Networks Could Pay Close to $500M a Year for College Football Playoff
College football is looking at a massive money grab in TV rights fees and marketing opportunities when it moves to a playoff, beginning with the 2014 season.
How much? Well, put it this way. ESPN picked up the rights to the Bowl Championship Series national championship game starting in 2011 with a four-year, $500 million deal.
That half-a-billion just might be a yearly starting point when negotiations begin for the new playoff.
Robert Boland, academic chair and clinical associate professor of sports management at New York University, said a college football playoff could generate $5 billion over a 12-year contract. Forbes magazine estimated in the $3 billion range for the same time period. An executive who specializes in TV-rights-fees negotiations and asked not to be identified told AdAge.com, "I'd say in between sounds right at around $4 billion for the package, but, yeah, sure, it could go higher."
"You have to wonder where the tipping point for rights fees that these networks pay is , and when it's going to get to the point where they can't afford it," said Larry Mann, exec VP-partner at the Chicago-based sports marketing firm Revolution. "But from what I'm hearing the [college football] commissioners think they can generate $500 million to $600 million annually."
School presidents and conference commissioners of the nation's 124 elite football-playing programs -- think LSU, Michigan, Texas, USC, et al. -- announced Tuesday they were finally dumping the much-reviled BCS format that has determined its national champion since 1998, in favor of a four-team, three-game playoff that fans have been clamoring for.
The two national semifinal games will be played annually on Dec. 31 and Jan. 1, with the national championship game about 10 days later. Previously, the BCS was a one-game playoff between the nation's two top teams, who were determined by a complicated, convoluted and wildly unpopular ratings system that involved both computer rankings and human poll voting. The new, four-team playoff will be determined by a yet-to-be announced selection committee, much like the annual NCAA college basketball tournament.
By way of comparison, the National Football League commands $5 billion per season on its current TV package, but that 's for 16 weeks of games on four networks (ESPN, FOX, CBS and NBC) and, of course, the annual ratings /marketing bonanza that is the Super Bowl that rotates among CBS, NBC and FOX.
One key question will be ad rates for such a game. "Will a college football playoff command $3 million, $3.5 million, $4 million for a 30 like the Super Bowl does? No," said Bill Glenn, senior VP for Dallas-based sports marketing agency The Marketing Arm. "But it's a perfectly good assumption on the part of college presidents and conference commissioners that with a legitimate playoff in place, ratings will indeed go up. But I think they need to act fast. I think you're asking a lot of current sponsors, especially those closely associated with college football such as Home Depot and All-State, to pay more. The appetite for this will never be as high as it is now. You have to ride the wave of emotion here."
ESPN has an exclusive negotiating window to retain the rights to college football's national championship and the new playoff format, but most experts believe all four major networks will bid, another reason why the price could be driven up to the $500 million-a-year mark.
This year's BCS title game between LSU and Alabama drew a 14.0 rating, according to Nielsen Media, the third-lowest rating ever for a BCS championship game. By comparison, the NFL conference championship games -- or Super Bowl semifinals, if you will -- drew ratings of 33.4 for New York Giants vs. San Francisco 49ers and 29.1 for New England Patriots vs. Baltimore Ravens this season. The Super Bowl, of course, is its own beast -- the Giants-Patriots game this past February was the most-watched TV program in history, with more than 111 million viewers.
Still, Mr. Boland believes the college football championship playoff game can pull what he called "mega type numbers."
"I would expect the Championship Game to do numbers among the annual top 20 shows and be the biggest program on cable if ESPN gets the rights. And these numbers should only grow as even casual fans fall into the habit of watching these games," he said.