Dale Nicholson, III: The Business of Bowl Games

Editor’s note: Dale Nicholson, III is a financial advisor with Raymond James in Little Rock. He is a former sportscaster for KATV and KFSM. Nicholson can be reached by email at [email protected].

It’s the most wonderful time of the year, or one of them, anyway. Wall-to-wall college football bowl games for a full month. Of course, we get stuck with some stinkers along the way, like the 6-7 Fresno State Bulldogs and the 7-5 Rice Owls squaring off in the Hawaii Bowl. But this year will be remembered as the Inaugural College Football Playoff. The stakes are raised with the sports first ever playoff system used to determine its national champion.

College Football has never really had a definitive champion. At one time, the polls voted and determined who the champ was, but it was never determined on the field. The BCS system sought to change all of that. With all of its controversies, it got it right most of the time. But too many teams were left out of having a chance to earn it on the field, so the College Football Playoff system was born.

Ultimately, though, it’s all about the money. And the CFP is yet another cash cow for the business of college football. According to The Business of College Sports, the Power 5 conferences (ACC, Big XII, Big Ten, SEC and PAC-12) each will receive roughly $50 million as part of the College Football Playoff payout system. This includes $300,000 for each school’s football team meeting the NCAA’s minimum standard for APR to participate in a bowl game. Each of the four teams selected for the playoff itself will receive $6 million for its conference. The teams selected for the “host” bowls, which are the major bowls outside of the playoff rotation in a given year, will receive $4 million for its conference. This year, the “host” bowls are the Cotton, Fiesta and Peach, with the Sugar and Rose comprising the playoff games this season.

Then there’s the contract bowls. The SEC and Big XII have contracts with the Sugar Bowl. This means in years these bowls are outside of the playoff rotation, those conferences will share an $80 million dollar payday for appearing in the game. This year, the Sugar Bowl is part of the playoff rotation, so the SEC will miss out on that payday. However, Mississippi State earned an invitation to the Orange Bowl. The ACC and Notre Dame or the SEC are contracted with that bowl game. So Mississippi State earned the league a $27.5 million payout for its berth in the Orange.

Thanks to Alabama’s appearance in the CFP Semi-final, Ole Miss’s appearance in the Peach Bowl and Mississippi State’s trip to the Orange Bowl, the Southeastern conference will lead all conferences in CFP Payouts with $87.5 million.

But it’s not just the playoff that nets conferences big money, although that’s where the biggest payouts are found. The other bowl games offer their participants some change as well. Arkansas will earn the SEC $3 million for its participation in the Texas Bowl. South Carolina earned the league $1.2 million from its Independence Bowl appearance. Texas A&M will bring in $1,473,500 from the Liberty Bowl, and LSU nets the league another $2.75 million from the Music City Bowl. Add in Georgia’s $1.7 million from the Belk Bowl, and you have another $10,123,500 in bowl money for the country’s top conference.

The SEC shares that revenue with all of its member schools. While the CFP doesn’t offer additional payouts for a Championship Game appearance, the SEC does. Alabama will pocket $2 million for its semi-final game, and will earn another $2.1 million if it makes the Championship Game. Ole Miss will get $1.475 million for going to the Peach Bowl, and Mississippi State gets $2 million from its Orange Bowl payout. The SEC also pays a pre-determined amount in travel expenses for all of its member schools making bowl trips.

Based on what I’ve been able to piece together through online research, Arkansas will net in the neighborhood of $1.125 million from its Texas bowl payday. After each team’s payout for their respective bowls and the $50 million base pay the league will receive from the CFP, the SEC will have a rough estimate of $85 million from bowl revenue before travel expenses. That number is divided 15 equal ways, 14 for the schools and 1 for the league office.

Last fiscal year, the SEC distributed a record $292.8 million to its 14 member schools. With the launch of the SEC Network this football season and with the league being well represented in the inaugural College Football Playoff this season, that record may not last too long.