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Money flows as college football bowl games kickoff

December 10, 2014

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College football is big business, and the opportunities to cash in on the sport’s biggest stage — bowl games — has never been greater for sports business bigwigs who run them.

The 2014-15 bowl season debuts the College Football Playoff system, a four-team elimination bracket made up of the NCAA’s top-four teams. It replaces the Bowl Championship Series, which lasted from 1998 to 2013. This year, Alabama, Oregon, Florida State and Ohio State made the cut.

In total, 38 bowl games (excluding the championship) will be played, up from 25 in the year 2000. The four original BCS showdowns — the Fiesta, Rose, Orange and Sugar bowls — will remain despite the BCS’ demise, with the Rose and Sugar bowls serving as semifinals.

The Power Five conferences — ACC, Big Ten, Big 12, Pac-12 and SEC — stand to make their biggest bowl payouts ever. Each will pull in at least $50 million this season, which is almost double the baseline distribution in the BCS’ final year, according to USA TODAY. In addition, conferences will earn millions more off of their individual contracts with bowl franchises.

Though the exact numbers haven’t been disclosed, ESPN’s 12-year TV deal with the College Football Playoff is reported to be $470 million annually. When you factor in ticket and merchandise sales, the new system could haul in more than $500 million this season.

And just when you thought the bowl perks couldn’t get any more exorbitant, most of these millions will likely go untaxed.

The BCS games were designated as non-profits, because they supposedly invested in their host cities, though, Think Progress casted serious doubt on that claim a few years ago. There’s been no indication that the top bowl games lost their tax-free status when the BCS system was disbanded.

Right about now, you’re probably curious if anyone besides those in charge of the games benefit from the sprawling bowl system. The answer is not so black and white.

Forbes contributor Patrick Rishe wrote earlier this year that the winners and losers from bowl games vary, but typically the games’ executives are the ones who gain the most, and can earn between $200,000-$1 million from a single game.

Not all schools, on the other hand, come away from a bowl with money in their pockets. Rishe points out that after you factor in travel and mandatory ticket expenses. some teams can actually lose money, especially in lesser games with smaller payouts.

There are some positive intangibles to consider here too: participating in any bowl game, no matter how small, can increase your team’s exposure and help with recruiting.

Economic impact on host cities is also another factor.

The Dallas Morning News wrote earlier this year about the championship game’s (which will be played in Arlington, Texas) financial impact on the local economy. According to their report, the projected spending during the event is expected to be $308.6 million and $16.1 million in tax revenue. 61,160 nonresidents are expected to attend.

However, the game comes with a hidden price tag for Texas taxpayers. The state government earmarked $10.7 million for the event, and Arlington and Dallas matched those funds with $300,000 and $1.16 million respectively.

The economics benefits of hosting major sporting events are up for debate. Bringing in thousands of nonresidents for a game might benefit one sector of a local economy, and do little or nothing for another.




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