Sportsgeekonomics

Musings on Sports Economics

Teams going to the Orange Bowl don’t make any money, and other Brooklyn Bridges some people want you to buy.

(If you can here looking for my Dec 31 post on BCS Bowl Accounting, and how it hides profit, I apologize for the headfake, but it has moved to   Deadspin’s “Regressing” website: http://regressing.deadspin.com/teams-in-the-orange-bowl-dont-make-any-money-and-othe-1494130032.

Here’s my new teaser for the story.

Have you ever wondered why college football programs seem to throw so much time, money and effort into reaching a bowl game when their accounting statements show losses when they play in the post-season?  The answer is that the accounting is masking the truth — Bowl Games, especially the biggest ones, are very profitable.

Turns out it’s a combination of factors that creates the illusion.  The biggest and most shocking is that those accounting statement everyone focuses on sometimes zero out the Bowl payout before starting — not hard to lose money if you assume the revenue is zero!  The rest, though, is a complex economic engineering effort, balancing each conference’s long-term desire to maximize total revenue potential, with the very real short-term incentive to minimize costs competing amongst itself for an already-guaranteed BCS slot.  AQ Conferences don’t want to outright kill their schools’  incentive to win, but they do want to tame it a little.  Maybe even more than a little.

Think of it as the college football version of Odysseus lashing himself to the mast to avoid the siren’s call of “overspending” on football.

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 Want to read more?  Check out my inaugural post for Deadspin’s “Regressing” website, a reprint of the final Sportsgeekonomics post of 2013.  Read it all here at http://regressing.deadspin.com/teams-in-the-orange-bowl-dont-make-any-money-and-othe-1494130032.

Also — if you are looking for a shorter version (365 words), I have a nice shrunken version I created with the editorial help of Rachel Bachman of WSJ fame, which is currently unclaimed. 

Posted by
Andy Schwarz

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