Playoff would be a big moneymaker

Through the years, discussion of a college football playoff system has been full of unknowns. But this much is certain: should the BCS bowl system be chucked in favor of a playoff, a financial windfall will follow.

Economists and television consultants value a playoff system around $600 million to $1.5 billion per year, depending on the number of teams included. That’s a major increase from the more than $125 million per year the BCS currently receives annually from its contract with ESPN for the national championship, Fiesta Bowl, Orange Bowl and Sugar Bowl. The Rose Bowl’s contract with ABC generates another $30 million per year.

Neil Pilson, former president of CBS Sports, said competition between networks to carry a college football playoff will lead to a big pay day, because airing playoff games would provide new business opportunities for networks in addition to showcasing a long-awaited event.

Television isn’t just about value in the sense of between 1 p.m. and 4 p.m. you can sell X number of commercials and that’s your revenue stream,” he said. “Sports on television today is about building businesses. The big deals now are supported by creating new business opportunities.”

Pilson cited the CBS/Turner bid for March Madness as an example of how sports television deals have ballooned -- not only because of the money that can be made from advertising but because the package of games can be a foundation for larger business opportunities.

“Turner saw new business opportunities -- growing truTV and higher [subscription] rates for TNT and TBS,” he said.

If a college football playoff comes up for bidding, Pilson envisions it will again be about which network or networks can use the property to also embark on new business opportunities. He compared it to the recent $2-billion Los Angeles Dodgers sale, which many believe reached historic proportions because of the chance to build a television network around the team.

“I think a college football playoff is the last big American sports event that hasn’t happened yet,” Pilson said. “It’s like creating beachfront property.”

Advertising rates as a major revenue producer shouldn’t be discounted, as experts agree those will skyrocket compared to current rates for BCS games.

Kevin Adler, who consults with Fortune 100 companies as founder of Engage Marketing, said he believes a current sponsor in college football would jump at the chance to be the title sponsor of a new playoff format, even at a much higher cost.

“The likelihood is one of the existing brands who invests heavily in the collegiate sponsorship space would step up before anyone new had the chance to get in -- someone like Allstate or AT&T,” he said.

Pilson said advertising rates could increase from 25 to 40 percent, and broadcast ratings by up to 50 percent.

“The fact that it’s such a long-awaited property -- you’re not really selling the [cost per ad view] or the rating. You’re selling participation in a great American event about to happen for the first time,” he said.

Andrew Zimbalist, an economics professor at Smith College who has authored numerous books on sports economics, said looking at the NFL’s regular season ratings versus post-season ratings show the value of a playoff.

“You’re talking ratings that go up three-and-a-half to four times from the regular season to the postseason,” said Zimbalist.

The timing of the playoff games would also be an economic factor. Some of the larger playoff proposals would have games starting in December so later playoff games wouldn’t end up competing for fans with the NFL playoffs. But the best timing for networks would be after Jan. 1.

“The Christmas week is a soft economic marketplace,” Pilson said. “All the Christmas spending has taken place and advertiser budgets are depleted by the end of the year.”

A Jan. 1 start would also alleviate potential conflicts with existing bowls. What happens to existing bowls has become a political issue.

Yet Jim McVay, president of the Outback Bowl, isn’t too worried.

“I don’t think there’s any threat the bowl games are going away,” he said. “If you look at the various scenarios being reported in the media, they’re all talking about four teams.

“I do not speak for the bowls or the BCS or the commissioners, but that seems to be what’s being reported. To speculate as to whether there would be bowl games or whether there would be political pressure to keep them, I don’t think we’re in that situation.”