Opinions expressed in this piece are solely those of the author and do not represent the views of S&P Global Market Intelligence.
You may never see a more unique nexus of capitalism, socialism, media and mysticism than the current U.S. college football bowl season, which brings together 126 division one schools in 10 conferences to find football glory, program recognition, player visibility and institutional publicity via 41 games over a three-week span, from Dec. 16 through Jan. 8, 2018.
The college bowl spectacle, summarized in the table below, remains complicated despite a simplification in the 2014-2015 bowl season to a four team, three game set to determine a national champion. The 41 sponsored bowl games this year is at an all-time high, doubling the number of bowl games supported a decade ago.
Capitalism: The conferences will likely be paid more than $600 million this year by four media networks covering the games, plus perhaps another $100 million or so by corporations branding each bowl game. Last year, the media networks paid out $622 million for exclusive rights to televise and stream bowl games, according to a report by USA Today, which analyzed NCAA financial records and tax forms from bowl organizations. After shouldering $105 million of bowl expenses and profits, the participating collegiate conferences grossed about $517 million, the records showed.
Socialism: The conferences distribute net profits to their collegiate members, with shared income split more or less evenly among the member schools. A few conferences weight their distributions to the teams that participated in a particular bowl. The distributions, however, can and do vary in any given year depending on internal conference politics. Beyond that, one split usually goes to the conference office, according to an analysis by Forbes.
Media: College bowl media rights are dominated by ESPN's networks, owned by media heavyweight Walt Disney Co. Walt Disney, which inked a 12-year, estimated $7.3 billion contract in 2012 to control college bowls from 2014 through the 2025-2026 bowl season. This season, ESPN will cover 33 bowls and sister network ABC (US) (also owned by Disney) will cover three other bowl games. ESPN not only covers bowl games, it owns 13 minor bowl games.
Although the audience has slipped a bit for the national championship in 2017 versus 2016 and 2015, the combined ratings in 2017 for the six major bowls and championship was up 15% in January 2017. Year-over-year rating comparisons are also tough to make with bowl games because of shifting variables of teams playing, game date and timing. For example, the College Football Playoff Administrator, or CFPA, which owns the playoffs, decided in 2016 not to schedule any more New Year's Eve bowl games because the audience was too distracted.
There is no evidence that ESPN's bowl revenues are suffering despite weaker ratings overall for National Football League games carried by ESPN and other networks in 2017 and 2016. The enigma of most high-profile annual TV events over the long haul is that revenues tend to go up even when fragmented audiences decline because the event still delivers a critical mass of eyeballs that advertisers value. The NFL has taken over the New Year's Eve slots abandoned by college bowl games in 2016.
Mysticism: The CFPA and college football fans would like to see the playoffs expanded to eight teams and five games. There is usually criticism of how the system ranks the top 10 teams and complaints about how the top four teams are selected for the playoffs, which is based in part on conference balance. The challenge for expansion, however, may depend on the advertising base being able to support a new level of bowl saturation. Instead of an Amazon.com Bowl or a Pepsi Bowl, for instance, this season we have "The Bad Boy Mowers Gasparilla Bowl" and the "Cheribundi Tart Cherry Boca Raton Bowl."
Then there's the issue of whether bowl economics are really promoting student athletes' welfare and academic primacy as touted as a goal by the National Collegiate Athletic Association, which sanctions bowl games (but does not own or control them). Another Forbes' report suggests more can be done to benefit athletes and colleges by the bowl system. My table above highlights one obvious disparity: Conference executives are paid millions and bowl coaches see six figure bonuses, while players in the championship game take home a goody bag.