The College Football Cartel

I had the idea for this post when listening to “The Fan” 97.1 FM yesterday…at work…where I am currently. Common Man and the Torg were discussing the BCS Bowl system. Now regardless of whether you prefer a playoff, plus-one system, reversion to the traditional system, the status quo, or some weird sadistic combination, the conversation led to some valid arguments.
The Torg began, “The BCS is a cartel, and the rich are getting richer.” Sounds like a queue for some economics. For starters, of the ten teams selected for the five BCS bowl games, six are guaranteed conference champions from the major conferences. Of course, this system gives an immediate disadvantage to all teams outside of these conferences. One loss to TCU or Boise State’s unblemished record this year would have certainly barred them as a BCS bowl contender, but a win by a then 8-4 Clemson team over Georgia Tech this past weekend would have given the tigers an Orange Bowl berth. Despite five teams remaining undefeated after regular season play, the BCS “formula” pitted Alabama against Texas. The “formula” is quite possibly the most unfair part of the entire process—one which two thirds relies on human opinion. No one can argue against the fact that the BCS was created for the benefit of the “BCS conferences.” Furthermore, through the use of the BCS “formula” and bowl selection by committee, the BCS is in collusion to keep downward pressure on the non-powerhouse conferences from gaining ground on the major ones.

How is the BCS a cartel?

1. Maximizes revenue for the benefit of the six major conferences, leaving the rest of college football with little. Payouts are fixed by the cartel.
Below is the breakdown of last year’s payouts from the BCS:
$19.3 million — non-AQ conferences
$17.8 million — each AQ conference
$4.5 million — each conference with a second team in the BCS (in addition to the $17.8 million above)
$1.8 million — Football Championship Subdivision conferences
$1.3 million — Notre Dame
$0.2 million — Army and Navy
(2009-10 is expected to be similar)

2. Extreme social inefficiencies. “Of the 156 college football teams, 100 of them start with no chance”…at a national championship. Even in the other BCS bowls, teams are picked on the basis of potential revenue generation. Penn State could have been selected over Iowa to play in the Sugar Bowl had the committee believed such a move would prove more profitable.

3. Maximize revenue for the BCS committee. Preventing a playoff, keeps the entire post-season on neutral fields. The revenue generated from these games are then at the disposal and control of the BCS. The schools get less of a say in the allocation of funds.

In any other industry, these acts would be considered anti-competitive and unlawful. The BCS system continues to pump money into the powerhouse conferences while maintaining the glass ceiling for their non-major counterparts. No matter how great a year TCU or Boise State had or could have had this season, these teams had no chance at playing for a national championship from day 1. Greater substantiation of BCS conspiring is evident in this year’s Fiesta Bowl. Instead of matching TCU and Boise State against formidable major conference foes, the system chose to play the teams against each other. If these teams had the opportunity to play powerhouse conference opponents—and won—it would have only strengthened the arguments against the BCS system.

In the end, as is with most things, it’s all about the benjamin’s—and the BCS is rolling in them.