Bowling For No Dollars: College Bowl Game Economics

College football fans will get to enjoy the BCS National Championship Game on Monday night, but before Auburn and Oregon take the field a few more bowl games will give us our pigskin fix. There’s one legendary one left (the Cotton Bowl) and three with, er, somewhat less storied histories (the GoDaddy.com Bowl, the BBVA Compass Bowl, and the Kraft Fight Hunger Bowl).

During these broadcasts, you’ll probably hear a lot about the payouts the schools get for their bowl appearances. Alabama and Texas raked in over $18 million for their appearances in last year’s title game, and Auburn and Oregon are set for even sweeter paydays. How does this money get doled out, though? Let’s take a look.

© Chris Williams/Icon SMI/Corbis

Before delving into the real economics of the situation, it’s important to note that the idea of a school receiving the bowl’s nominal payout is a bit misleading.

Alabama’s aforementioned $18.9-million bonanza didn’t come in the form a novelty check that the Crimson Tide hauled back to Tuscaloosa and deposited at their local bank. Instead, the payment goes to the schools’ conferences. The conference slides some cash to the team that played in the game and then divides the remaining payout into equal shares for all of its member schools That means Vanderbilt's share of Alabama’s take was in the neighborhood of $1.25 million. In the end, Bama only took home around $1.925 million of its payout, plus reimbursement for travel expenses.

Unfortunately for conference members, though, this revenue-sharing sword cuts both ways. While the big BCS bowls have hefty eight-figure payouts, minor bowls can’t toss around that sort of cash. Tonight’s GoDaddy.com Bowl will only pay Middle Tennessee and Miami University $750,000 apiece.

Although $750,000 isn’t anyone’s idea of chump change, it’s a rotten financial deal for the schools and their conferences. The teams don’t totally foot the bill for any losses they turn by going to bowls; their conference mates do. Basically, conferences put all of the payouts from all of the bowls in which their teams appeared in a big pot. They then reimburse the bowl-bound teams for whatever expenses they incurred. Any leftover cash is then divvied up among the member schools. Thus, if Kentucky loses money on Saturday’s BBVA Compass Bowl, Auburn’s hefty payout from appearing in the BCS Championship Game will help subsidize the Wildcats’ losses.

TicketCity Bowl image courtesy of @bubbaprog via @darrenrovell

Conferences having to cover large losses is shockingly common. Curtis Eichelberger wrote a great piece for Bloomberg on December 23 in which he used public records to show at least 13 state schools actually lost money on their bowl games last year. Some of the losses are astounding; Fresno State went $390,000 into the red for the privilege of losing the 2009 New Mexico Bowl.

How is playing in a bowl game such an awful economic proposition? The problem starts with ticket sales. Schools can’t just earn a winning record and show up for a bowl game. Bowl invites are obviously a nice feather in a program’s cap, but they come with a pretty onerous catch: the school has to buy up a large block of tickets for the game. It can then recoup its expenses by selling the tickets to its fans, but it’s a fairly stout financial commitment for any program to make. Most bowls require schools to buy at least 10,000 tickets at full price, and even the less expensive tickets can run close to $50 apiece.

This arrangement is terrific for the bowl committees. They know that before the box office ever really opens for fans, they’ll already have at least 20,000 or so tickets sold. Schools aren’t quite so lucky; over 200,000 of these blocked tickets go unsold each year. Smaller programs playing in less prestigious bowls in cities that aren’t vacation hotspots can take some brutal hits at the box office. The San Diego Union-Tribune ran a story in 2009 detailing the Western Michigan Broncos’ 2008 trip to the Texas Bowl in Houston. The school had to spend $450,000 to buy a block of 11,000 tickets. It sold 548 of them and ended up with a loss of $412,535. Ouch.

It’s not just small programs in crummy bowls that take hits like this, either. Schools playing in BCS games can take even worse financial beatings on tickets. They might not struggle to sell more than 500 tickets like Western Michigan did, but they have to buy larger blocks of tickets at much higher prices. UConn had to buy 17,500 tickets for this year’s Fiesta Bowl at over $200 per ticket. In the days leading up to the game, it had only managed to sell around 5,000 of them.

The aforementioned Union-Tribune article estimated that Ohio State had lost something in the neighborhood of $1 million after it failed to sell even 10,000 of its 17,500-seat block at the 2009 Fiesta Bowl. A similar piece from The Pittsburgh Tribune-Review quoted the West Virginia Mountaineers’ gross revenue from their 2008 Fiesta Bowl win at $2,425,600, which sounds like a lot until you learn their expenses totaled $3,495,000.

Having to eat all of these unsold tickets would be enough of a financial burden, but schools also have to face the reality that it’s really expensive to physically get to a bowl. For that Fiesta Bowl trip, West Virginia spent a whopping $700,000 in travel expenses… for its marching band. The South Florida Sun-Sentinel said that Florida only turned about a $50,000 profit from its trip to the 2009 BCS title game after shelling out $960,000 in bonuses to coaches and athletic department staff, nearly $500,000 in travel and lodging expenses, $190,000 for meals, and $320,000 worth of tickets for the athletic department.

If most of these games are financial train wrecks for the schools and their conferences, why does anyone accept a bowl berth? There are plenty of other benefits for the schools. Even though playing in a bowl game is no longer a major coup for a program – it’s hard to think of simply making a bowl as a huge honor when 70 of the 120 teams in NCAA’s Division I FBS will play in one this year – a bowl appearance is significant when it comes to wowing recruits with your program’s achievements.

In the end, fans, coaches, and players get the fun of being able to see their favorite teams play in a bowl. Conferences and programs get some extra exposure on national TV, which is nothing to snort at. The real winners, though, aren’t going to show up on the scoreboards. They’re the bowls themselves and the host cities that rake in the cash on hotel rooms, meals, and other tourism-related expenses.