As all organizations will eventually
benefit from a playoff format, letís eliminate a major obstacle - greed. Both
revenue allocation and revenue sharing must be discussed.
Revenue allocation explains how funds
generated by processes of a particular sport as a whole are distributed among
that sportís individual participants; where the individual participants may,
but not usually, receive identical portions. Once monies have been allocated,
there may be a need for some participants to divide their proceeds among members
of a particular alliance, such as a conference or league. Equal share of total
revenue among the members of any alliance is not necessarily fair due to the
fact that the worst program or department has little to no incentive to become
the finest. Is it fair when the least prepared, whom most likely put in less
effort, receive the same gain as the best? Thus, revenue sharing describes fair
dispersion among members whose returns vary per organization per year. Letís
look first at revenue allocation.
In the old system and current BCS, it has
basically been all or nothing concerning the allocation of monies, where smaller
programs collect little or nothing. The bowls have shown to make rich schools
richer. Schools in the (6) major conferences - ACC, Big 10, Big 12, Big East,
Pac 10, and SEC - received approximately 94% of the total $144.6 Million paid
out by 23 bowls after the 1999 season. Ten years earlier in 1989, the same teams
from above also received an identical 94% of bowl revenues. Additionally, there
is further disparity among the disparity. Take 1998 Kansas State for example.
After a heartbreaking overtime loss in the extra game of the Big 12
Championship, KSU was dropped from a slot in the BCS title game and a $12
Million payout to an insignificant bowl and payout of less than $1 Million. Now,
with the following allocation configuration, those teams in the postseason but
not in the National Championship game will still receive a significant payout;
and the teams not in the postseason altogether would receive a comparatively
Only schools that have Division IA
football programs would be eligible to receive any funds generated from a Div.
IA playoff. These funds, after NCAA expenses, would be distributed in a manner
to be described.
[We will call the after-expense monies to
be allocated, revenues]
With the Top 12 and Next 16 formats, there
are more postseason games. However, most important is the knowledge that all
games with a playoff structure would hold an optimum amount of interest. The
schools that participate in either the Top 12 or Next 16 tournaments would
receive approximately 63% of the total revenue. Those schools not partaking in
the postseason would receive approximately 37%. For each tournament, monetary
payouts will be determined by the last round of participation.
1.0 share = 1.0% of revenues
Total shares allocated to the 28 teams
of both tournaments = 63.0
Regarding the percentage each tournament is allotted from this total of
63 shares, the Top 12 shall acquire 63%, and the Next 16 secures 37% (sum the total
round in the table above).
.63 times 63 shares = 40 shares
.37 times 63 shares = 23 shares
Of 114 Div. I teams, 86 will not make either tournament.
37 shares remain for 86 teams.
Ranked teams #29 - #56 shall receive 37% of the remaining 37 shares; and
Ranked teams #57 - #114 shall receive 63% of the remaining 37 shares.
.37 times 37 shares = 14 shares
.63 times 37 shares = 23 shares
#29 - #56:
/ 28 teams =
0.5 shares per team
#57 - #114:
/ 58 teams
= ~ 0.4 shares per team
In summary of this particular and fair
distribution for a college football postseason, the top 28 teams (top quarter,
28 divided by 114 equals 25%) receive anywhere from 1.0 to 6.0 shares each;
teams of rank #29 - 56 (second quarter) each will receive a 1/2
share (0.5); and the bottom half of all ranked teams (#57 - 114) shall receive
approximately 0.4 shares each.
As a note, many schools have been
criticized for undisciplined spending on bowl trips. With the current system,
bowls pay the participating schools; who first take out their expenses, then
share whatís left, if anything. Under a playoff system, the NCAA could put
reasonable limits on university travel expenses, thereby further increasing
total revenues to be allocated.
There are many concerns regarding how
revenues are shared on both the collegiate level as well as in professional
sports, among other circumstances and environments. In Major League baseball,
for example, some teams spend $90 Million on player contracts and make a profit
while other teams may spend $40 Million and actually lose money. In regard to
college football, some individual teams are required to share their payouts with
other members of an appropriate conference. This and other scenarios are
relevant in the need to develop a fair and consistent method of sharing
For conceptual purposes, letís first begin with an example more closely relating to professional sports. This example shall introduce and clarify the steps and formulae involved; then, we will move to an example especially pertinent to college football.
Example: Professional Sports League Revenues Sharing Across Franchises
Revenues, which are rounded to the nearest $Million, are defined as monies available prior to any variable spending such as player contracts.
Listed is a sample of 12 teams and their varying pre-disbursement funds:
Rn equals REVENUE for a PARTICULAR TEAM
N represents the NUMBER of TEAMS
T is TOTAL REVENUE of ALL TEAMS
B stands for the BASE REVENUE TOTAL of ALL TEAMS
E is EXCESS REVENUE ABOVE BASE TOTAL of ALL TEAMS
D equals the REMAINING REVENUE per EACH TEAM
C represents the BASE per EACH individual TEAM
stands for EQUAL AVERAGE per TEAM of TOTAL REVENUES
I equals TOTAL of INDIVIDUAL TEAM ADDITIONAL amounts
F is the FINAL REVENUE EXCESS
An represents INDIVIDUAL TEAM ADDITIONAL REVENUE
Zn equals INDIVIDUAL TEAMís FINAL REVENUE AMOUNT
Steps to determine fair distribution: (emphasis on major and minor influences)
1. T = R1 + R2 + R3 + ... + Rn
2. V = T / N
3. B = T (.63)
4. C = B / N
5. An = (Rn - C) (.37)
6. I = A1 + A2 + A3 + ... + An
7. E = T - B
8. F = E - I
9. D = F / N
Zn = C + D + An
Zn = [[ T - (.63) (.37) T ] - I + N (.37) Rn] / N
From the above, we arrive at the Final Distribution Table:
C = 43
As you can see, individual organizations
that perform are rewarded with above average funds and organizations that fall
below standard receive below average funds. However, the differences between
individual entities regarding final disbursement is proportional to the
differences between levels of success or gain; as opposed to being skewed to
opposite ends of the spectrum as before revenue sharing, or as opposed to how
equal sharing appoints all exactly in the middle of the spectrum. In other
words, fair dispersion between members!
Now, letís apply these principles to
college football. The following illustration displays how schools of the Big 12
Conference would share the revenues acquired from individual programs after a
postseason of the Top 12 and Next 16 has concluded.
Total proceeds to be allocated among all Div. IA teams equals $500
C = 4.71
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