Money Game: Did Clemson's trip to CFP generate a financial windfall?
|Wednesday, March 16, 2016 7:04 AM- -|
The chartered Delta 747 carrying the Clemson football team, support staff and spouses landed at Phoenix Sky Harbor International Airport in early January, and as the players and coaches and support staff de-planed I wondered: who paid for the plane?
The answer wasn’t easy to decipher at first because the schools are paid a stipend for travel expenses by the playoff. There is no doubt that the College Football Playoff generates a windfall for the networks and the affiliated conferences, but how much of that money do the schools see? The answer…….not as much as you might think. ESPN pays the College Football Playoff about $470 million a year for the media rights to the three playoff games and four other bowls, and most of the money is distributed to the 10 FBS conferences and schools. So Clemson made money by playing in the College Football Playoff and appearing in the title game, right? Wrong.
The answer wasn’t easy to decipher at first because the schools are paid a stipend for travel expenses by the playoff.
There is no doubt that the College Football Playoff generates a windfall for the networks and the affiliated conferences, but how much of that money do the schools see? The answer…….not as much as you might think.
ESPN pays the College Football Playoff about $470 million a year for the media rights to the three playoff games and four other bowls, and most of the money is distributed to the 10 FBS conferences and schools. So Clemson made money by playing in the College Football Playoff and appearing in the title game, right? Wrong.
In fact, Clemson wound up with a deficit of more than $3 million, according to deputy athletics director Graham Neff. Factoring in the bonuses for the coaches and three expensive trips to Charlotte for the ACC Championship Game, to Miami for the Orange Bowl and Phoenix for the National Championship, and Clemson had no way of even coming close to breaking even.
So where does the money go? Let’s start by looking at what the CFP pays out to the conferences, according to the College Football Playoff website:
College Football Playoff Revenue-Distribution Policies
The following estimates of the CFP revenue distribution are based on preliminary calculations for the 2015-2016 season and are only approximate projections of potential revenue distribution from each component:
(1) Each conference will receive $300,000 for each of its schools when the school’s football team meets the NCAA’s APR for participation in a post-season football game. Each independent institution will also receive the $300,000 when its football team meets that standard.
(2) Each of the 10 conferences will also receive a base amount. For conferences that have contracts for their champions to participate in the Orange, Rose or Sugar Bowl, the base combined with the full academic performance pool will be approximately $51 million for each conference. The five conferences that do not have contracts for their champions to participate in the Orange, Rose or Sugar Bowls, will receive approximately $79 million in aggregate (full academic pool plus base), which the conferences will distribute as they choose. Notre Dame will receive a payment of $2.58 million if it meets the APR standard; the other two independents will share $618,241.
(3) A conference will receive $6 million for each team that is selected for the semifinal games. There will be no additional distribution to conferences whose teams qualify for the national championship game. A conference will receive $4 million for each team that plays in a non-playoff bowl under the arrangement (in 2014-2015, the Cotton, Fiesta and Peach Bowls).
(4) Each conference whose team participates in a playoff semifinal, Cotton, Fiesta or Peach Bowl, or in the national championship game will receive $2.08 million to cover expenses for each game.
Additionally, certain conferences in the Football Championship Subdivision conferences will receive $2.34 million in aggregate.
Thanks to the College Football Playoff, bowl games paid more than a half-billion dollars to conferences and schools in 2014, the largest payout ever and an increase of almost $200 million from the final season of the Bowl Championship Series.
But Forbes estimated recently that somewhere between 10 and 20 schools lose money by going to bowl games each season, once travel expenses and mandatory ticket purchases are factored in. Clemson didn’t pay for one trip to Shreveport and Nashville, however, it had to pay for the trips to Miami and Phoenix as well as Charlotte.
Add in the coaches’ bonuses – Dabo Swinney earned more than $1 million in incentives and his assistants added in another million in bonuses – and the school was out $2 million from the start.
"The majority of the bonuses are contracted," Neff said. "Those are between all three postseason games. Some bonuses are payable by going to Charlotte, winning in Charlotte, going to the CFP, winning the CFP and being in the national championship."
Now, back to the plane: As stipulated above, the College Football Playoff provided a $2.08 million travel stipend to each school for each game. Sounds like a good chunk of change, and it is, but a 747 charter isn’t cheap, and with hotel rooms going for as much as $579 per night that money can evaporate fairly quickly. Add in meals and the cost of tickets and the fact that the school paid $700,000 just to send the band to all three games, and the money dries up.
"It's going to be a little under a million is what our travel deficit was based on when you talk tickets, flying, hotels and meals between the three games - Charlotte, Miami and Phoenix," Neff said.
Clemson's deficit was close to a million dollars when you take into account all three trips. Add in the coaches' bonuses for all three postseason games and you come in at the $3 million total.
The big winner, obviously, is the conference. The losers – if you can call a school that makes the College Football Playoff a loser – are the schools, which operate under a system that rewards the conference.
Neff says the school will depend on gifts to help make up the difference, but he also said the school would gladly pay the money each year. Why? The return on investment is high when you consider the long-term benefits of having the iconic paw seen across the country for a three-week span.
"That's the biggest task and the biggest thing we've been messaging internally to our board and IPTAY and other campus constituents. At the end of the day, we would be very happy to pay that to have the opportunity to play in the national championship game each and every year, not only for that opportunity but also for the middle and long term revenues that come with that," Neff said. "Ultimately, the objective is how do we make this year work because that's a this year deficit. We feel incredibly optimistic and solid as far as the longer term benefits we'll receive from IPTAY donations - the annual fund and the cornerstone and major gifts - licensing, ticket sales. All of those things are going to see upticks in various forms and fashions. That's something that as we go through the rest of this year that there are near-term revenues."
Neff even went as far as to say that the schools receive just as much benefit as the conferences.
"I would say the most benefit - our direct brand as Clemson University and our athletic department and the football program. I think we still receive the most," he said. "Dollars flow through the conference to the other member schools with us. The whole ACC tide rises a little bit, but we certainly don't view it as the rest of the conference is benefitting on our behalf because there are others that dollars are flowing into the conference that aren't a result of Clemson. For instance, NCAA Tournament dollars go to the conference and we're certainly not in the tournament so we're not adding any revenue dollars to the conference, but we are a direct recipient of the success of the teams from the ACC that are in the basketball post season."
If Clemson were to make the playoff again in 2016, the travel budget might be lighter considering the distances involved for travel would be shorter.
"It's 2.08 million times six - all four schools in the semis and then Clemson and Alabama in the national championship. That's just a flat number that was the exact same last year," Neff said. "We'd like to look along with the CFP and the conference at the travel stipend. Does it make more sense for that to be distance related. Next year there's a semifinal and final path where we could be in Atlanta and Tampa versus Miami and Phoenix, so if it's a flat 2.08 next year we're probably going to be just fine whereas this year we ran a deficit. Does it make sense to be more distance related? Is it a flight versus a bus ride? Things like that are such big drivers in how we travel and the associated expenses. Nobody - CFP, ACC, athletic directors - wants successful schools participating in the playoffs to ultimately lose operational dollars, but we don't have an expectation to directly make operational dollars. Is there a better formula that more associates the travel expense with the stipend?"