Five consequences of a college football playoff that nobody is talking about

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While the members of the sports media are busy congratulating each other over the long-sought victory against the evil Bowl Championship Series (BCS), they are failing to recognize the real changes happening in college football that started years ago and will continue with or without the BCS. In fact, we will argue that the elimination of the BCS actually accelerates a number of trends in college football – trends that few if any members of the media are talking about.

1. The gap between the “have” and “have-not” programs in college football is widening, and the number of “have” programs is shrinking.

One of the main arguments against the BCS over the last decade is that it left out the little guys. Whether it was Utah, Boise State, TCU, Marshall or whatever, the BCS just wasn’t fair. How could you leave out an undefeated team was the question screamed from the newsroom of most media outlets.

With the fairness meme being pushed by the game’s columnists, it was assumed and often articulated that a move to a playoff system – a system that determines a champion on the field and not via a computer formula – would cure these ills.

By opening up the field to more than just the #1 and #2 teams, we can have more of an opportunity to bring in the little guy and he can have a chance to win a real championship against the big boys. Right? Wrong.

college football playoffSure there might be a fluke year where the Boise State gets in, but by and large, the system will remain the same. The major conferences will supply the four teams. There will be an emphasis on schedule and on winning a conference championship. This will significantly favor the large conferences, specifically the “Big Five” of the Big Ten, SEC, Big-12, Pac-12 and ACC (for now).  The big conferences call the shots, and their self interest is a major factor in implementing the new system.

Now, let’s discuss an aspect of the playoff which the media continues to get wrong. A common argument since the framework for the 4-team playoff was announced is that we are essentially moving from five BCS bowls to six. There will be 2 semi-final games and 4 BCS-like bowls. Six bowl venues will be in play, and two of the six will host the semifinal games each year (rotating). The view is that it will be easier for the small guys to get into the major bowls now. With an extra bowl, this is true. However, it isn’t as significant as many think.

The reason it doesn’t change anything is this: As you increase games that matter, the games that don’t matter become even less relevant. By moving from one national championship game to two semifinal games and one final championship game (a total of three games), the other bowls – even the ones near the top – become less interesting. As a select few games become more interesting, the rest become less interesting. It doesn’t matter if Boise State gets into the sixth “championship” bowl game because they still aren’t in the playoff.

A corollary to this rule is that as money concentrates at the top, less money goes to the other teams. The media is right that the playoff will drive more revenue. As interest increases for the two semifinal games, these games become very lucrative. However, just as our interest will wane for the other bowls/games, the money will slow as well.

There’s no better example of this than the recent news surrounding the Rose Bowl and the Orange Bowl. Sports Business Journal reported last Monday that ESPN will be paying $80 million annually for the rights to the Rose Bowl through 2026. This is a 167% increase from the roughly $30 million annually that the Rose Bowl rights command now! This is incredible.

Meanwhile, the Orange Bowl is fighting for relevancy by attempting to woo Notre Dame into committing to the Orange Bowl in the future. The Orange Bowl is coming off a 32% decline in ratings from the previous season. Wait, I thought all BCS Bowls are equal? Clearly the Rose Bowl is on another level.

This dynamic will continue to benefit the top programs and accelerate the gap between the haves and the have-nots.

The number of teams that are at the top is shrinking as well. We’ve already seen the Big East essentially get kicked out of the club. We went from six conferences with AQ-status and a handful of teams that might be able to get in from time to time to four big boy conferences, one fighting to stay in the room, and a handful of teams that might be able to get in from time to time.

Oregon new facilitiesThe big question is what happens with the ACC. As the spread between the haves and have-nots widens, the football powers in the ACC will likely feel the pressure to seek a better conference that will reward its status as a football power. Teams like Clemson, FSU and Virginia Tech don’t deserve to be on the same financial level as Duke, NC State and Syracuse. The ACC will break at some point. The economics are unavoidable. When that happens, the number of “have” programs will shrink even more.

You can see evidence of this widening spread at the school level by looking at schools like Oregon and Maryland. Oregon is building bigger and badder facilities while Maryland is cutting sports.

Oregon, a clear “have” program backed by Nike’s Phil Knight has broken ground on some incredible new facilities:

The new center will feature two skybridge-linked buildings — on the north and east sides of the Casanova Center — that will rise six stories on top of underground parking.

Opening day is set for fall 2013.

Blueprints submitted by the builders to the city of Eugene show that the new complex will continue the trend of jaw-dropping, donor-funded opulence set by previous Duck athletics construction projects. The new center will, for example, feature nine dedicated classrooms, each for a single key position on the football team, from quarterback to inside linebacker.

Football coach Chip Kelly will have a private hot tub next to his office with a waterproofed video center, so he can watch games while taking a soak.

The new football complex is the latest in a 14-year UO athletics building binge that brought: One, the West Coast’s first collegiate indoor practice football field, according to the UO; two, a stadium upgrade with lavish skyboxes; three, an athletic medical center with submerged treadmills and a trendy nutrition bar; four, a $227 million basketball arena; and five, an exclusive academic study building for athletes erected at the gateway to campus.

The new football building will be top-of-the-line “pro or college, in the U.S.,” according to the UO’s official athletics website. The addition will push UO facilities to “outrageously impressive,” according to ESPN’s ranking of college facilities.

Meanwhile, Maryland, one of those programs in the country lost in the middle and liking eventually on the outside looking in is facing massive financial shortfalls:

With its multimillion-dollar deficit mounting and no deep-pocketed donor to cover the shortfall, the University of Maryland’s athletic department will proceed with plans to cut at least seven of its 27 varsity teams this weekend. The downsizing is an attempt to correct an unsustainable pattern many households know well: Spending more than you earn.

The remaining four consequences are by-products of the widening gap we have just outlined and require less explanation.

2. Most bowls will become like the NIT basketball tournament

What does it look like to have two forms of a postseason where one is relevant and the other is not? Look at the NCAA basketball tournament and the NIT. I can’t tell you the last time I watched an NIT basketball game.

The media always point to basketball’s “March Madness” as a perfect system, but fail to address the negatives of the system (which are many). Moreover, you can’t compare a 64-team basketball tournament to a football playoff. They are different sports with different economics. It’s much more expensive for a football team to travel, adding games is a much bigger issue for football for health reasons, etc.

Additionally, the NIT is an important factor. The NIT provides a second tier playoff for those left out. It’s pretty meaningless, but it provides the rest of the teams with something to do. While you can’t compare basketball to football directly, you can compare the fan interest level of the second tier postseason for both sports. Over time as fans get more and more into the college football 4-team playoff, the remaining bowls will become increasingly NIT-like.

We’re already seeing this to a certain degree. The over-supply of Bowls is evident and ratings are down for most bowl games.

The idea that if football is good, then more football is better is a fallacy. An over-supply of meaningless games is not better for the fans. Preseason NFL, the vast majority of MLB baseball and most of college basketball is irrelevant and unwatchable. The bowl system is following this path as we transition into a 4-team playoff.

3. Expect to pay more for your cable bill

ESPN cable billAs we referenced above, it’s reported that ESPN will be paying $80 million annually for the Rose Bowl rights. As a more defined subset of college football games draws the majority of eyeballs, ESPN will ensure that they have the rights for these games. They will pay whatever is required in order to get the rights. The reason they can do this is because you will pay whatever you have to for your cable bill in order to be able to watch live college football.

The only thing keeping the current cable television model from collapsing is live sports. Until we have a way to watch live sports outside of paying increasing monthly cable bills, this trend will continue. Few people know that ESPN is one of the main profit drivers of Disney. Yes, cable subscription revenue is a larger earnings growth driver of Disney than theme parks, cruise ships and movies. And live sports is the key to that growth continuing.

What does this have to do with a playoff? Again, it’s about our attention being pointing to a select few football games. These games will be must-see television and a good portion of the other games will be completely uninteresting for the masses. ESPN will pay more money than anyone thinks right now for these must see games. You will pay your cable bill in order to watch them. You’ll also probably have access to a bunch of games and television programming that you have no interest in. In other words, your current cable arrangement will remain the same, just cost more.

4. Some football programs will likely go under

Conference realignment isn’t just about making a little more money by being affiliated with another conference. It’s about program survival. As we mentioned above, Maryland is a great example of an athletic’s program that is in real trouble.  The same article above mentioned that only 22 of the 227 Division-1 public universities made money from their athletics departments.

As the gap between the haves and have-nots widens, the have-nots are not able to compete against the top teams. The top teams will build bigger and better facilities fueled by increased television revenues. The top teams will get most of the top talent across the country (what else are cool facilities useful for?). The top programs will be watched by millions on television which further accelerates the trend.

The end result could potentially be that the have-not programs merge with the FCS schools leaving only 40 or so teams in the top subdivision.

The economics doesn’t work for programs if their shared television revenue is cut drastically. With strained state and school budgets, an expensive, noncompetitive, irrelevant football program could be an easy target in the future.

5. The NCAA is increasingly irrelevant

Another interesting angle here is how irrelevant the NCAA is in all of this. In fact, they’ve been irrelevant in the vast majority of issues dealing with college football for some time. They don’t run the postseason. They handle eligibility and violations for the most part.

As the power conferences continue to consolidate power and manage their own affairs including taking over the bowls as well, the influence of the NCAA continues to diminish. As of this writing, it’s being reported that the Big Ten is now even considering assuming disciplinary powers where the conference could fire a member school’s football coach. Again, the power is shifting towards the conferences.

It’s indeed a fascinating time in college football. The landscape should continue to shift and change in the years ahead. Whether it’s the conference affiliation or the postseason format, these are parts of the larger trend in that the number of relevant football programs is decreasing.

With arguably the top conference with regards to football and perhaps the most powerful man in college football in Commissioner Slive, the SEC stands to benefit much from such trends. Like the Pac-12 and Big Ten will benefit from a new Rose Bowl deal, expect more money to hit the coffers of the SEC and its member programs. College football will continue to change, but you can expect the SEC to remain at the top.

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