One of the most intriguing questions in televised sports on the horizon is which network will broadcast the inaugural college football playoff in 2014. With sports rights fees increasing exponentially across sports, the popularity of college football, and the groundbreaking nature of a playoff, it's sure to fetch an enormous amount of money for everyone involved in college football. Well, except the student-athletes of course. But hey, everyone else will get even more insanely rich! Hooray!
A CBSSports.com report from Dennis Dodd has the first real hard news from potential playoff negotiations. An offer is already on the table for the four team playoff and it's a mega offer from ESPN approaching $500 million per year...
"ESPN has offered close to $500 million per year for the college football playoff, CBSSports.com has learned.
While negotiations remain ongoing, multiple sources confirmed the amount offered for a four-team playoff beginning after the 2014 season. Discussions are ongoing about the structure of the playoff.
While the figure is not considered a formal opening bid, it does put a per-year value on a playoff. Using $500 million as a high -- sources say the ESPN bid isn't quite that high -- a 12-year deal would be worth between $5 billion and $6 billion through 2026.
If nothing else, we have an indication of the value of a playoff. The commissioners went into their annual BCS meeting in April thinking the valuation was at $350 million per year. After listening to consultants, the value had shot through the roof. Now we have tangible proof of the windfall awaiting college football.
Currently, Disney/ABC/ESPN pay $155 million annually for the 4 BCS Bowl games and the Rose Bowl. The Rose Bowl has a $30 million per year price tag and has a separate deal than the other BCS bowls. That number is supposed to increase almost threefold to $80 million from 2015-2026 in a deal signed this summer.
A theoretical $500 million per year price tag would be more than a threefold increase and pay an incredible $167 million dollars for each of the three games in a four team playoff. That's more than the entire fee for all the BCS bowls combined! Keep in mind that NBC just paid roughly $83 million per year for an entire season of EPL games. Then again, compared to ESPN's contract for Monday Night Football that pays over a million per game, this is merely a drop in the bucket. After all, Disney just reported a profit of $1.2 billion dollars in the last quarter alone and carriage fees for ESPN are being touted as a major reason why.
By the way, $4.88 Billion in revenues for media networks is a Quarterly number. Have to believe yearly revenue for ESPN alone > $9 Billion.
— James Andrew Miller (@ESPNBook) November 9, 2012
The $500 million dollar number was first reported by the Sporting News during the summer at $5 billion over 10 years, but now it looks to be coming to reality. It's one thing to have a BCS source speculate about that number as a possibility, it's completely another for ESPN to have an offer on the table that approaches that lofty amount.
ESPN has an exclusive 30 day negotiating window with the BCS to win rights to the playoff, but the CBS report doesn't make note of whether that window has actually opened. The major question will be whether or not the BCS takes ESPN's great offer that is surely on the table or wait to open up the market and drive up the price to an even more astronomical number.
Financially, with sports rights still exploding, the BCS would be wise to take the bounty of the first ever Division I-A playoff to the open market. Who knows what the final number could be with rival networks bidding. And let's be real, when has the BCS and big time college football been about anything else but the money. However, that extra cash may not be worth leaving the friendly confines of ESPN's umbrella. We saw what happened when Fox got their hands on the BCS, but there's no doubt they'd be a competitor once again. ESPN is the unquestioned central hub of college football and on the whole covers the sport well.
What's most likely to happen? ESPN has to be the odds on favorite given their investment to college football and the BCS over the years. They've been very disciplined in rights negotiations over the last year, even losing a few contracts they long held, but there is no way Bristol is going to miss out on this history making playoff. ESPN lost the World Cup to Fox, it won't lose the college football playoff as well. ESPN isn't just bidding for the present, they're bidding for the future of an event that may wind up only being surpassed by the Super Bowl in American sports. Whether they close a deal in the exclusive negotiating window, or a rival bids them up in the end, ESPN should be the home of the first college football playoff in 2014. And they should write a blank check to do it.