🐣 Our Little College Football Playoff is Growing Up

Auf Wiedersehen, goodbye…4-team College Football Playoff

Cue the music:

Wow, can we take a moment and recognize Vitamin C here. She really knew how to get her listeners to shed a tear and trigger music-evoked autobiographical themes and memories such as “starting over” and “leaving traditions behind” back in 1999 didn’t she 🥹? Alright my bad, we’re done talking about musical lyrics in this post. However, this year we will be saying goodbye to…the 4-team College Football Playoff.

The 4-team College Football Playoff will soon be the 12-TEAM College Football Playoff, which is set to debut next season. But why is this happening? Does this mean mid-tier bowl games like the Duke’s Mayo Bowl and Pop-Tarts Bowl will cease to exist? Will this end up being March Madness but for football? Let’s break it down…

How did the College Football Playoff (CFP) come about?

• Without going down too big of a college football rabbit hole, the CFP was created in 1999. The postseason was named the Bowl Championship Series (BCS) which consisted of five main bowl games (Rose Bowl, Sugar Bowl, Fiesta Bowl, Orange Bowl, and BCS National Championship).

• The teams selected to participate in these games were determined by (1) averaging a set of rankings/polls (final weekly Coaches’ Poll, the Harris Poll, and six computer rankings) and (2) discussing these equations and results in individual bowl committees from the automatically qualifying champions of the “Power Five” conferences (ACC, Big-12, Big Ten, Pac-12, and SEC) + four at-large teams. Complicated right? 😵‍💫 The entire world thought so too, and along with several controversies, this selection method only lasted 15 years.

• In 2014, the CFP debuted a new selection method. Here, the rankings were determined by a 13-member selection committee (hello, former Secretary of State, Condoleezza Rice!) which ranks the top 25 teams in the country. In short, the top four teams head to the CFP.

How will the new 12-team CFP work?

• The playoff will include the six highest-ranked conference champions, which will receive automatic bids. The top four teams will receive a first-round bye to the quarterfinals and the first-round games would be played on campus sites. The six highest-ranked teams remaining will round out the 12-team format.

• However, playoff formatting details will need to be reviewed again as the “Power Five” conferences might become the “Power Four” since the Pac-12 conference has essentially self-destructed because the majority of their schools have left for greener 🤑 pastures.

Now that we understand the formatting, what are the financial implications of this expanded playoff?

• Media Rights: The current contract with ESPN pays out an average of $470 million per year. The next deal, starting in 2026, could likely be worth north of $2 billion annually as networks and streamers such as Apple, Amazon, NBC, ESPN, Fox, and Warner Bros Discovery have all expressed interest in buying a piece of the playoff media rights.

  • In the meantime, the CFP will have a nice trial period for 2024 and 2025 as the first round games are still on the market (polish up those bid cards!). And ESPN still holds the rights for the quarterfinals, semifinals, and championship.

• Conference Payouts: Right now, the revenue distributions for the Power Five conferences, are relatively close and have been this way since the 2014-2015 season (see Table 1). But let’s break it down further:

  • Majority of the money goes toward equal base payouts received by all Power Five conferences, regardless of on-field performance (~$80 million each).

  • A smaller payout is awarded to conferences for each of their schools that reaches a national semifinal bowl ($6 million per team).

  • An additional $4 million for each team that plays in one of the other CFP-operated bowls (this year: Cotton Bowl, Peach Bowl, or Fiesta Bowl).

  • And don’t forget the ~$3 million per team to cover expenses for teams selected to the CFP + other CFP-operated bowls.

  • As an example, last year the SEC pocketed $27.5 million from Tennessee’s Orange Bowl appearance and another $40 million from Alabama’s Sugar Bowl bid 😳.

What could happen to all the weird-sponsored bowl games we grew up watching?

• You might have seen the Pop-Tarts mascot go down a 20 foot toaster and come out as an edible human-sized Pop-Tart for the winning Kansas State football team. But besides genius marketing, what does the expanded playoff format mean for mid-tier bowls?

• We have already seen a swing in recent years of players opting out of these games due to the transfer portal and not willing to risk injury and ruin their chances at getting selected at the NFL Draft or losing NIL deals for the following year. Even though this could still be a fear for the CFP, there is an incentive for players to win a National Championship. The mid-tier bowl games, don’t possess that incentive.

• Overall, the money drives it all. No surprise there. It’s exactly why there are 43 total bowl games (some of which you have never even heard of) that occur from mid-December through the National Championship Game.

  • As seen after nearly 30 years of games, the Valero Alamo Bowl surpassed $1 billion of total economic impact in 2022 due to increased number of visitors spending money at restaurants, hotels, and merchandise as well as tax dollars generated for the host city.

Where could this lead?

• Mid-tier bowls will still exist: Until we see a dramatic decrease in viewership and company sponsors continue to shell out cash, these games will still occur and the Pop-Tarts mascot will keep getting toasted.

• The NCAA taking notes from the NFL: It’s not quite plagiarizing but with the new media rights deal approaching in 2026, we might see the NCAA take a page from the NFL playbook and have networks/streamers bid on each CFP round. What’s stopping them from giving Apple the rights to Round 1, Fox the rights to Round 2, etc.? This will only increase revenue distribution for each conference and team. Who’s to say that money won’t trickle down to the players through their NIL deals at some point?

• Viewership has never been higher, and will only climb: The Michigan-Alabama semifinal averaged 27.2 million viewers, according to Nielsen’s fast nationals, peaking at 32.8 million. Which made it one of the Top 10 most-watched cable TV telecasts of all time. Add in more playoff games, with incentives to win a National Championship, and teams playing on campus sites in Round 1 to add more drama…I mean come on 🥵

Quick Hitters

• ⛹🏻‍♀️ The NCAA and ESPN announced a $920 million, 8-year agreement that will give the network exclusive rights to 40 championships, including the Division I women’s basketball tournament (we’re not worthy Caitlin Clark!). The tournament accounts for about 57% of the deal, or $65 million annually, according to the NCAA. That’s 10x what it was valued in ESPN’s prior contract.

• 🐅 Tiger Woods and Nike have agreed to part ways after a 27-year partnership, upwards of $500 million in total payments, and billions of dollars in sales generated from his line— the endorsement deal was one of the longest and most lucrative in sports. What a run from the GOAT!

• 🦚 Peacock, the NBC streaming service, will exclusively air the wild-card round matchup between the Kansas City Chiefs and Miami Dolphins. The game is set to only be aired on NBC stations in Kansas City and Miami, so good luck watching the game if you don’t have Peacock! (who the hell uses Peacock for anything more than binging The Office anyway?). Peacock paid the NFL nearly $110 million to air the first-ever, live-streamed NFL playoff game and the NFL was purposeful to use it on one of the better matchups of the weekend 🙄.

• 🏈 Football is King. Sorry CSI: Vegas fans. In 2023, per Nielsen, the league accounted for 93 out of 100 most-watched TV broadcasts, an increase from 2022’s tally of 82 and a massive leap compared to the 61 slots five years ago.