Money, Money, Money…

Low probability events happen every day. According to a report in the Washington Post yesterday, the NCAA has issued a moratorium on approvals for any new college football bowl games for the next 3 years. The NCAA came down in favor of restraint and against incremental revenue. That is a low probability event.

I was unaware that three cities had applied for NCAA approval to stage additional bowl games and that the approval process was proceeding apace. Those cities are:

    Austin, Texas
    Charleston, S. Carolina
    Myrtle Beach, S. Carolina

Obviously, Kalispell Montana failed to get its paperwork into NCAA HQs in time for that round of approvals…

Last year, there were 40 college football bowl games requiring 80 participating teams. Not surprisingly, there were not enough teams who were “bowl eligible” according to the rules the NCAA had established and they had to figure a way to let 3 “ineligible teams” take the field. Let me be clear, the hurdle the NCAA established for “bowl eligibility” is not a daunting one; all a team needs to do is break even for the season with a 6-6 record. Last year, 3 teams played in bowl games even though they were 5-7 for the season.

The NCAA has a task force that will – nominally – make recommendations to the Football Oversight Committee by June of this year with regard to “reforming the postseason”. Even in the announcement of the existence of this task force, there is every indication that the NCAA mavens do not recognize the fundamental flaw in their postseason architecture. The task force will also determine “what should qualify as a deserving team and how a 5-7 team should be placed in a bowl game if necessary.”

What that statement of objectives for the task force means is that the NCAA does not recognize that teams with a 6-6 record are not “deserving teams” and only get to go to a bowl game because there is a glut of them out there. In any event, we will have to wait until June to see if the great black monolith from 2001 A Space Odyssey makes an appearance at any of the task force meetings and alters the course of human evolution/thinking amongst those toilers. I suspect that is what it will take for them to recognize that the “correct answer” to the problem here is to reduce the number of bowl games from 40 to somewhere in the neighborhood of 20-24.

    Not gonna happen…

Clearly, cutting back on the number of bowl games will cut into the revenue streams for college athletics and that is why this is not gonna happen. However, do not mistakenly conclude that the NCAA and the conferences and the athletic departments are destitute and running on fumes. Concurrently with the work of this task force which ought to recommend a cutback here, the NCAA has agreed with CBS and Turner Broadcasting to extend the contract for television rights to the NCAA Men’s Basketball Tournament.

The reason you did not know that the existing contract was about to expire and therefore negotiations for a new one were underway is that the existing contract was nowhere near expiration. In fact, the current deal would not have expired until 2024; the current contract calls for the NCAA to receive an average of “only” $771M per year from the networks. ($10.8B over a 14-year period).

The contract extension adds another 8 years to the deal taking it out to 2032 and those additional 8 years will bring in an average of $1.1B. I am well-aware that there are lots of member institutions out there to share in the bounty here, but no matter how you slice it, this is a whole lot of cheese.

Speaking of the intersection of sports and money, the San Diego Chargers have proposed a way for them to get a new stadium in San Diego – keeping the team there “permanently”. The facility would have 65,000 seats and it would be municipally owned; the Chargers propose an oversight entity for the stadium that would maintain the stadium and run the venue for any non-NFL events that might take place there. Let me just say that there is nothing revolutionary about such a concept.

The way the Chargers propose to pay for all of this is for the NFL to kick in $300M and for the Chargers to pony up $350M. Over and above that the local government entities would pick up the tab. For the moment, the idea is for the city/county to raise its Transient Occupancy Tax – us normal folk would call it a hotel/motel tax – by 4%. Also contained in this proposal is the use of some Transient Occupancy Tax money to build a new convention center for the city.

This all sounds reasonable except for a few details:

    1. The site proposed by the Chargers is one that the city fathers have rejected more than once in the past.

    2. The hotel/motel owners and operators in the city have been dead set against any increase in the Transient Occupancy Tax every time funding for a new stadium has been discussed.

    3. There seems not to be a consensus in San Diego that the city needs a new convention center.

In any event, the Chargers want to put this question to the voters in a referendum. Stay tuned for posturing and positioning on that issue…

Finally, in keeping with the theme of college football bowl games and TV money and the like, consider this observation from Brad Dickson in the Omaha World-Herald:

“The College Football Playoff committee has altered the 2016 playoff schedule. This after we learned last year that Americans would rather spend New Year’s Eve with their face planted in a bowl of dip than watch a football game.”

But don’t get me wrong, I love sports………

4 thoughts on “Money, Money, Money…”

  1. The NFL is going to kick in money for the building of a stadium. Does major league baseball know about this outrageous act of fiscal irresponsibility!

    1. david:

      The NFL has a revolving fund that can be used for stadium development when needed. If I recall correctly, the league contributed some funds to the building of the new stadium for the Giants/Jets.

  2. There is a feeling, in some quarters, that Spanos and the Chargers, are assuming that the loyal Charger’s fans will stand behind any of their plans, if the Chargers stay in San Diego. The hotel occupancy tax will go to 16.5% under one of the current plans. I think that a lot of my fellow San Diegoans are tired of listening to the “bloviating” over who pays what, and where the stadium goes, etc, etc. Particularly, since it has been said that the Chargers might remain here only because Spanos didn’t get the deal he wanted and/or expected (whatever that was) from the NFL team owners some months ago. I am just a local tax payer so obviously don’t have the inside scoop. In spite of the hot air from all sides, many of the locals really want the Chargers to remain.

    1. Price K:

      This stadium tug-of-war has been ongoing in San Diego for at least 10 years now – maybe 15. If “many of the locals really want the Chargers to remain”, the City Fathers really only have a short time to get a deal done because even though Spanos will be the “tenant” in LA and not the landlord, he will likely make a ton more profit there than he would by staying in Qualcomm Stadium. It would seem to me that a large Hotel/Motel Tax as a major way to pay off the bonds for a new stadium is about as painless a way for the locals to go about this funding. Much of those funds will come from visitors and not locals. However, there will be a referendum at some point and they will count the votes. Since you live in the San Diego area, you have a much better sense of how this might turn out than I do.

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