With the College Football Playoff format and future revenues in flux, this is on the table

By | March 8, 2024

As College Football Playoff leaders continue to explore the future of the business, the industry is on edge.

The Big Ten and SEC are flexing their proverbial muscles. The Big 12 and ACC are toiling over compromises.

Playoff formats and revenue models continue to circulate.

A deadline is looming. An agreement is missing.

And for some, there is a disturbing certainty: Any deal reached will drive a further financial wedge between the four major conferences.

The CFP is heading toward a new format and revenue model that leans toward the new Power Two of college athletics, creating a more formal demarcation between two groups: the SEC and the Big Ten; the ACC and Big 12.

While the Power Two long ago seceded through increased revenue streams and recent expansion, a new playoff model is expected to draw a more permanent line. Exploiting an unequal revenue distribution creates a tangible divide between college football’s haves and the players who were once true equals in the industry.

Those with knowledge of the proposals spoke to Yahoo Sports on condition of anonymity.

“You have two leagues asserting their power,” described one college athletics administrator.

The College Football Playoff's 12-team format will only be signed for the next two seasons.  (Jevone Moore/Icon Sportswire via Getty Images)The College Football Playoff's 12-team format will only be signed for the next two seasons.  (Jevone Moore/Icon Sportswire via Getty Images)

The College Football Playoff’s 12-team format will only be signed for the next two seasons. (Jevone Moore/Icon Sportswire via Getty Images)

CFP format and revenue distribution

Any decision on a playoff format takes a back seat to a more important piece: the money.

A revenue sharing model has emerged that would hand out several million more dollars annually to the SEC and Big Ten than their two power league counterparts. While it was an expected move, the numbers shocked those who had seen the proposal.

Under the previous structure, the five major conferences typically shared 80% of the CFP’s $460 million in revenue.

In a proposal discussed among administrators this week, the Big Ten and SEC would together earn about 58% of the CFP’s base distribution — a figure that is sure to grow in the participation distribution as their individual schools earn more revenue for qualifying and advancement in the play-offs. . This figure would easily exceed the combined distribution figure of the ACC and the Big 12, which is expected to be around 31%. The remaining amount (approximately 10%) will be distributed among Notre Dame and the 64 teams of the Group of Five.

The difference in distribution between the two sets of conferences – SEC/Big Ten and ACC/Big 12 – will likely exceed $300 million per year. The Power Two will earn about $760 million combined, compared to about $440 million for the ACC and Big 12. About $115 million is planned for the Group of Five.

No school’s revenues will decline, as the CFP is expected to distribute about $1.3 billion annually in a new television contract with ESPN, or three times the amount of the previous deal in the four-team version. The participation distribution is expected to account for only $100 million of the total distribution amount. Teams earn between $3 and 5 million each for participation and advancement in the playoffs.

Considering the distribution rates, SEC teams will make as much as $23 million per year, Big Ten $21 million, ACC about $14 million and Big 12 about $12.5 million. The Group of Five teams are expected to earn just under $2 million.

The contract is expected to include a look-in provision to consider further conference realignment — a provision that Big 12 Commissioner Brett Yormark encouraged to add.

A play-off format has not yet been definitively determined.

There are still several 14-team formats circulating in the industry, including the one that made headlines last week. It awards three automatic qualifiers each to the SEC and Big Ten, two each to the ACC and Big 12 and one to the top-ranked Group of 5 program, with three at-large spots – a 3-3-2-2 1+ 3 models.

There is also a 2-2-1-1-1+7 model. It awards two car berths each to the SEC and Big Ten, one to the ACC and Big 12, one to the top-ranked Group of 5, with seven at-large spots. There is also a 5+9 model that mirrors the current 5+7 12 team format, but with two extra large spots. Presumably that model would automatically accommodate the five highest-ranked conference champions.

The concept of the Big Ten and the SEC having exclusive rights to the two first-round byes has attracted enough resistance that many expect it to be tabled.

The money is the most important issue.

Income is more important than ever. The major conferences and their members are gearing up for a future compensation model for athletes. The concept – whether employment, revenue sharing or collective bargaining – requires setting aside additional cash flow for players.

The age-old method of splitting revenue evenly has recently imploded at the conference level. Washington and Oregon received discounts to join the Big Ten. SMU, Cal and Stanford did the same by joining the ACC, a league that now does not distribute funds evenly but is based primarily on football performance.

Now the trend has reached the national stage. The CFP basic revenue distribution model is largely based on historical playoff success over the past decade. Considering future realignments, the SEC and Big Ten account for 72.5% of CFP participants. The SEC leads all schools with 17 in the four-team field, considering Oklahoma and Texas. The Big Ten is next at 12, taking into account the four new schools. The ACC (7 teams) and Big 12 (2) follow.

“I’m looking at this real-life healing of conferences,” Washington State President Kirk Schulz, the Pac-12 representative on the CFP Board of Managers, told Yahoo Sports last month. “You have the Big Ten and SEC and then you drop down a level to ACC and Big 12 and then you drop to Mountain West and AAC, at least in terms of football. The Pac-12 is somewhere in all of that. I’m happy to see national leadership from the Big Ten and SEC. Someone has to take the reins, but it’s probably a little scary if you don’t happen to be in the Big Ten or SEC. Will anyone be dictated to, ‘This is how things will look’?’

Beyond the size, the distribution of the money alone is causing concern for both the ACC and the Big 12, with some administrators asking a tough question:

“Would the Power Two really leave if we say no?”

What is the place of the ACC in this?

The implications of the new level of college football could be far-reaching, and none could be more impactful than the Atlantic Coast Conference.

The CFP’s further demarcation of the industry’s power structure is likely to worsen the ACC’s fate in keeping some of its biggest brands out of the industry. The gap in the revenue distribution model could further incentivize programs to follow the state of Florida’s lead in a legal attempt to exit.

With their television deal falling further behind the Power Two financially, seven ACC schools – FSU, Clemson, Miami, North Carolina, NC State, Virginia and Virginia Tech – met independently last year to discuss a possible exit strategy from the award. ACC to investigate. rights. Leading the expedition were Florida State and Clemson, the two most disgruntled and perhaps valuable programs seeking a new conference. FSU took a first step in its exit strategy in December and filed a legal filing against the league. Court dates are scheduled for later this spring.

Clemson attorneys have been preparing for their own legal action in recent months, sources with knowledge of the discussions told Yahoo Sports.

More attempts at secession could plunge the conference into chaos. Could the outcomes of a possible exit from Florida State or Clemson come apart from the allocation of rights? – could chart a path for the other members of the seven, especially North Carolina, the most attractive of the programs.

Can the seven leave the league on their own and reform into a smaller, more valuable conference? Could some of the seven join a new conference – the Big 12, SEC or Big Ten?

One date looms as a possible turning point in the ACC’s future.

Although ESPN’s contract with the ACC runs through 2036, the network has the option to opt out of the final nine years starting in 2027, a way in which ESPN itself could potentially reopen the rights grant, or at least the organization could restructure. agreement.

Can a restructured approach to unequal distribution prevent even more departures? Would an ESPN opt-out open the door to more schools leaving?

The network must exercise the option by February 2025.

The timeline

According to its own reporting, ESPN is in the final stages of agreeing a six-year extension with the CFP, which will pay the entity approximately $1.3 billion annually to televise the expanded playoff through 2031 broadcast – 12 teams in 2024 and 2025 and, presumably, 14 teams from 2026.

The offer has been on the proverbial table for more than a month now, as CFP leaders argue over a slew of issues: a playoff format, a revenue distribution model and a voting structure. Network officials have indicated they need a decision.

Some sort of internal deadline has been set – by the end of next week – by which the conferences must agree on a future CFP framework and, presumably, salvage all or part of the ESPN deal. It’s still not entirely clear how an agreement will be reached, as there is currently no contract or voting structure in place beyond the 2025 playoffs. The ESPN deal is the only thing binding the 10 leagues and Notre Dame.

Unanimity is not and will not be a requirement in any new contract – an expected change in the playoff voting structure. It is expected that the conferences, plus Notre Dame, that are willing to commit to the future framework will be part of the CFP after 2025.

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