SI: Michigan made a profit by not going to bowls in 2008, 2009

Submitted by NateVolk on

 

http://sportsillustrated.cnn.com/vault/article/magazine/MAG1177192/1/index.htm

SI Article by Dan Wetzel and Austin Murphy talking about the economics of the BCS system quoting former AD Bill Martin on page 4.  Basically says that athletic departments and schools are big losers in the bowls and a playoff system is the post-season solution to the economic blood letting.   Check out Ohio State's profit from last years $18 million payout at the Rose Bowl.  

The thing that shocked me was the way the current system works.  The schools build in a loss to show up and play, while the bowls, cloaked as non-profit, make out like bandits. If you are pro-playoff, this article throws down some really good talking points.

***Side note: Mgo was talking about this issue referencing Wetzel two years ago. During my dark ages period:

http://mgoblog.com/content/unverified-voracity-makes-plans

jmblue

November 16th, 2010 at 5:15 PM ^

 Check out Ohio State's profit from last years $18 million payout at the Rose Bowl.  

OSU only pocked 1/11 of that money.  After expenses are covered, the rest of the bowl payout is split equally among Big Ten schools.

oriental andrew

November 16th, 2010 at 5:42 PM ^

Very next sentence, albeit on the next page:

So it would have been, if the Buckeyes actually got to keep the money, which they did not. The $18.5 million went to the Big Ten, where it was added to a pool of bowl revenue that was then sliced into 12 shares—one for each team, one for the league office. 

M-Wolverine

November 16th, 2010 at 7:54 PM ^

It may have changed, but my understanding was it's split 13 ways, one for each team, one for the conference, and two for the team that made the bowl. That way there is some reward to going to the Rose Bowl vs. staying at home.

Michigan4Life

November 16th, 2010 at 5:17 PM ^

is because there's a large payoff sum for the committee chairmen, AD and coaches.  Otherwise, the schools are likely to incur losses mostly because they can't sell all of the tickets out.  This is why BCS needs to go away.  There is a lot more potential revenues for the playoffs, approximately 700-800 millions dollars of revenues.

MaizeAndBlueWahoo

November 16th, 2010 at 7:17 PM ^

That's nonsense.  Where do you get a figure like that?  What a nonsensical paradox: every single member of college football fandom and the media decries and bemoans the NCAA's corporate-whore attitude and never-ending march to grubbing as much money as they possibly can by slapping corporate sponsorships all over everything, in the eternal quest for a couple thousand here and a couple thousand there.  Yet supposedly there's this bottomless gold mine to be had, a goose that shits golden eggs the size of boulders, and the corporate-whore attitude of the NCAA is preventing them from going after all that money?

That is the most implausible thing I've ever heard.  This is capitalism.  If that kind of money were there to be made, they'd find a way to make it.  Wetzel would have us believe Delany is this ruthless money-grubbing robber baron who refuses to make even more by finding a way to hold a playoff?  This is the same guy who took the BTN plunge with no guarantees and then strong-armed the cable conglomerates into seeing things his way.  So being scared to take the playoff leap isn't a problem here.

teldar

November 16th, 2010 at 7:53 PM ^

You get rid of 30-some bowl organizations and all their staff and expenses and have the ncaa run the bowls instead and there would be more money to subsidize all the members of the ncaa. I'm sure there is quite a bit of graft and corruption which could be gotten rid of to the schools' and athletes' benefit.

MaizeAndBlueWahoo

November 16th, 2010 at 8:01 PM ^

You don't see the legal issues of a takeover like that?  Particularly in light of the insane antitrust lawsuit the state of Utah is filing?

And there certainly isn't $800 million to be found by doing that.  There might be 15 or 20.  Might.  The NCAA is obviously not the picture of streamlined efficiency themselves, and I bet you the conferences and schools like getting their money from the bowls and not through the NCAA middleman, which will surely take its cut before the schools see any.

Don

November 16th, 2010 at 5:17 PM ^

to field inept teams in '08 and '09 for financial reasons. In fact, David Brandon is more likely to fire Rich Rodriguez now, since going to the bowl will cost UM an arm and a leg. RR has tried mightily to ensure another losing season, by making Troy blow out his ankle and persuading JT Turner and Vlad to leave and hiring GERG, but he didn't take into account that which cannot be quantified or accounted for: Shoelace.

MGoShoe

November 16th, 2010 at 5:20 PM ^

...what? 

Meanwhile, the sad sack programs that fail to qualify for a bowl often end up in the best financial position. As former Michigan AD Bill Martin said after the 2009 season, "The fact we didn't go to a bowl game the last two years means we actually made money."

While 2008 and 2009 were clearly god-awful years in the storied annals of Michigan football, I challenge Messrs Murphy to Wetzel to suport the assertion that Michigan's football program (vice its team) was "sad sack".

Bando Calrissian

November 16th, 2010 at 5:30 PM ^

Bowl trips are absurdly expensive, and Michigan had a string of quite pricey ones leading up to RR.  The Alamo Bowl was particularly bad, with plane travel costing a fortune at that particular point in time.  When you think about the cost of flying a good 100 football players, the coaching staff, their families, athletic department officials, cheerleaders, the MMB, support staff, factor in hotel costs, food costs, etc. etc. etc. it's amazing how much it turns out to be.

 

That being said, I'd rather lose money on a bowl than not go to one.

Zone Left

November 16th, 2010 at 6:22 PM ^

Bowl trips are absurdly expensive largely because the schools choose to fly the band and a lot of random folks to the games for extended stays in expensive resorts.  Teams could fly in the day before like a normal road trip, leave everyone else at home, and even the lowest payout bowls would probably be profitable.  I'm not saying it's right or wrong, but the expenses are largely of the school's own making.

--Obviously, there are contracts to do certain events, like the Rose Parade with the band, but conferences like the Big 10 have all the power in negotiating those contracts (hence the changed bowl tie-ins.

Michigan4Life

November 16th, 2010 at 6:28 PM ^

when a school can't sell out the allocated tickets for the bowl games.  They are left with losses already plus they have to pay for travel expenses for the team.  Even with lower tier bowl, the payout isn't large and the overall payout for the conference isn't large.  You're pretty much left with either a small profit or losses(most likely).

joeyb

November 16th, 2010 at 6:35 PM ^

His point is that they could fly down 150 players, coaches, and staff at $200-300 roundtrip (I'm sure they could get some sort of deal flying this many people). Double up on rooms for 2 nights at $100/night. That's about $50,000. Obviously, that is barebone, but it doesn't have to cost you millions to send your team to a bowl game. The schools choose to spend the extra money because they can.

Zone Left

November 16th, 2010 at 7:05 PM ^

They do, but the Big 10 or the SEC could basically demand whatever concessions they wanted from bowl games--particularly the mid to lower level games that aren't profitable.  Better matchups and name brand teams allow the bowl to make more off of TV and puts lots of butts in seats to satisfy local governments.  If the Big 10 said they wouldn't participate in any of the Citrus Bowl festivities or guarantee any ticket sales, the Citrus Bowl would still be thrilled to pay Michigan or OSU to show up and bring their fans to Orlando.

Bando Calrissian

November 16th, 2010 at 7:09 PM ^

Dunno about the "resort" part.  On the three bowl trips I went on, we stayed in normal hotels...  And squeezed in 4 people per room.  And, yes, there events like parades and pep rallies and such that require the Band's participation.  

 

If you want to get stingy, you could just "negotiate," but would you really want to be the first AD to leave the MMB at home?  

Zone Left

November 16th, 2010 at 7:37 PM ^

Was that as a student? Bowls like the Citrus or Rose came into being as a way to get people to build a family vacation during the holidays. This year, check out the official alumni package through the school, it'll be in a nice hotel with gobs of expensive tours and outings--we went once with my folks.

teldar

November 16th, 2010 at 8:03 PM ^

(the band, that was) we stayed in a very nice resort in st petersburg (i think) 4 to a 2 br suite. It was a nice resort. And we tooK a chartered flight down and back as well. No expense spared kind of thing. At least that was the way I felt. It was definitely more expensive a vacation than I had ever been on. I would guess that if we had paid for it ourselves, it would have been more than $1000, maybe close to 1500 each, for what we did and where we went. And that was 15 years ago.

M-Wolverine

November 16th, 2010 at 8:04 PM ^

Often the hotel they stay in isn't as nice as the team, or alumni one. Like the guy who said you could find a hotel room for $100 a night...in theory...but not in the hotels in the towns at the times the team is staying in.

Beavis

November 16th, 2010 at 5:38 PM ^

Say what you guys will about ESPN (myself included at times) but at least they do not split their articles up into 4 separate web pages as a way to increase clicks / ad revenue.

I figured most major sports websites would be beyond that, but hey, SI sure proved me wrong today. 

mvp

November 16th, 2010 at 5:47 PM ^

The article is pretty good...up until the OSU example.

Referring to how the big conference teams do, they point out that b/c OSU only got 1/12 of the money from their bowl, they lost $79,597.  They fail to include, however, the 1/12 share of all the other bowl games Big Ten teams attended!  (Or so it seems, I can't make the math add up.  1/12 of $18.5M is $1.5M, SI points out that they have $2.2M, which implies that the TOTAL received from all other bowl bids was $7.9M, which just doesn't sound right.)

The part about the ADs asking for more bowls, even though they know they'll lose money, so that they get their bowl bonuses is pretty galling.  It just points out how people, as a rule, will work to maximize their self interest, even at the expense of others.

MrVociferous

November 16th, 2010 at 5:59 PM ^

In the BCS system, the 1st team from the conference earns the conference the $18.7M, and the second team earns the conference a smaller payment.  From what I remember, $7.9 sounds about right.  I don't think schools get much of anything from non-BCS games.

joeyb

November 16th, 2010 at 6:19 PM ^

From what I can tell, the autobids get 18.5 and the at-larges get less ($4.5m?). Capital One - 4.5, Outback - 3.3, Alamo - 2.25, Insight - 1.35, Champs - 2.25,.

That totals 36.65 or around $3 million per school. Take away tickets that the schools couldn't sell and that's probably how they got down to 2.2m.

joeyb

November 16th, 2010 at 7:16 PM ^

Everywhere else I am seeing $17m instead of 18.5 and I forgot the 2 in 4.25 for the capital one bowl. There is $150k from each school. I still don't know where the other 700k or so went.

M-Wolverine

November 16th, 2010 at 8:10 PM ^

The article has a side mention of it, but you can't account for losing 11/12th's (or 11/13th's - see above) without taking into account getting 1/12th of every other bowl. Which they kinda gloss over. It's not too hard to lose money, depending on the smaller bowl payout, or extra VIPs for the big games...but it's not losing money hand over foot. You may have no expenses for not going to a bowl, but when you factor in less merchandise sales and stuff for having crappy seasons, Martin's quote makes a good sound-byte, but isn't completely accurate.

MaizeAndBlueWahoo

November 16th, 2010 at 7:21 PM ^

 It just points out how people, as a rule, will work to maximize their self interest, even at the expense of others.

But this would not happen under a playoff.  It would be as pure as the driven snow and NOBODY would seek to expand the playoffs so more teams could get in.  A playoff would be held purely for the sake of competition and money wouldn't be a factor.

mvp

November 16th, 2010 at 8:30 PM ^

However, if you ALIGN the interests of the ADs with that of the student athletes and the school as a whole, you'd get a better result.  It is also true that you could better align incentives under the current system.

One of the key takeaways from the article is that the biggest reason the system survives is that it is in the interest of bowl presidents.  The ADs, and the NCAA as a group, have ceded power, and as a result, lots of money, to the bowls.  The bowls have an interest in keeping that power.

cutter

November 16th, 2010 at 5:58 PM ^

I just read Dan Wetzel's book "Kill the BCS" and it tells a pretty damning tale about how the Bowl Championship Series is set up.  If you can't purchase the book, then I recommend going to the following website for excerpts, interviews, etc.

http://cfbexaminer.info/2010/10/18/episode-24-dan-wetzels-plan-to-kill-the-bcs/

There are a couple of mentions of Michigan in the book and one about this blog.  Besides Martin talking about how the athletic department made money by not going to a bowl due to the revenue sharing formula in the Big Ten, he also discussed how difficult it was to get an opening day opponent this season.  Martin said he spoke with a large number of schools before getting an agreement with Connecticut because the major programs weren't willing to schedule Michigan and chance the early season loss.  Wetzel points this out as one of the problems with the current system and advocates a playoff in part because it means teams would be more willing to improve their non-conference schedules.

MGoBlog also gets a mention when Wentzel describes how the coverage of college football has blossomed through the internet.  The sport is now followed in one form or another year round rather than just during the regular season.

Wentzel's basic contention is that a playoff system would be extremely lucrative--he cites a couple of sources saying college football would get about $750M through a playoff system that's run separte from the bowls.  He advocates a 16-team playoff with the eleven conference winners getting an automatic bid with five at large teams.  The first three rounds of the playoff would be played at the home stadium of the higher ranked team.  The championship game would be held at the Rose Bowl each year.  Those teams not part of the playoff system would participate in the bowls.

With the bowls and televison paying a little over $200M per year,  why do the conferences continue to stay with the BCS and not take the higher payout that a playoff would present?  Simply put, it would mean the conference commisioners would lose control of the college football postseason to the NCAA.  Jim Delany comes in for a lot of abuse in this book--Wetzel states that Delany's strategy in protecting the Big Ten's interest is to make sure the conference (and all the BCS conferences) gets the biggest slice of a smaller pie and he's the one holding the knife.  It's essentially a strategy of starving an competition from resources in order to keep your entity (the Big Ten) at the top of the heap.

Wentzel points out that most all the bowl games cost the universities more than they pay to the schools.  He cited, for example, the most recent Insight Bowl where Minnesota was paid $1.2M by the bowl, but had expenses of $1.8M.  Those expenses included tickets the school had to pay for (and weren't able to sell) plus sponsorships that Minnesota had to pay for as part of their bowl participation.   The BCS bowls  do pay a lot of money (over $17M), but that money goes to the conference and is doled out to all the programs in the Big Ten after an allowance is made for bowl expenses--that's why a school like Michigan would actually make more money not going to a bowl than actually participating.

The reason why there are a lot of bowls is they're money makers and they're lucrative to  the organizers.  Athletic directors and coaches like them as well because part of their compensation is tied into bowl pariticipation.  It's kind of a sweetheart deal for those close to the system, but it's not optimal for the fans (the majority of who probably want a playoff) and it's not a great system for the universities when you consider how much money is being left on the table.

 

 

 

MaizeAndBlueWahoo

November 16th, 2010 at 7:08 PM ^

You lost me at Wetzel's claim that a playoff would cause better nonconference scheduling.  Both pro and anti-BCS people make this claim and it's horseshit both ways.  When Boise State finishes their season unbeaten, people will claim that's reason enough to include them in a playoff and reason enough to have one.  When Tulane finished its season unbeaten, the same thing happened.  A playoff will not encourage better scheduling.

The best programs always fill up their stadiums even by playing the worst games.  Therefore there's no incentive to schedule better ones.  Period.