Who Stands to Benefit From the Switch to College Football Playoffs?
For college football fans, we're closing in on the most wonderful time of the year -- in addition to some great games, we'll get mid-December "classics" such as the Little Caesars Pizza Bowl and the Royal Purple Las Vegas Bowl, followed by endless complaints from fans, pundits, coaches, and even Internet memes about the inherent unfairness of the Bowl Championship Series.
Originally adopted in 1998 and tweaked thereafter, the current BCS framework was established in 2006, and contains four BCS bowls, plus a title game. But the BCS is gone after this year, and will be replaced by an even more simplistic acronym: the CFP, or College Football Playoff. Seriously, that's what it's called.
Now, it's worth analyzing some of the potential winners from this new system. After all, college football is a multi-billion dollar business with power conference schools like Alabama and Ohio State routinely taking in over $100 million a year in revenues from the sport.
The Wall Street Journal estimates that TV rights deals alone are responsible for $25.5 billion in revenue over the next decade-and-a-half, and according to most statistics, media fees only represent 2% to 10% of all money Bowl Subdivision (Division I-A) schools make from football. Other major sources of income include ticket sales, donations, branding, and various bowl-related revenue-sharing agreements.
As you'd probably guess, there are quite a few parties who are happy the BCS is giving way to the CFP for the 2014-2015 season and beyond.
For starters, there's better football to watch during the New Year's holiday. The new playoff format will consist of two semifinal games on Jan. 1, and four additional bowl games around this date. In its first year, the Rose Bowl and the Sugar Bowl will host the semifinals, while the Orange Bowl, Cotton Bowl, Fiesta Bowl, and Peach Bowl will also be included in what's been described as the "New Year's Six" for marketing purposes.
Including the top four playoff contestants, this slate of games will feature 12 elite teams over a two-day period that's historically been one of the year's best from a TV ratings standpoint.
In terms of high-quality matchups, there's also a significantly greater level of concentration during the New Year's holiday than normal. Under the current format, no BCS games are shown on Dec. 31, and just two are aired on the following day.
TV ad titans
This is ultimately a win for all of the schools involved, and for advertisers as well. Data from Kantar indicates that Aflac , GM , and AT&T are three of the largest college football marketers in terms of broadcast ad dollars spent, and industrywide spending was above $1 billion last year after sitting near the $800 million mark as recently as 2010.
Of this trio, AT&T and Aflac have added prominence in this world because of the specific sponsorships they maintain. The latter, which spends about 10% of its total ad budget on college football TV spots, also sponsors the Heisman Trophy. AT&T, meanwhile, has naming rights to the Arlington, Texas, stadium responsible for hosting next year's inaugural CFP title game.
The privately held Chick-fil-A, which sponsors the Peach Bowl, is another major victor in the marketing circuit, and it will gain prominent exposure as a rotational host of a CFP semifinal game every three years, in addition to being featured on the New Year's holiday.
ESPN is also a clear winner because they have a contract through at least 2025 to broadcast all playoff games. Over this 12-year period, the network, whose majority owner is Disney , bought media rights to the entire CFP postseason system for a little over $7 billion, roughly $600 million per year.
While total costs are significantly higher than the $123 million in annual fees ESPN paid for exclusive BCS rights over the past four years, it's still cheaper than the $770 million yearly rate that CBS and Time Warner's Turner Sports pay for the rights to broadcast NCAA March Madness.
Working out the kinks
Of course, there will always be downsides to any system that ranks athletic performance in a matter-of-fact manner, and the new college football playoff format is not immune to criticism. Instead of weekly rankings that are based on a computer algorithm, the CFP will be determined by a 13-person selection committee that will meet several times a year. As we've seen in men's college basketball, we can still expect issues.
Instead of hearing complaints from a No. 3-ranked Bowl Subdivision team that thinks they should've been considered for a BCS title game, we should prepare ourselves for the drama surrounding the No. 5s that won't make the four-team playoff.
Furthermore, while one mid-major team is guaranteed a spot in the New Year's Six, there's no promise that the performances of smaller schools will receive adequate playoff consideration from the selection committee. With no direct input from mid-major athletic directors in the 13-person group and representation from ADs within the SEC, Big Ten, Pac-12, Big 12 and ACC, interests of the little guy could get squashed.
Still, both of these kinks have easy solutions that can be made in the coming years.
First, by extending the playoff system to eight teams, there would likely be less criticism from the schools that don't make it. Obviously, there will always be a odd man out, but that argument gets significantly weaker as the field is expanded. Additionally, if at least three of the selection committee spots can be given to mid-major ADs instead of celebrities like Archie Manning and Condoleezza Rice (yes, they're both on the exclusive list), the CFP can assure fans that all teams receive fair judgment.
On the whole, there are mostly winners from college football's new post season format, and it's not just ESPN and ad titans like AT&T and Aflac who are feeling cheery. If you've ever curled up on New Year's Day in search of something to watch, the New Year's Six will have a better chance at curing your hangover than the current mishmash of poorly named bowl games ever could.
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The article Who Stands to Benefit From the Switch to College Football Playoffs? originally appeared on Fool.com.Fool contributor Jake Mann has no position in any stocks mentioned. The Motley Fool recommends Aflac, General Motors, and Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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