College Bowl Economics

Many people are frustrated with the BCS system in college football for a number of very good reasons.  However, I am doubtful the system will change in an expansive way because the economics suggest there is little incentive for it to change.

A growing inequality exists between the smaller bowl games that will begin on Saturday and the games that will be played in January.  Here are a few examples:

• Potato Bowl (formerly the Humanitarian Bowl) - Generates revenue of less than $2 Million.  Team payouts for game participation are $500,000 combined.  Broadcast revenue is less than $200,000.
• New Orleans Bowl - Generates revenue of approximately $2 Million.  Team payouts for game participation are $650,000 combined, and broadcast revenue is a little over $100,000.
• Holiday Bowl and Poinsettia Bowl - The same association puts on both bowl games which generated a combined $10.7 Million of revenue last year.  Team Payouts were a combined $4.2 Million, or more than the combined revenue of the bowl games in Boise and New Orleans.  Broadcast revenue in San Diego was $1.8 Million last year.  Finally, this association currently hold approximately $4.7 Million of cash!
• The non-profit committees that put on the Orange Bowl and the Sugar Bowl hold approximately $20 Million and $21 Million respectively of publicly traded investments!
• "The Granddaddy of Them All" (aka The Rose Bowl) generated revenue last year of $54 Million.  The participation payouts amounted to just under $18 Million per team.  I know, they have a parade and do other things as well.  Ok, so they only attributed $46 Million of their revenue to the Rose Bowl.  However, the BCS National Championship Game was worth $54 Million of revenue (on top of the $43.7 Million generated by the Rose Bowl the same year) for the organization.  That year, payouts to the four schools (Rose Bowl and BCS Championship) topped $70 Million! 

So, a basic bowl game generates somewhere between $2 Million and $5 Million of revenue.  If the bowl committee is lucky and does a nice job over time they may be able to generate 10% of the revenue received by the Rose Bowl or the BCS National Championship Game.

Please correct me where I am wrong, but I just don't see how college football can maximize revenue through a playoff system.