People can speculate anything about this, but no one knows exactly what will happen,” Hancock told Yahoo Sports. “It’s fun for people to speculate, but no one can see the future for sure.”
When would playoff expansion happen?
We’re halfway through ESPN’s 12-year television deal to broadcast the CFP. It’s difficult to find officials around the sport who see the format remaining for the final six seasons.
That said, we won’t see a reformatted playoff for at least two more college football seasons. The 2020 season — whatever that comes to look like — is certainly not going to be the place where we see a different postseason format. Those familiar with the system say that putting changes in place for the 2021 season would be virtually impossible.
So the earliest an expansion could happen would be following the 2022 season, which means that leagues and programs wouldn’t get a bigger paycheck until the spring of 2023. Hopefully by then, COVID-19 is a distant memory and some normalcy has returned to the landscape.
But even the most optimistic financial projections come with significant fallout, as donations, ticket sales and overall revenue will project to be less than recent years.
How much more could it be worth?
This is likely the thorniest question. There are so many variables that come into play here that broadly projecting a number can be nothing more than educated guesses off back-of-the-napkin math.
As the playoff works currently, there’s an average of nearly $470 million paid out annually to the conferences in the postseason bowl bundle. (There are variances here, because of the rotating New Year’s Six bowls.)
For the Power Five leagues, a ballpark average payout each season is nearly $70 million. But using $70 million as a baseline, that means each program in a Power Five league gets more than $5.5 million annually from the CFP.
How much could those numbers increase?
Predictions are fluid because of the myriad factors that come into play here. With six years left on the ESPN deal, there’s unlikely to be outside leverage to inflate the deal. Also, ESPN is going into its most profitable years of the deal, as is common on the backend of long contracts. (That would theoretically lessen its motivation to tear it up to pay exponentially more.)
AJ Maestas, the CEO of Navigate Research and a veteran in the college athletics media space, projects that an eight-team playoff — the next likely iteration — could command 80 to 110 percent more for schools. That puts a low-end estimate around $850 million per year. (That could push the per-school payout up in the neighborhood of $10 million for Power Five leagues.)
(For those looking for a playoff finances rabbit hole, Navigate’s Matt Balvanz recently wrote about it. Included are his projections of $887 million per year for an eight-team playoff and $1.45 billion for a 16-team event.)
Multiple officials around the sport caution those projections could be considered far too optimistic considering the current environment. Just because the amount of playoff games more than double, it doesn’t mean the payout will.
There are a lot of unknowns looming over the landscape: What kind of financial shape will ESPN be in the next few years with a loss in advertising revenue? Also, with three playoff games turning into seven, it’s important to realize that CFP quarterfinal games won’t command nearly as much as the semis and finals. (If NFL wild-card games go for $70 million, it’s hard to imagine CFP quarterfinal games going for more than $50 million.)
Maestas is still generally bullish on the inevitably of expansion. He told Yahoo Sports this week: “I think it was going to happen anyway, but now I think it’s going to [be decided on] in this next cycle. This [current financial environment] is an accelerator. People will be more open to it. The motivation has increased.”
Could playoff expand to 16 teams?
Considering the amount of consternation that has come with each incremental growth toward a playoff, this would be radical. (Check back if the season gets canceled, though, as we’d then be looking at far different finances.)
One of the refreshing perspectives from speaking to officials around the sport is that some of the next generation of leaders are annoyed with the postseason still being tethered to the bowl system. Essentially, college sports are still outsourcing their most valuable inventory. That has always been dumb.
“I think we should do 16,” a Power Five AD said. “If not, at least 12. That’s what everyone wants. That’s where the value is. Athletes want it, fans want it and TV wants it.”
The AD, who is at a school that’s perennially in the top 20, put it this way: Observe the actions and habits of the fans and players, the sport’s two most important constituencies. Fans care exponentially less about non-playoff bowl games than they do College Football Playoff games. Elite players are tipping their hand — wisely, by the way— by sitting out non-playoff bowl games.
“There’s two really important groups to whom bowls don’t matter – players and fans,” the athletic director said. “Has a [healthy] player sat out a playoff game yet? Well, why don’t we play more of those? That’s just Marketing 101. What do they want? Give them more. What don’t they want? Give them less.”
There will always be a place for second-tier bowl games. They still rate well, are heavily bet on and give fans a near-nightly football fix during the holiday season. (Basketball coaches are always dumbfounded to hear statistics like this: The Belk Bowl beat all but one regular-season college basketball game in audience last year.)
As old-guard commissioners like Jim Delany of the Big Ten cycle out of leadership roles, the defiant defense of the bowl system being tied to the sport’s top events is expected to wane. How quickly is the question.
“We started 100 percent in the bowls,” the athletic director said. “We moved to 90 percent in and 10 percent outside [in the current system]. We need to keep pushing that percentage. The bowls are the NIT of college football. The NIT exists in part because TV needs something to show midweek during the NCAA tournament. We don’t need to be putting our better teams in that system.”
Could we see quarterfinal games at campus venues?
The answer here among folks around the industry is a resounding yes.
Picture No. 1 Alabama hosting No. 8 Cincinnati in Tuscaloosa. Imagine No. 2 Clemson hosting No. 7 Georgia in Death Valley. Or maybe No. 3 Oregon hosting No. 6 Oklahoma in Autzen Stadium. What about No. 4 Penn State playing No. 5 LSU in State College? Sounds a lot better than the corporate and sterile atmosphere at these bowl sites. Fans are already stretched thin financially if they want to fly to both a semifinal game and a title game. Reward them with a home game.
It would also be a great incentive to finish in the top four, as a home game gives both an obvious advantage and a local economic boost. “It’d be a $40 [million] or $50 million weekend for the local economy,” said another Power Five AD. “I’d say that’s a conservative number.”
(We are operating under the assumption that one Group of Five team would get a bid in an eight-team playoff, as this would avoid consternation over exclusion. That would spice up the race for No. 1 as well.)
What are the obstacles to a playoff?
Player safety will be the most important issue. And perhaps if the NIL legislation passes through the NCAA in the upcoming months, there’s a cut of these hundreds of millions of dollars that’d go to the players. Maybe that could help rationalize the risk.
Maestas points out that only four teams would have to play an extra game. Essentially, that’s a small enough number where this argument — while important — doesn’t end up as a roadblock for stopping expansion.
The schedule of the Rose Bowl and Sugar Bowl, which boxed out the CFP for the prime ratings time slots, will also loom large. Would ESPN need those leagues to agree to move those games in order to put playoff games on New Year’s Day?
Common sense and basic economics would indicate that makes sense. But tradition has long impeded progress in college football, where in-fighting and ego trump common sense.
With none of the obstacles impossible to overcome, expect the financial pressures to pull the trigger for expansion.
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