The Business of Sports

Are You Ready for Some (Mediocre) Football?


1. Bowls Full o' Money: Cities Across the U.S. Welcome College Bowl Economic Impact

Couches of America, prepare yourselves. On Saturday, the avalanche of college football bowl games begins. From Albuquerque and Boise to Jacksonville, the District of Columbia, and back out to the grand finale in Glendale, Ariz., 70—yes, 70—college football teams are preparing to square off in the greatest demonstration of sports mediocrity since MLB's tepid Home Run Derby last July.

The schools matching up for the 35 bowls comprise an unprecedented 15 teams that finished the season 6-6 and 257 total losses. At least this season, we're spared having to watch any teams that have been awarded a bowl berth despite posting a losing record, such as 5-6 Troy State in 2001, 5-6 William & Mary in 1970, and 4-6 SMU way back in '63.

How on earth did we get to the point where someone thinks 35 bowl games are palatable? It's simple—even the lowly Beef 'O' Brady's Bowl on Dec. 21 on St. Petersburg's Tropicana Field (Louisville vs. Southern Miss) is a money-making vessel.

The national championship vote has been split between college football coaches and writers 11 times since they began voting for the national champion in 1954. The Bowl Coalition began in 1992, and the Bowl Alliance attempted to improve that system three years later. The current Bowl Championship Series had its beginning in 1998 and has been tweaked a half-dozen times since then to its current format of four top-tier BCS bowls: the Fiesta, Orange, Rose, and Sugar, and a rotating "plus one" National Championship Game.

Ironically, Swiss sports marketing conglomerate ISL Worldwide—last time we checked, they don't play football in Switzerland—proposed a 16-team college football playoff around 1998. Colleges immediately rejected the proposal, though the $350 million annual payoff would have been twice the amount paid them the first decade of the BCS.

Despite all of the controversy, more than 800 Division I college football games were played this year in the $5 billion business called college football, and the ongoing call for a playoff system has heralded the rite of passage into the 35 bowls over 24 days. The interlocking contracts between conferences, teams, and TV guarantee that the core of the present system is here to stay.

The bowl committees in all of these communities have figured out how to turn an empty winter's stadium into gravy. Each bowl generates anywhere from $50 million and $70 million for its respective region, with many bowl committees getting help from existing teams, leagues, and/or economic development organizations in their communities. Further, the respective BCS locations have refined the art of connecting the BCS National Championship Game with their established BCS bowl.

PepsiCo's (PEP) Tostitos, for example, initially entered into a six-year, $30 million deal as the Fiesta Bowl sponsor in Arizona. That has been increased as the BCS "plus one" system has been installed. The event calendar for games in Arizona begins with the Dec. 28 Insight Bowl, continues through the Jan. 1 Fiesta Bowl, and culminates 10 days later with the BCS title game. Regional economic impact numbers (hotels, car rentals, golf courses, restaurants, etc.) should be higher than ever before because of the 14 days spanning the respective events.

Of the 35 games, 31 have some corporate or state sponsorship attached to their name. The New Mexico Bowl begins the bowl season with 6-6 Brigham Young playing 6-6 University of Texas at El Paso (backed by the New Mexico Tourist Board). Hawaii and Texas also participate in bowl names. Corporately, the Jan. 1 Rose Bowl is presented by flatscreen maker Vizio, and the Dec. 29 Military Bowl is presented by Northrop Grumman (NOC)—eager for name recognition in Washington, D.C., where most of their government business is done. Newcomers this year include: uDrove (trucking compliance management software) and cap maker New Era sponsoring the New Era Pinstripe Bowl in Yankee Stadium on Dec. 30. A bowl sponsor breakdown by industry:

Industry Breakdown

Consumer Goods 7

Financial Services 6

Restaurants 4

Autos 3

Aerospace/Defense 2

On the economic-impact high end for college bowls is the granddaddy of them all, Pasadena's Rose Bowl. Comprising the Rose Parade and the Rose Bowl game, the Tournament of Roses has always been a big draw for Big Ten conference fans longing to escape the frigid winter temps in the Midwest for sunny Southern California, and organizers have always been on the lookout for fan bases that "travel well"—are willing to journey long distances, spend a lot of money while doing so, and stay a while.

Tourism boosters in Southern California are especially pleased with this year's matchup. The Horned Frogs of Texas Christian University have never before played in Pasadena, virtually guaranteeing a good turnout, and University of Wisconsin backers have a proven track record of traveling well. All told, local convention and visitors bureaus anticipate a minimum of $178 million economic impact to the region, with the Rose Bowl game expected to draw 94,000 fans and the Rose Parade 700,000 viewers along Colorado Boulevard.

2. Bowling for Dollars: The Teams

While they don't benefit from secondary market ticket sales, college football's 11 conferences clearly get a significant yearend boost from conference championships and bowl berths, no matter how small the bowl. The 70 bowls pay a total of $261.76 million to conferences (which distribute the revenues based on their own individual formulas). Here's a look at 2010-11 total conference payouts:

Conference Payouts

SEC $54.3 million

Big Ten $49.2 million

Pac-10 $38.4 million

Big 12 $32.1 million

ACC $29.8 million

Big East $23.7 million

MWC $20.6 million

CUSA $5.95 million

WAC $3.3 million

MAC $2.58 million

Sun Belt $1.83 million

Whether Maaco, Meineke, or Miami, the 35 bowls produce 70 schools with an opportunity to participate in the post-season at a significant level. Overall, nearly half of Bowl Subdivision and Division I teams have the privilege of participating in post-season bowl games—a far greater percentage than the approximately 20 percent selected in the NCAA championships in other sports (22 percent in baseball; 20 percent in men's and women's basketball; and 24 percent in men's soccer).

As for television, Scarborough Research initially reported three years ago that adult bowl game viewers are among the most prolific buyers—20 percent more likely to bank online and 28 percent more likely to have a money market account. Given this, their conference championships and bowl packages are a significant bargaining chip when America's top conferences sit down to negotiate their next TV rights deal with ESPN, Fox, and the broadcast networks.

Sometimes a loss hurts more in the wallet than it does on the field. Boise State's loss to Nevada, and the school's subsequent freefall to the Dec. 22 Maaco Las Vegas Bowl from a BCS berth, or even the National Championship Game, is estimated to have cost the school and its conference around $16 million.

3. What Do the Coaches Get Out of All This?

According to recent research published by USA Today, nearly half the 120 Bowl Subdivision head football coaches make $1 million annually, with a national average salary of $1.36 million. (The average head coach salary will drop after new hires Will Muschamp at Florida and Al Golden at Miami take over.) Here's a look, courtesy of SportsBusiness Daily, of the top five Bowl Subdivision head coaches' compensation:

COACH SCHOOL UNIVERSITY PAY NON-UNIV.PAY TOTAL MAX BONUS

Nick Saban Alabama $5,166,666 $830,683 $5,997,349 $700,000

Mack Brown Texas $5,100,000 $61,500 $5,161,500 $850,000

Bob Stoops Oklahoma $4,275,000 $100,000 $4,375,000 $819,500

Urban Meyer Florida $4,010,000 $0 $4,010,000 $575,000*

Les Miles LSU $3,751,000 $154,000 $3,905,000 $400,000

* Meyer retired in early December; new head coach Muschamp's compensation package has yet to be made public

As far as bowl games go, most coaches' contracts include some incentive clause for getting their team to a bowl. The California Bears played in the San Diego County Credit Union Poinsettia Bowl last year but are watching at home this season—head coach Jeff Tedford's contract, according to USA Today, calls for up to $1 million worth of increases over a contract expiring Dec, 31, 2015, if the team meets any of five goals, including a BCS berth and/or the National Championship Game. When Oklahoma head coach Bob Stoops wakes up on Jan. 1—the day he oversees a Fiesta Bowl matchup with University of Connecticut—his bank account will have an additional $1 million in it, according to the Tulsa World. "That's the annual New Year's Day bonus of $200,000, plus an 'Additional Stay Benefit' that was written into his contract last year," the newspaper claims. Stoops will reportedly be paid $4.875 million in 2011.

One football coach who missed jumping through two hoops this season is Texas A&M head coach Mike Sherman. While the Aggies have secured a berth in the AT&T Cotton Bowl on Jan. 7, Sherman contractually could have received "$100,000 for appearing in the postseason football game that is designated the national championship game," as well as being named the national champion by the Associated Press, according to USA Today.

Who says there's no longer any tension between the BCS and the polls?

Rick_horrow
Rick Horrow is a leading expert in the business of sports. As chief executive officer of Horrow Sports Ventures, he has been the architect of 103 deals worth more than $13 billion in sports and urban infrastructure projects. He is also the sports business analyst for CNN, Fox Sports, and the Fox Business Channel. Karla Swatek is vice-president of Horrow Sports Ventures and co-author of Beyond the Box Score: An Insider's Guide to the $750 Billion Business of Sports (2010). Horrow is also the host of Sportfolio, a new program on Bloomberg TV that airs Wednesday nights at 9 pm ET.

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