Wednesday, April 25, 2012

UConn Paper: Schools lose money in BCS

image In a very thorough investigative piece on schools’ financial exposure to BCS bowls, the UConn Daily Campus lays out the bottom line impacts of the extravaganzas and concludes what many already knew—the BCS bowls are not cash cows for their participants.

Specifically, large chunks of cash come out of program coffers for mandatory ticket allotments and mandatory lodging requirements, both stipulations imposed by the bowls themselves. The schools are unable to negotiate their own accommodations and face minimum required stays (eight nights for UConn’s trip to the 2011 Fiest Bowl, where it lost an estimated $1.9 million).

Other findings from the Daily Campus review:

  • Schools that participated in the BCS between 2010 and 2012 lost close to $130,000 on average. If you factor in the cost of unsold tickets that conferences bought up, that number jumps to over $400,000.
  • On average, schools spent $2.3 million at BCS bowl games, including $576,009 on transportation, $764,948 on meals and lodging, $420,778 on unsold tickets and $559,971 on other expenses, such as awards, entertainment, promotion and equipment.
  • The last three national champions all lost money. In 2010, Alabama lost $1.86 million at the BCS National Championship game. In 2011, Auburn lost $614,106, and this past year, Alabama lost $1.9 million.
  • More than half of all teams whose data was available (16 of 26) incurred greater expenses than revenue at their game. Five of those teams ended up posting small profits after their conferences helped buy up tickets, and the remaining 11 posted losses.

While it’s true that the participating schools have little chance of making money on a BCS Bowl trip, the real bottom line is that the bowl system is highly profitable for both the bowls and the conferences they’re aligned with.

At its annual Destin, Florida meetings In June 2011, the Southeastern Conference distributed a record $220 million in sports-related revenues, including $31.3 million from bowls. The revenues distributed did not include the bowl payout money retained by each of the participating schools, which came to about $14.2 million total.

The average (total) distribution was about $18 million each.

In what’s clearly a case of the “haves” vs. the “have nots,” the BCS and the revenue sharing system works pretty well for the SEC. Maybe it doesn’t work so well for other conferences and their member schools.

As this entry goes to the innnerwebs, the commissioners of the BCS conferences are meeting in a sunny Florida location, where they are expected to at least come up with a new and improved college football postseason that includes a four-team playoff (we’re optimistic that they will, anyway). That system has the potential to more than double the amount of revenue generated by the conferences and schools.

While it’s true that individual programs lose money in BCS bowls, they end up made more than whole when the final packages are handed out in the offseason.

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