Finance Uncategorized

Baylor, TCU in the money despite exclusion from CFP

With CFP revenues looking strong, the Big 12 and its members face an important question moving forward.

(AP Photo/Waco Tribune Herald, Rod Aydelotte)
(AP Photo/Waco Tribune Herald, Rod Aydelotte)

College football pundits have speculated that the absence of Baylor and TCU in the College Football Playoff might spur the conference to add two schools in order to reach 12 members, the requisite number to host a conference championship game. However, before speculating which schools the Big 12 might add, realize that its current members stand to earn more from the CFP than any of their Power-5 counterparts.

Why? The Big 12 pie has fewer slices.

For placing two teams in CFP access bowls this year, the Big 12 will earn $8 million ($4 million per team) on top of the $50 million distributed to each Power-5 conference. Assuming the conference distributes its revenue evenly, splitting the pie 10 ways — instead of 12 or 14 like its counterparts — results in each school’s payout nearing $5.8 million. By comparison, this year the Big Ten will distribute about $4.3 million, the Pac-12 will distribute $4.8 million and the ACC (as a result of the Orange Bowl contract) will be closer to $6 million from the CFP. The SEC, which received an added bonus by landing Mississippi State in the Orange Bowl, will distribute $6.25 million to each school.

(Photo by Christian Petersen/Getty Images)
(Photo by Christian Petersen/Getty Images)

Look at future CFP revenues and that’s where things appear most promising for the ten-team Big 12 conference. Power-5 conferences will average $91 million in revenue over the course of the 12-year CFP contract with ESPN. In seasons when the Sugar Bowl and Rose Bowl fall outside the CFP, which happens twice in each three-year cycle, the conferences contracted with those bowls (the Big 12 being one) receive a big revenue boost. So, in 2015-16 and 2016-17, Big 12 schools will each bring in close to $10 million from the CFP. By comparison, the 14-team Big Ten and SEC will distribute closer to $7 million per school.

There are many factors in determining whether or not the conference should expand, but one of the questions the Big 12 and its members face moving forward is: Will the added value of a conference championship game and the increased prestige of landing a member school in the College Football Playoff be worth the decreased payouts in return?

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