College Football's Big-Money, Big-Risk Business Model

Rachel Bachman & Matthew Futterman:

On one side are the nation's largest universities, which face sharp declines in public funding. On the other, the cable and broadcast television networks, which are struggling to hold on to viewers and advertisers.

Like dynastic rulers desperate to protect their holdings, the two sides have engineered an alliance. The schools have offered up their most marketable asset, college football. The networks have agreed to marry the sport to the most important segment of their audience: the millions of viewers across the country who can still be counted on to drop whatever they are doing to watch live sports.

As a dowry, TV has agreed to pump about $25.5 billion in rights fees into college conferences and their member schools over the next 15 years. That includes a recent deal for ESPN to televise major-college football's first playoff--a four-team bracket launching in 2014--that is valued at $5.6 billion over 12 years. The schools, meanwhile, are doing whatever is needed to maximize what they can command from TV: playing more games, jumping to new conferences, abandoning long-standing rivalries, dismantling the old system of postseason bowl games and, last June, approving that first-ever playoff.

Posted by Jim Zellmer at January 1, 2013 4:48 AM
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