After years of complaining about arbitrary computer-based ranking systems of the oft-maligned Bowl Championship Series (BCS), college football now has a four-team playoff to determine its national champion. While fans and media have finally received the postseason format they’ve clamored for for years, the change has left many financial uncertainties for the traditional partners involved, namely organizations like the Sugar Bowl and host cities like New Orleans.
According to a study by economist Dr. Tim Ryan, last season’s Sugar Bowl between Oklahoma and Alabama had an economic impact of $250.5 million, including close to $20 million in city and state tax revenue. However, in 2008 and 2012, when the Sugar Bowl hosted the national championship, the economic impact was worth more than $400 million.
“The financial dynamics of the playoff with a semifinal game every three years are not as beneficial to the bowl as the old BCS era was,” says Jeff Hundley, the Sugar Bowl’s chief operating officer. “It’s a seismic shift in the landscape, a dramatic change.”
Cautious Approach
The Sugar Bowl has taken a very conservative business approach to the playoff format, thinking it will break even or make a marginal profit in the years it hosts a semifinal game (2015, 2018, 2021 and 2024). In the two years between semifinals, the organization will have to hustle to break even, Hundley says.
For now, the bowl is going to see how the format plays out in its inaugural year. However, there is hope that the new playoff system will make the semifinal a net-plus.
“If the CFP semifinal games truly capture the imagination and support of college football fans, we could actually be talking about a net gain for the city and state,” Sugar Bowl President Judge Dennis Waldron says. “That’s because we’ll host a semifinal game every three years instead of a championship game every fourth year. We’ll find out soon, as the first semifinal is rapidly approaching.”
To help ensure interest in years when it doesn’t host a semifinal, the Sugar Bowl will feature a matchup between the top available schools from the SEC and Big 12, conferences with well-known teams that are all within driving distance or a short flight of New Orleans, meaning fans are likely to follow their team, filling the Superdome along with local hotels and restaurants.
“We’ve got good partners. And we’ll figure out a way to make this a winning situation for everyone. It’s one that we think will be good in the long run for the city, the businesses around the city, and, hopefully, for our organization, Waldron says.”
Room for Growth
With ESPN signed on at $7.3 billion for the 12-year TV rights to promote and broadcast the playoffs (including $80 million a year for the Sugar Bowl through its various media through 2025) the Sugar Bowl will look at the value it provides and maximize its sponsorship levels accordingly. It is currently the only of the six major bowls to have the same title sponsor as last year.
With ESPN’s reach, it’s safe to think sponsorships will become a major source of revenue for the bowl so that it may bid on future games and continue the community support it has graciously extended to New Orleans. In addition to the bowl game, the Sugar Bowl Committee is involved with various community initiatives through hosting and sponsorships of sporting events, awards and clinics. Through these efforts, the organization supports and honors more than 13,000 student-athletes each year, while injecting more than $2 billion into the local economy in the last decade.
“While our methods may be changing as the result of the new playoff format, our mission remains the same,” Waldron says. “We are committed and fully focused on supporting a wide array of amateur sporting events to benefit young people and to aid the city and state tourism industry in the process.”
“Fortunately, the BCS era was good to us, and we were able to put together a safety net that will help us endure whatever potentially stormy seas might be out there,” Hundley says. “We’re hopeful it will be calm and all will go well.”
Last year’s Sugar Bowl between Oklahoma and Alabama brought in $250.5 million, including close to $20 million in city and state tax revenue.
BCS to Playoff
With the guaranteed economic impact of the BCS’ quadrennial national championship game gone, the city now has to compete in an ever-tightening race to host the season’s ultimate game.
For 80 years the Sugar Bowl has had a say in who played in its game in order to boost financials for the bowl and the city.
“It’s a business relationship where the predominance of any excess revenue over expenses goes to the College Football Playoff group, and hence the conferences and schools participating,” Hundley says.
One of the major changes for the bowls, he points out, in the change from the BCS to the playoff era is the decrease in the ticket commitment of each participating school from 17,500 to 12,500, suddenly giving each bowl an additional 10,000 tickets to sell. Additionally, he questions how enthusiastic fans will be in supporting their teams through a full season, a conference championship game, a semifinal and National Championship game.
“We had to sell locally,” Hundley says. “Based on the early indications of the general public sale, that went extremely well. There are precious few now; all that’s left is what we have for sponsors and the schools.”
Requests for proposals to host the National Championships in 2018, 2019 and 2020 will be distributed February 2015.
Game Plan for a Championship
In the first round of bidding to host the playoff championship, the Crescent City didn’t look varsity ready, putting up only half the value of the bids of the winning cities – Dallas (2015), Phoenix (2016) and Tampa (2017). Now, chief among concerns locally is how the Sugar Bowl and New Orleans will compete in order to maintain their position as one of college football’s most desirable postseason destinations.
Hosting a National Championship, which is expected to have an estimated economic impact of $308 million on Dallas this year, is in the game plan. Championship sites are determined through a bid system, much like the Super Bowl or the NCAA Final Four. A request for proposals to host the game in 2018, 2019 and 2020 will be distributed to interested communities in February 2015, with site selections announced next fall. According to playoff rules, New Orleans will be unable to host the 2018 game because it is already hosting a semifinal.
“We’re studying the landscape and doing our homework so that we’ll be prepared to respond appropriately,” Waldron says.
With so much revenue potentially available, the Sugar Bowl is expected to join forces with experienced partners in the tourism and convention industry across the city to make a much stronger impression with its bid for the championship in 2015.
Mark Romig, president and CEO of the New Orleans Tourism Marketing Corp., says his organization is willing to follow the Sugar Bowl’s lead to help land its goals.
“It’s great to have a National Championship and the worldwide branding for the city that goes along with it, but the glass is not half empty without one,” Romig says. “Our convention and business meeting events are growing. We have 123 festivals now. This city is bursting at the seams with visitors even without a National Championship on the horizon.”
That said, Romig says New Orleans is fortunate to have an event like the Sugar Bowl that annually has a $150 million impact.
“Many cities would give their eyetooth to have an event like this,” he adds. “We’re very glad to be part of the playoff rotation through 2025. I’m thrilled for what we have and what we have coming.”
Season KickOff Classic
In addition to a Championship Game, the Sugar Bowl is currently studying the idea of hosting a premium game at the start of the season as an additional source of revenue. It would basically be a bowl game to kick off the season rather than end it. Atlanta, Dallas and Houston have all added kickoff games with prominent programs and lucrative results in recent years. For instance, an estimated $44.3 million was injected into the Atlanta economy as a result of the 2013 Chick-fil-A Kickoff Game between Alabama and Virginia Tech, which drew 73,114 fans. The lineup for the AdvoCare Cowboys Classics in Dallas includes teams known for having passionate, travelling fan bases – Alabama-Wisconsin in 2015, Alabama-USC in 2016, Florida-Michigan in 2017 and LSU-Miami (Fla.) in 2018.
It’s completely feasible to see city leaders work toward advertising New Orleans as a Labor Day weekend destination for college football fans to enjoy a three-day vacation to end the summer and begin the fall football season.
“We’ve had extended discussions with school and television partners and are continuing to look seriously at such an opportunity,” Waldron says. “Because of the complexities of team scheduling and television rights, it isn’t an easy process. Nonetheless, we are moving forward with our discussions on this front.”
New Playoff Format
Each of the 10 Football Bowl Subdivision (FBS) conferences (American Athletic, Atlantic Coast, Big Ten, Big 12, Conference USA, Mid-American, Mountain West, Pac-12, SEC and Sun Belt) and their member institutions is expected to at least double the annual revenue that had been received under the BCS arrangement.
“The College Football Playoff will include the top four teams, but every conference will benefit under the new arrangement” playoff Executive Director Bill Hancock says. “This approach rewards those teams that are part of the event and is fair to all the conferences and independent institutions that participate and make the College Football Playoff possible. It really will be a big win for all.”
The four teams that go to the College Football Playoff are determined by the 12-member College Football Playoff Selection Committee, which includes current and former coaches, student-athletes, collegiate administrators and journalists, along with sitting athletics directors. It includes Barry Alvarez, athletics director, Wisconsin; Mike Gould, former superintendent, U.S. Air Force Academy; Pat Haden, athletics director, USC; Tom Jernstedt, former NCAA executive vice president; Jeff Long (chair), vice chancellor and athletics director, Arkansas; Oliver Luck, athletics director, West Virginia; Tom Osborne, former athletics director and coach, Nebraska; Dan Radakovich, athletics director, Clemson; Condoleezza Rice, former provost, Stanford; Mike Tranghese, former commissioner, Big East conference; Steve Wieberg, former journalist, USA Today; Tyrone Willingham, former head coach, Stanford, Notre Dame and Washington. Archie Manning resigned from the committee due to health reasons earlier this year.
New Year’s Extravaganza
The format of the playoff will be great for fans, especially traditionalists who like bowl games on or near New Year’s Day. There will be back-to-back triple-headers on New Year’s Eve and New Year’s Day featuring the playoff semifinals and four premier bowl games. The semifinal games will rotate between six current bowl games – the Sugar and Rose, Orange and Cotton, and Fiesta and Peach. This year, the semifinal games will be played on New Year’s Day at the Rose Bowl in Pasadena, Calif., and the Sugar Bowl in New Orleans, before the National Championship is played in Dallas on Monday, Jan. 12.
The selection committee will choose the four teams for the playoff based on strength of schedule, head-to-head results against common opponents, championships won and other factors. They will announce the playoff semifinal pairings and bowl assignments live on ESPN at 11:45 a.m., on Sunday, Dec. 7. Those games will feature matchups of the No. 1 vs. No. 4 and No. 2 vs. No. 3-ranked teams, based on the closest geographic proximity of the No. 1 team. For instance, if a team from the SEC is ranked No. 1, they would likely play in the Sugar Bowl rather than the Rose. On Dec. 7, the committee will announce pairings for the Orange, Cotton, Fiesta and Peach bowls, as well as the final top 25 rankings.
The Sugar Bowl is currently studying the idea of hosting a premium game at the start of the season as an additional source of revenue – following in the steps of cities like Atlanta, Dallas and Houston. A 2013 kickoff game in Atlanta brought the city an estimated $44.3 million.
