College Football Bowl Games & Your Money

It is early January and we are just wrapping up the College Football bowl season.  Unlike every other college sport, D-I

The 2007 PapaJohns.com Bowl. Plenty of empty seats to go around.

college football does not carry out a playoff after the regular season.  Instead a series of “bowl games” are played matching up teams with similar records at games in warm locations such as Miami and southern California.  The tradition started with the Rose Bowl in Pasadena, CA in 1902 and now 34 bowl games will be played this year.  It is an odd tradition, but as a fan of college football, one I enjoy.

However these bowl games come with a increasingly steep price tag.  The organizers of them would tell you they are financially beneficial and help the local economy.  While the premier games featuring great teams such as the Rose Bowl and Championship Game make mountains of cash, the smaller games are economic sink holes for both taxpayers and universities.

The Cato Institute’s Neal McCluskey published an op-ed last week detailing how bowl games pass the bill to the taxpayer:

For starters, many bowls receive generous taxpayer subsidies. According to Mark Yost, author of Varsity Green, seven bowls received more than $21.6 million in government aid between 2001 and 2005. And the majority of bowls are tax-exempt, supposedly because they’re good for local tourism. That bowl executives often make big money and corporate sponsors get prominent advertising is apparently irrelevant.

So local governments are basically handing money over to these bowl games.  That sounds bad, but these days just about every industry gets a bailout of some sort, so bowl games are not unique.  But that’s not the only way in which bowl games raid our wallets.  Since they often struggle to actually sell tickets to these games, the bowls require participating schools to buy a set amount of tickets as a requirement for playing.  Michigan football blogger Brian Cook outlined the problem in a brilliantly titled post Small Bowl Games Rob Peter to Pay Peter:

Since a sizable cut of their guarantee is being fed right back to the bowl in the form of ticket guarantees that aren’t coming close to being met even for BCS games, the result is a net loss for everyone except the bowl operators. (One reason you’ll never see this story on ESPN: the network now operates a half-dozen bowl games of little repute.) The MAC received a $2.1 million kickback from the BCS last year; bowl games the conference actually played in lost more money than they brought in. This is a familiar story: programs unable to actually pay players spend money in a thousand other ways, competing against each other on the margins and introducing a cottage industry of middlemen taking a cut.

So local governments are pouring in money and small schools are taking big hits to play in these games.  This is bad, but obviously the big name school are making money off these games, right?  Well the college football blog The Wiz of Odds reports differently:

The Big East’s payout to West Virginia for its trip to the 2008 Fiesta Bowl was $2,425,600, but the team’s expenses totaled $3,495,000. That’s a loss of $1,069,400.

Florida and Ohio State ran up more than $5 million in expenses in the 2007 BCS title game, finishing with a combined deficit of more than $600,000.

Texas A&M racked up losses of $489,978 for its trip to the 2006 Holiday Bowl…

Who’s getting rich? The bowls, of course, or at least some of the people associated with them. In 2006, Outback Bowl president Jim McVay had a salary of about $490,000, the San Diego Union-Tribune reported. Gary Cavalli, the executive director of the Emerald Bowl, had a salary of $362,018 back then.

West Virginia, Florida, Ohio State, and Texas A&M are huge state schools with traditionally successful football programs.  The fact that they are losing money on these games is shocking.  Clearly there is plenty of blame to go around to the local governments, the schools, and the bowl games themselves.  If the bowls were honest about these facts it would be one thing, but we are told that bowl games make profits and are good for everyone.  This is clearly not the case.

As college students and recent grads we should be furious that our tuition and tax dollars are being used to fund these boondoggles.  While I personally love watching these games and would be sad to see them go, I am glad that light is finally being shed on the financial mess they create for everyone involved.

[Editor's Update]

Neal McCluskey of the Cato Institute just recorded a podcast covering this issue.  He touches on all the ways taxpayers are on the hook for big time college football including direct subsidies for bowl games, subsidies for stadiums and operations, bowl games requiring schools to buy a certain number of tickets (which go unsold), and more.  Check it out.