Big-time bowl games can create big-time financial issues for some schools

By David Wharton

Dec. 30, 2012 12 AM PT

On a Sunday afternoon in early December, the Northern Illinois football team gathered on campus to learn its fate.

A Cinderella story from the fringes of the big-time college game, the Huskies erupted in cheers when they received an invitation to play in the prestigious Orange Bowl on New Year’s Day.

But as players jumped on tables and threw their hands in the air, administrators set to work behind the scenes, wondering if their university could afford its big break.

“I’ve been in this business for a while,” said Jeff Compher, the athletic director. “I remember some not-so-great stories about schools that lost money in situations like this.”

TIMELINE: College football 2012-13 bowl schedule

There are 35 bowl games during this holiday season, including five that belong to the elite Bowl Championship Series — the BCS national title game plus the Rose, Fiesta, Sugar and Orange bowls.

It is no secret that teams often run up deficits traveling to minor postseason games that offer small payouts. More surprising, these tough economics can extend to the BCS.

Multimillion-dollar payouts get whittled down by complicated formulas and hefty costs, with competitors required to pay for large blocks of seats and expensive hotel stays. Schools turn a profit if they sell all of their allotted tickets, but not everyone can manage that.

In recent years, Virginia Tech, West Virginia and Connecticut wound up in the red.

“That is the misconception about bowls,” said Dan Fulks, an accounting professor at Transylvania University in Kentucky who analyzes NCAA financial data. “I think people are surprised at how much money you can lose.”

Bowl committees maintain complex relationships with certain conferences but, given a choice, prefer to choose teams that will bring lots of fans — and discretionary income — to town. The payouts they offer in return do not go directly to the invitees.

For a non-BCS bowl game, the money is sent to the respective conference. The Pac-12, for example, will receive an estimated $2 million for placing UCLA in the Holiday Bowl and another $2 million for getting USC to the Sun Bowl.

For BCS games, payouts equaling as much as $18 million per team go into an escrow account where they are combined with BCS television revenues. The six major conferences receive $25 million each, plus $6.2 million for each additional team that receives an at-large bid.

So the Pac-12 should net about $31.2 million for placing Stanford in the Rose Bowl and Oregon in the Fiesta Bowl.

The amounts can be dizzying as conferences pool their postseason money, giving bowl teams a cut off the top to cover expenses and dividing the remainder among all member schools.

This is the BCS paradox: The system pumps tens of millions into college football while rewarding teams that actually play in its games with only a fraction of the total payout. And the math gets even trickier for Northern Illinois, which belongs to the Mid-American Conference.

Years ago, when the big boys created the BCS, they set aside 9% of revenues for five less-prominent leagues — including the MAC – whose regular-season champions do not automatically qualify for BCS games.

The non-Automatic Qualifying conferences would have received $14 million this season, but the amount doubles whenever a non-AQ team such as Boise State, Hawaii or Northern Illinois reaches a BCS game, so the total will be $28 million.

Part of the money will be divided equally among the non-AQ conferences. Another part goes into a merit-based pool — the conferences with the winningest teams get the most money.

The MAC figures to receive at least $12 million thanks to Northern Illinois’ success, Commissioner Jon Steinbrecher said. That would divide into $1-million shares for each of the conference’s BCS-eligible members, but Steinbrecher realized early on that Northern Illinois faced major expenses.

“I started reaching out, seeing what other conferences had done,” he said. “And then I started thinking philosophically.”

The Huskies had to charter three planes to transport players, coaches, officials and band members to Miami. Not only was their designated team hotel relatively expensive, they had to check in for seven days as opposed to the four or five required for smaller bowls in which MAC teams usually play.

Even more worrisome, the Orange Bowl requires each of its competitors to purchase 17,500 tickets. That’s almost 2,000 more than Northern Illinois averaged at home games this fall.

Though the school had distributed about 15,000 seats as of last week, most were by donation. The Huskies have a tradition of providing one free ticket to each student who applies. Thousands more were given to Big Brothers Big Sisters and a veterans group.

That left actual sales at about 3,000. With face values ranging from $75 to $225, Northern Illinois stood to lose millions.

“I knew what was going to be expected of us,” said university President John G. Peters, who previously worked at Nebraska and Tennessee. “It’s not like we’re going to make millions of dollars just because we made the Orange Bowl.”

The secondary market adds to the ticket dilemma. Late last week, the cheapest Orange Bowl seats were listed at $23.99 on StubHub. Prime $225 seats were going for $170.

No wonder bowl-bound teams absorbed an average of more than $12 million in unused seats over the last two seasons, according to an NCAA financial report.

Connecticut ended up almost $3 million short on ticket sales for the 2011 Fiesta Bowl. Even with its share of the payout, the school lost $1.8 million on the trip. Virginia Tech faced a similar difficulty at the 2009 Orange Bowl, when the Atlantic Coast Conference stepped in to pay off $1.6 million of a $2-million loss.

“By contract, we weren’t even allowed to reduce the [ticket] prices,” said Lisa Rudd, Virginia Tech’s assistant athletic director for financial affairs. “They wouldn’t let us sell to a group at half off.”

Sparing Northern Illinois from a similar fate, the MAC recently approved $4 million in travel expenses for the team. Exact payouts will not be calculated until after the game, but the school should leave Miami with a reasonable profit.

“This is a celebration for the entire conference,” Steinbrecher said. “We’ve made it to a BCS game.”

Some of that achievement cannot be measured in dollars and cents. Though the Huskies are a heavy underdog to Florida State, their campus in DeKalb has been buzzing for weeks.

Coach Rod Carey sees a positive response from high-school recruits — “They call us back,” he said — and alumni, who donated more than $31,000 so the university could offer students a $150 travel package that includes transportation, meals and a two-night hotel stay for the game. Twenty-six buses were scheduled to head south from Illinois.

Administrators have been just as thrilled. Peters said that freshman applications have risen significantly since the Orange Bowl invitation.

“Kids in the area are making inquiries,” the university president said. “They’re going on line and saying, ‘What is this Northern Illinois?’ ”

As for the more-tangible aspects of a BCS bid, Compher can enjoy the experience now that the conference will balance his budget.

“Oh, it’s a relief,” he said. “I’ve had a smile on my face.”

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