College Football Playoff Part Five: The Money

The fifth, and final, part of the CCCFPP is perhaps the most crucial part. Unfortunately I’m not even remotely privy to enough information to form concrete ideas about how to make things work from the money perspective. After all, the playoff idea hinges on it being financially feasible from all aspects. While most of the ideas I have for this part are admittedly vague, you’ll find that everything seems to work out at least in theory inside.

The first step in addressing how this system can work monetarily deals with the payouts to the teams (and conferences) involved. In the current system teams playing in BCS bowls as champions of the major conferences pull in about $17 million apiece. That money is in most cases given to the conference (after travel expenses for the university are deducted) and split amongst the members of said conference. Obviously the playoff idea essentially eliminates the Rose Bowl as we know it, having the “Rose Bowl” serve as one of the premier hosts for the playoff. However imagine if you will that the “Rose Bowl” is still played and operated as if nothing changed. The same money would be coming into the game from sponsors, fans, the NCAA, television, and everywhere else just like it was the old Rose Bowl, but now instead it’s the national title game. Considering the same amount of money coming in, there’s still about $34 million worth of payouts to the teams. Let’s for a moment put that $34 million in a general fund to be dispersed later, as well as the payouts for every single one of the former bowls that are now a host site for the playoff.

In the current structure of the BCS the second team from each conference pulls in only $4.5 million for their conference. This helps to cut down on the disparity year to year from multi-bid conferences, and this same amount is also applied to non BCS teams who happen to make it (Utah). All in all the BCS pays out $120 million total to the ten teams who participate in it. Add in the combined $6 million from the former Cotton Bowl, $4 million from the former Holiday Bowl, and $8 million from the Capital One Bowl and you have $138 million in the general fund to be paid out back to the 16 teams in the playoff.

Repayment would be done on a tiered basis, with each team garnering a bigger share of the pie as they advance. All participants in the first round of the playoff will be paid $3 million to be given back to the conference almost identically like bowl payouts are now. The eight winners who advance to the second round would earn an additional $5 million on top of the original $3 million. Semifinalists would bring in $5 million more on top of the $8 million previous. And both participants in the championship game would secure for their conferences a hefty $10 million payout each. As a bonus for winning the national title, the national champion would, on top of the trophy, win a $2 million bonus to be paid directly to the university athletic department – a sum that would not be subject to revenue sharing within the conference. Adding it all up you get a first round payout of $48 million (16 teams X $3 million), a second round payout of $40 million (8 teams X $5 million), a semifinal payout of $20 million (4 teams X $5 million), and a championship payout of $22 million (2 teams X $10 million + $2 million to the winner). The grand total of payouts to the teams/conferences involved in the playoff would be $130 million. This cost is covered entirely by the normal funds that would be paid out by these sites if they were hosting the games under the old bowl system. Instead of paying out that money under the old system they now pay it out under a new playoff system. All operations for the host site do not change at all. In fact, I would be willing to bet that since the site would be a part of a playoff they would be able to secure even more revenue due to the increased excitement that is sure to result. Over time these numbers would only continue to grow through normal inflation and increased revenue across the span of the game, once everything is set up it would be up to the NCAA to oversee additional revenues from this original framework.

But there’s still one nagging thing left out there to really make this work for everybody. As you will recall, part of making it feasible for a full fledged 16 team playoff was eliminating a regular season game. While the 12th game has only been around for a few years, cutting it out at this point would be akin to taking money out of the pockets of universities everywhere. Adding the extra game was a money grab and now athletic departments everywhere count on that 12th football game to bring in extra revenue to meet their spending projections. So how can we compensate the 120 Division I institutions for the loss of the 12th game?

Consider that ESPN just signed a $125 million per year contract with the NCAA to televise three BCS games and the national championship game. This doesn’t include what the network is already paying to televise the Rose bowl, which I would imagine is somewhere in the $20 million annual range. This money goes to a variety of sources and helps to contribute the huge payouts to the teams and conferences that the BCS currently has. However with the playoff system the NCAA could, and most certainly would, sell the exclusive television rights for all 15 games to the highest bidder. If you would allow me to speculate for a moment, I would guess that the value of these games in a playoff system vs. the current BCS system would be an enormous amount. I would guess that the rights to exclusively televise all 15 games of an NCAA Division I football playoff would sell for somewhere in the $300-350 million per year range. This deal, paid to the NCAA, would represent a straight up increase of $150-200 million a year even after the NCAA subsidizes Orlando, Dallas, and San Diego for the current television money they would be losing. Of course it is also possible that the television rights could sell for much higher, but I think $300-350 million would be a nice conservative guess. With this increased cashflow the NCAA would then disburse $1 million to each and every one of the 120 Division I member institutions. This $1 million would cover the revenues lost from the extra home game for every school and would more than cover the revenues lost from the road games for the other half. Once the playoff teams get their share, the playoff sites are given enough to maintain current day payouts to participating teams, and the 120 member institutions get their $1 million the NCAA then pockets all remaining money – and there will be plenty left.

Is some of it a little out there? Yeah. Is it a pie in the sky dream? I really don’t think so. Obviously the financial part is the most important part, and it’s unfortunately the part where I have the least amount of solid information. However I think the structure proposed in the previous 1,200 words is a solid redistribution of money that is already there combined with a compensation for the one game sacrifice to make all of this work. On top of all of that the NCAA sees an increased bump in general revenues to be spent wherever they see fit. A playoff, and the demand it has generated along with the interest it will generate, is a cash cow waiting to happen for the NCAA. All it takes is an innovative idea and a willingness to work things out and make some changes.

So there you have the official Clearinghouse Chaos College Football Playoff Plan. It’s not perfect by any means but I happen to think its pretty solid all around. I’d love to hear feedback from anybody and everybody about what you like and don’t like about it. I’ll be opening up a feedback post so any comments left can be consolidated there, but you can also feel free to e-mail me at clearinghousechaos@gmail.com. Who knows, maybe this idea will get some traction and we can finally get some real change, for the better, accomplished.

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