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Lost in the shadow of the mighty College Football Playoff, several less prestigious postseason bowl games recently have faced a tough choice.
Costs had gone up. Attendance was going down. What could they do about it?
Three of them decided to bail out:
In January, the non-profit owner of the Poinsettia Bowl in San Diego announced it was canceling the game after 12 years.
A few months later, the non-profit Miami Beach Bowl announced it was selling itself to ESPN Events after not being able to find a title sponsor since its birth in 2014.
After losing money in 2013 and 2014, the non-profit owner of the Foster Farms Bowl also transferred ownership of the game to a new owner last year with deeper pockets, the San Francisco 49ers.
"The Playoff had had a bigger impact than expected in terms of diminishing the other bowls," said Gary Cavalli, the former executive director of the San Francisco Bowl Game Association, which founded the Foster Farms Bowl in 2002.
As a result, more lower-tier bowl games have been picked up on the cheap by for-profit companies such as ESPN Events -- altering the complexion and business model of an industry that previously was exclusively run by local non-profit civic organizations that promoted tourism.
It's part of the fallout of an industry that is now dominated by the Playoff, which started in 2014. It's also a result of market saturation. In 1996, there were only 18 bowl games, virtually all of them run by these stand-alone non-profits.
This year, there are 40 major-college postseason games, starting Saturday, with a record 17 of them owned by larger for-profit businesses, including three pro sports franchises: the 49ers, Detroit Lions (Quick Lane Bowl) and New York Yankees (Pinstripe Bowl).
The biggest game, the national championship, is owned by the College Football Playoff Administration LLC, a for-profit entity whose members are the 10 major-college football conferences and Notre Dame.
The other 13 "for-profit" games are owned by ESPN Events, a division of the cable sports network. That's crept up considerably since 2005, when ESPN Events owned just three of the 28 bowl games.
"The ownership and operation of a bowl game is something that is more in the wheelhouse of ESPN Events," said Chuck Sullivan, spokesman for the American Athletic Conference, which owned the Miami Beach Bowl before selling it to ESPN Events. "So as long as we maintained a spot in the bowl on an annual basis, it made sense to sell the game to them."
The Miami Beach Bowl drew just 15,262 to last year's game at Marlins Park, whose capacity is about 37,000. After buying it from the American Athletic Conference, ESPN Events moved it to a 20,500-seat soccer stadium in Frisco, Texas, where Southern Methodist (7-5) will face Louisiana Tech (6-6) in the inaugural Frisco Bowl on Dec. 20.
The move underscores why ESPN values these lower-tier games. It's not because of crowd size. It's about television viewership, too. Average bowl game attendance has declined for nine consecutive years, down to 41,718 last season, the lowest mark since the 1940s, when there were only about a dozen bowl games, according to NCAA records.
But smaller crowds and the struggles of some of these games don't mean the overall bowl industry is in trouble. Far from it. The business model is just shifting.
A profit of $517 million
The system is still about supply and demand. And there's still plenty of demand for these bowls from the conferences, schools and fans who want their teams to play in them if they're eligible with at least a 6-6 record. Three bowl-eligible teams were left out of the bowl schedule this year and weren't happy about it: Buffalo (6-6), Western Michigan (6-6) and Texas San Antonio (6-5).
There's also plenty of money supply now to help pay the expenses of all the teams when they go to these games, mostly coming from the windfall of the Playoff, which gets about $470 million a year from ESPN.
The bowl games collectively paid out about $622 million to conferences and schools last season, including $441 million from the Playoff alone, according to NCAA financial records reviewed by USA TODAY. After $105 million in expenses, the conferences and schools took home a $517 million "profit."
"The bowl system is really healthy," said Clint Overby, vice president at ESPN Events.
For conferences that participate in lower-tier games, it's healthy in large part because the Playoff subsidizes them even if they don't participate in the Playoff.
Last year, for example, the American Athletic Conference placed seven teams in bowl games, including Tulsa in the Miami Beach Bowl.
The AAC got $20.3 million from the Playoff in revenue sharing despite not having a team involved in it. If not for that Playoff share, the AAC would have lost more than $1 million on its bowl trips because the lower-tier games didn't pay enough to cover $5.9 million in combined league expenses, according to NCAA financial forms.
It's a system that works well for the biggest bowls and all the leagues and teams that play in the postseason. But it hasn't exactly worked for some of the smaller local stand-alone organizations whose visibility and importance have been shrunk by the Playoff. Those businesses needed to sell tickets, sponsorships and TV rights to keep the lights on and meet the payout required to the participating conferences that put their teams in their games.
And that's why some have bailed and other business models have taken over instead.
Trouncing the competition
Such games arguably make more financial sense for ESPN than traditional non-profit bowl organizations because the currency of the realm for ESPN is eyeballs on screens and not so much butts in stadium seats.
"The ESPN bowl games, which account for the growth in bowl games, are essentially made-for-TV events," Stanford economist Roger Noll told USA TODAY.
Consider the Miami Beach Bowl in which Tulsa beat Central Michigan last year 55-10. A crowd of 15,262 was bad news for a small non-profit that relies on ticket sales and corporate sponsorships to make ends meet.
But attendance doesn't matter as much to a deep-pocketed media network. ESPN wants live television programming during the holiday season to draw viewers, sell advertising and beat the competition, reinforcing the channel's value with cable distributors and satellite providers.
The game drew an average of 795,000 TV viewers, trouncing other channels that day, on a Monday afternoon. Fox Sports 1 and NBC Sports Network both had less than 280,000 viewers on average during the same time period, according to Nielsen.
For comparison, ESPN boasted earlier this year that its Wednesday Night Baseball viewership had increased to an average of 636,000 in April, up 11% from a year earlier.
"Think of how well it would rate in a different time slot," Overby said of the Miami Beach Bowl.
Even though it was the least-watched bowl game of the season, it was still a ratings win for ESPN. Live sports games are especially coveted by advertisers because viewers are considered more likely to watch their commercials live, unlike non-sports content that often is recorded with a DVR to skip the ads.
By owning these games, ESPN also doesn't have to pay an outside middleman for the right to broadcast them. This year, Disney-owned ESPN and ABC networks will televise 35 of the 40 postseason games, including the 13 games owned by ESPN Events.
"We can institute scale and some learnings across multiple games to identify the best models at each," Overby told USA TODAY. "That's ultimately how we're able to make these things work competitively across the board."
Don't get him wrong: ESPN wants to sell lots of tickets to these games.
Yet even if they don't, ESPN still can succeed financially where a local non-profit bowl owner cannot.
Owning these games also makes more sense for a pro franchise such as the 49ers, which can use its own stadium, staff and corporate relationships to put on a bowl game and make extra money. Likewise, the Lions started the Quick Lane Bowl in 2014 and host it annually at their stadium, Ford Field. The Yankees have staged the Pinstripe Bowl at Yankee Stadium since 2010.
"The old non-profit model, at least in our case in the most competitive sports market in the country, was probably going to be more and more difficult," said Cavalli, who recently retired from the San Francisco Bowl Game Association. "From our standpoint, it made sense to turn the game over to a successful, deep-pocketed pro team that had a new stadium, lots of personnel and the ability to sell sponsorships as part of packages rather than as a one-off."
In effect, ESPN Events and pro franchises are saving or stabilizing these lower-tier games. Both recognize the demand for them, from teams, fans and viewers.
"What really gets missed sometimes is that college football is wholly unique in that it has a full-on celebration of its season every year at the end of the year through the bowl system," Overby said.
ESPN Events is more invested in it than ever before. It also owns the Celebration Bowl, a game between historically black colleges and universities. This year it's Grambling State vs. North Carolina A&T on Saturday on ABC.
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