Bowl Games Prosper Despite Schools Losing Money On Unsold Tickets

(Justin Matlock/Creative Commons)

(Justin Matlock/Creative Commons)

College football fans had been waiting years for it. College presidents had talked around it. Coaches and players longed for it. Last June, it was finally confirmed.

Playoff.

It was the word everyone was waiting to hear, and starting with the 2014 season, college football will have a playoff for its national championship after more than a decade of determining a winner with the Bowl Championship Series.

The new system will not look like basketball’s 68-team March Madness, though, nor any of the other large-scale tournaments the National Collegiate Athletic Association (NCAA) uses to decide a champion in most of its 22 sports. Instead, football will have just a four-team playoff; three games in a winner-take-all.

Such a small playoff means college football’s unique postseason setup will remain in place: 35 “bowl games” played in by 70 teams that finished the regular season with at least a .500 record (fewer losses than wins). The bowl system, originating from the inaugural 1902 Rose Bowl game in Pasadena, sees bowl organizing committees paying conferences for their member teams to end the season in the December or January games.

The conferences (think Big Ten, ACC, Pac-12) then divvy the money to their members, even those that did not make a bowl game after a losing season. For the schools that go bowling, the trip can become a costly endeavor. Bowl-bound schools have to pay the travel expenses and hotel costs for their team, coaches and marching band, though that is common for every road game they play.

The real costs often come in the form of ticket guarantees; schools are allotted thousands of game tickets that are theirs to sell. When the team is playing in a prestigious bowl like the Rose Bowl or National Championship, or in a highly-anticipated matchup close to home, the allotments are a blessing. Schools playing in these types of games can sell out of tickets.

Then there’s the curse. If a school accepts an invitation to play in a bowl far away, a low-profile game or a bowl in which they had recently participated, fewer fans shell out the money to travel and attend the game.

DATA: See the numbers we compiled from the tax forms of non-profit bowl games.

From 2004 to 2011, 307 Division I Football Bowl Subdivision (FBS) football teams reported breaking even or losing money on the season, according to data provided by the schools to the federal Office of Postsecondary Education. Of those 307 teams, 98 played in bowl games after a season that was a financial break-even or loss.

Keep in mind, many of these 98 teams represented schools that are rarely financial winners on the gridiron. For example, every year from 2004 to 2011 the University of Memphis football program reported breaking even or losing money. There were two seasons in which the Tigers made a bowl game and broke even, and also two seasons in which the Tigers made a bowl and lost money. The team’s postseason status did not greatly alter the bottom line, and that fact is true of many lower-tier programs in Division I FBS.

However, large public schools going to “elite” BCS bowls can feel the impact of ticket requirements. In recent years, West Virginia and Virginia Tech lost money to play in the Orange Bowl in Miami Gardens, according to a report by the Los Angeles Times. The bowl allots 17,500 tickets to each participating school, meaning almost half the stadium’s seats have to be sold by the two schools.

Another example of “big bowls” meaning big costs is that of the University of Connecticut. Over the last decade, the largest financial loss the Connecticut Huskies underwent came in the 2010-11 football season, when the Huskies made the Fiesta Bowl in Glendale, Arizona. Despite filling their home stadium to 95 percent capacity during the regular season, Connecticut could only sell 2,771 of their 17,500 Fiesta Bowl tickets, according to the school newspaper. Despite a winning season on the field, the football team ended the fiscal year with a loss of $1,534,938.

Keep in mind that a school’s inability to sell tickets does not necessarily represent fan apathy, just the free market. The face value for Orange Bowl tickets run from $75 to $250, but smart shoppers could get in to the stadium via secondary ticket sellers like StubHub, where the budget-conscious fan could buy a seat for as low as $48.

Money Maker for Committees

While schools often lose money in the process of accepting a bowl invitation and playing in the game, the bowl committees themselves come out stronger financially.

We analyzed the tax forms of 12 non-profit bowl committees since 2005, ranging from high-profile games like the Rose Bowl, mid-tier games like the Sun Bowl and smaller games like the GoDaddy.com Bowl.

For the 90 games studied, 68 turned a profit for the fiscal year. Since 2005, all 12 bowl committees have seen at least a 7 percent rise in net assets, and more than half the committees have doubled their net assets.

Translation: all of the bowl committees studied have more financial assets than they did in 2005 (before the economic downturn), some substantially more. It should be no surprise that about half the bowl games in college football were founded in the last 16 years. It seems to be a good financial proposition.

Bowl Game Net Asset Change

Bowl games are gaining strength financially at a time when attendance at the games is actually dropping. The average attendance for the most recent bowl games was 49,222 fans per game, the lowest average since 1978-79 according to an analysis by Jon Solomon of AL.com.

Last season, 33 of the 35 bowl games were televised by Disney-owned ESPN, ESPN2 or ABC. However, ESPN is no longer just in the business of showing the bowl games on TV. Not all bowls are run by non-profit committees bringing the games to their hometowns. ESPN Regional Television now owns and operates seven annual bowl games. Operating even one bowl game is an expensive project. Our analysis showed annual expenses for non-profit bowl committees running from $2.8 million (New Orleans Bowl) to $17 million (Orange Bowl).

ESPN is not a non-profit, of course. They are in the business of making money via commercials and distribution fees to cable networks. And with the broadcast rights for bowl games climbing higher and higher, it would appear ESPN has found it a better business decision to run the show itself.

Bowls for schools that lost money

For the Cotton Bowl, a Staff Handsomely Paid

Any conversation about schools being required to take on millions of dollars in bowl ticket obligations cannot be complete without pointing out that some bowl executives make far more than their counterparts running Division I athletic departments.

The average annual compensation for “current officers, directors, trustees, and key employees” for bowl games is about 5.5 percent of total expenses, according to the bowls’ Tax Form 990s. One bowl is an outlier in compensating its staff, the AT&T Cotton Bowl Classic in Texas.

Keep in mind that the Cotton Bowl game is no longer played at the Cotton Bowl stadium, the depression-era venue in Dallas’ Fair Park. Starting with the 2010 contest, the Cotton Bowl classic was moved to $1.3-billion Cowboys Stadium in Arlington. The Cotton Bowl stadium now hosts a new game called the Heart of Dallas Bowl.

Confusing enough for you?

During the first year at Cowboys Stadium, Cotton Bowl Classic officials were paid $701,545, or 6.4 percent of the bowl’s total expenses, according to the Form 990 filed by the bowl. Two years later in 2012, officials were paid $1,754,937, or 15.1 percent of total expenses. That percentage was the largest we found of any bowl game since 2005.

It’s important to note, at least in the case of the Cotton Bowl Classic, the millions are not doled out to executives to run one game per year. For the 2013 season, the officials will also organize two regular season contests at Cowboys Stadium, Louisiana State vs. Texas Christian on Aug. 31 and Notre Dame vs. Arizona State on Oct. 5.

In 2014, Cotton Bowl officials are in charge of Texas vs. UCLA, Arkansas vs. Texas A&M and Florida State vs. Oklahoma State before hosting the National Championship Game on Jan. 12, 2015.

“That’s almost a regular season worth of games,” said Michael Konradi, vice president of external affairs for the Cotton Bowl.

Hosting four college football games does not exactly match up to the six regular season home games schools usually host, it represents more than the one Outback Bowl game organized by the Tampa Bay Bowl Association. CEO Jim McVay was paid a compensation package of $814,935 in the fiscal year 2012. That figure was second among bowl officials behind Cotton Bowl CEO’s total package of $1,028,280.

To compare that to other non-profits in college athletics, 100 of the 114 athletic directors of Division I FBS schools earn less than McVay’s compensation package, according to research done by USA TODAY. Athletic directors are the heads of athletic departments for schools, with responsibilities for many sports beyond football.

Ticket Revenue, Attendance Sometimes Don’t Line Up

An example of curious accounting for bowl games can be found in the ticket sales revenue reported by the GoDaddy.com Bowl in Mobile, Alabama, formerly the GMAC Bowl. For three straight years (2006 to 2008), the bowl reported ticket sales of exactly $1,375,926 on each tax Form 990. Such a figure could be accurate if the GMAC Bowl had filled 40,000-seat Ladd-Peebles Stadium with fans. It did not.

  • 2005 GMAC Bowl (tax report 2006): 35,422
  • 2007 GMAC Bowl: 38,751
  • 2008 GMAC Bowl: 36,932

The 2009 GMAC Bowl reported ticket sales of $1,375,927 (up one dollar) before the sales numbers changed to lower figures in later years. The two possibilities are that GMAC Bowl officials had fudged the ticket revenues on their tax forms, or the revenue was counting thousands of seats sold to schools that went unused.

GoDaddy.com Bowl officials were not available for comment.

A Change Afoot?

The ticket requirements will not be changing for the 2013-14 bowl season. The contracts which line out obligations for ticket sales are agreed upon by the bowls and the conferences, not the individual schools. But after this season, the so-called “bowl cycle” of rotating the National Championship game resets, opening the door for the establishment of the four-team College Football Playoff. Conferences will have a chance to renegotiate their bowl contracts.

“Conferences have the leverage right now,” the Cotton Bowl’s Konradi said.

In addition, bowl directors expect a change in team selection in the contract renegotiations. Traditionally, individual bowl committees have controlled which teams to invite. New contracts could give more power to the conferences to assign where member schools play their postseason games.

With the conferences in control, it is more likely that future bowl designations will better match the financial needs of member schools. In 2008, 2009 and 2011, Virginia Tech lost money playing in the Orange Bowl in Miami. According to university records analyzed by The Arizona Republic, the school would have lost a total of $5.1 million over the three games, but the Atlantic Coast Conference absorbed the cost for several thousand tickets.

Even with the financial hit, schools continue to accept bowl invitations for any number of reasons. There is still prestige involved for many of the bowl games, and the television exposure can help with recruiting players. In addition, teams are only allowed to practice after the end of the regular season in early December if they make a bowl game. Even if the contest is a low-tier game, coaches get more instruction time and full practices to prepare their team for the following season, as NCAA rules limit teams to 15 spring practices in March and April.

Still, with our analysis finding that about one-third of Division I FBS football teams in any given season show no profit, schools may be faced with tough decisions if the financial burden is too much to bear to go bowling.

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One thought on “Bowl Games Prosper Despite Schools Losing Money On Unsold Tickets

  1. Pingback: Bowl Game Payouts - SportsHoopla.com Sports Forums

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