BCS Analysis – Revenue Discrimination

Mr Pac Ten
Posted May 28, 2010

Collegefootballnews' Matthew Smith Looks at the BCS, what's wrong with it and how to fix it, part three: The BCS "Revenue Discrimination" Chart

It seems like almost every year there is a controversy involving the BCS rankings, either in terms of who gets to go to the national title game, who gets the at-large berths, or sometimes both. Over the course of a few articles, I'll be looking at the problems with the BCS system and suggesting some practical, reasonable ways to make it better. This isn't about overhauling the system and turning it into a plus-one or playoff (whether that's a better way to go is another debate entirely); this is about making the current system better.

By now, you're probably all familiar with the chart created by Alan Fishel of the DC-area law firm Arent Fox, entitled "BCS Mandates Substantial Revenue Discrimination, Regardless of TV Ratings, Rankings and Attendance" ( link here). You may have also read some commentary by one or more sources talking about this chart, such as SI.com's Andy Staples ( link here), AJC's Tony Barnhart ( link here), the Idaho Statesman's Brian Murphy ( link here ) or Boise St President Robert Kustra ( link here ).

What's especially interesting about the whole situation is that the chart itself is really supposed to be making a point about how the BCS discriminates in terms of how it distributes revenue to the non-AQ teams that actually make BCS bowls (emphasis mine). However, many of the people talking about the chart are interpreting it in terms of access (see Staples, Barnhart, Murphy, and various internet board threads such as this , this , this , this , and this . Keep that point in mind, because I'll get back to it after talking about what the chart is actually trying to say, namely that the BCS is guilty of discrimination for the checks that it actually cuts to teams that make the BCS.

You're probably not familiar with how the BCS revenue distribution system works; before the conversation I had with Mr. Fishel (the lawyer who published the chart), I wasn't either. If you had to think about it, you'd probably just assume that, for instance, when Utah made the Sugar Bowl in the 2008 season, the BCS cut the Mountain West a check and they'd be free to do whatever with that check, including "spreading the wealth" to other non-AQ leagues, should they so choose. It would be the logical, sensible way to think about it. And if you'd read the BCS's recent letter ( link here ), you'd really think so, given that they stated point blank "The Sun Belt Conference, Conference USA, Mid-American Conference, Mountain West Conference and Western Athletic Conference (the "non-AQ conferences") have elected to pool their revenue and distribute it under a formula that they have developed. That is solely their decision."

However, according to Mr. Fishel ( and confirmed by Wikipedia), you'd be wrong. Instead, the way it works is that the BCS cuts a check to the non-AQ conferences as a whole, and they decide collectively what to do with the cash. Unsurprisingly, they have decided to go with an approach that leans more towards equal (everyone gets a slice of the pie) rather than equitable (the leagues that actually earn the cash get to keep it); you can see this NCAA-provided chart for the details of the last five bowl season payouts. And that is the ultimate source of the "revenue discrimination"; technically, the BCS sends everyone else a check greater than what an automatic qualifier earns, but so many people take a piece of the pie that in the end a non-AQ league that sends a team to the BCS ends up with far less than what an AQ league (who doesn't have to share) gets.

Is that unfair? I have to say yes. Technically, the BCS didn't mandate the revenue splits, and technically the non-AQ leagues could have collectively decided to split the revenue in a way that more strongly rewards the teams that actually earn the revenue, but that doesn't abdicate the BCS of their responsibility to act fairly. Just because the Sun Belt or MAC could have chosen to grab less cash but instead chose to act in their own interests doesn't means that it was fair for the BCS to create that situation in the first place. It seems to me that what's happening here is that the BCS has chosen to throw a check at "everyone else" and wash their hands of all responsibility.

And that's extremely troubling. I'm no lawyer, so I can't speak for or against the relevant legal rules, but at the very least it really doesn't sound good, even if it turns out be actually be legal (and again, I'm no lawyer, so I really don't know one way or the other). What's especially troublesome about the whole arrangement is that it's incredibly easy to come up with a simpler, fairer arrangement for payouts. That would be to take some (small) fixed percentage of BCS revenues and split it evenly between every single team in 1-A (I have no idea why 1-AA leagues are also getting BCS revenue; if that needs to continue then I guess count them in too, probably at some lower payout rate). After that is done, then all other payouts go to the directly to the teams / leagues that participate in the BCS games.

Obviously, there are still some payment-related issues to work out, most importantly what kind of flat percentage goes out to every 1-A (and maybe 1-AA?) team, as well as whether to institute flat payments for each BCS berth or largely keep the more complicated system in place. But it would be a simple, clear, and potentially fair system, that no longer lets the BCS ditch their obligations (whatever they may or may not be) to the lower-level 1-A teams by essentially letting them steal the revenue that the more worthy non-AQ teams have earned.

That said, I should at least take the time to at least defend a little what the BCS has been doing. As of the end of the 2007 season, there had been only three teams who made BCS bowls from non-AQ leagues, and if memory serves, there had never been a second team who seriously challenged for an additional berth. In that context, and at that time, it would have been reasonable to mentally bucket "everyone else" into one group and treat them as one huge league that only sometimes would produce a team worthy of a BCS at-large berth. I'm not saying fair, mind you, but at least reasonable from a certain perspective. However, now that we've just gone through 2008 and 2009, with three teams making BCS bowls (and both Boise and TCU in 2008 would probably have been extremely competitive in BCS bowls), that perspective is a lot less reasonable and a lot less defensible. No matter what the reasoning behind the current payment system (and I've just been speculating in this paragraph), it's becoming increasingly clear that it needs to change. Of course, this is the BCS, who seem to always bumble and stumble their way through existence (see my previous columns about the computer polls and coaches polls for more evidence of this), so don't hold your breath on them doing anything about it on their own.

So that's the story about what the chart is actually trying to say. However, considering how many people have interpreted it in terms of access and not revenue structure, I have to talk about that as well.

First of all, I should point out that, in terms of its message, the structure of the chart actually makes a lot of sense. As noted in the top, the message is that the BCS is discriminating in the checks they cut; the message is NOT "hey look, the MWC/WAC are a lot better than the ACC/Big East, so why aren't the auto-bids distributed differently". In other words, the important figure is the one on the right, with the really large gap; the relevance of the three charts left of it (TV Ratings, Rankings, Attendance) is simply to tell the story that the MWC/WAC champions that make BCS bowls look at least as good as some of the BCS participants from other leagues. (emphasis mine) It's not there to try to make a superiority argument, but rather to clearly demonstrate that the substantial revenue difference for BCS bowl participants is not justified by TV Ratings, Rankings, or Attendance. And in that context, they do serve to support the argument that the way the BCS distributes money is pretty clearly unfair.

However, many people aren't taking this chart in that context. As noted in many of the above links, it seems to have now become popular to interpret this chart as being relevant to BCS access, rather than simply revenue distribution. Even though the intended meaning of the exhibit makes a lot of sense, so do alternative interpretations, partially because the left three charts all appear to show the MWC/WAC in a favorable light, and partially because the comparison targets are the ACC and Big East, two leagues that have come under recent fire lately for their auto-bids. Unfortunately, when you go down this road, you start to create some serious problems.

For starters, four years (and for the Big East and ACC, only four games each) is a fairly small snapshot to be drawing major conclusions based on any of these three standards. This is especially true because it gives a lot of weight to the abysmally-rated 2009 Orange Bowl between Cincy and Virginia Tech, while not giving any weight at all to the extremely well-rated 2006 Orange Bowl between Penn St and Florida St, or the pretty well-rated 2006 Sugar Bowl between West Virginia and Georgia. And in terms of attendance, the same arguments apply, plus the fact that that even though the blue bar (MWC/WAC) looks better than the other two, it's actually a pretty close set of numbers, simply blown up for presentation's sake.

Moreover, these tables are cherry-picking the best MWC/WAC champions of the last four years, and ignoring duds like 2005 Boise (BCS rank: NR) and 2006 BYU (BCS rank: 20th). By throwing out those teams, you're heavily biasing the rankings and ignoring the likelihood that those teams would have produced duds in terms of TV ratings and attendance.

Also important is the fact that in the context of six auto-bids, there will inevitably be variation of quality by league from year to year. Looking at what appear to be the two most favorable comparison points (the other four leagues scored substantially better in TV ratings, even if you throw out the national title games), doesn't give a fair comparison. In any four-year period some leagues will look worse and some better; unless you can show that this sort of pattern was consistent over a longer period of time, reading anything into those differences is extremely dubious.

Finally, it's worth noting the fact that the decision on which leagues got auto-bids was set before the 2008 season. If you want to argue discrimination (as opposed to simply arguing that the next time the decisions are made, the Mountain West should get an auto-bid), then you need to look at the seasons before then. Unless you buy the "crystal-ball theory" of discrimination, that the BCS somehow "should have known" what future seasons would hold, then you have to look at the 2004 – 2007 seasons instead. And considering that TCU and Boise just combined for the best-ever rating by non-AQ teams in the last decade (and was the best pair of non-AQ league champs in the last decade as well, with 2008 Utah and Boise second), as well as the fact that the 2005 season didn't produce any BCS teams (14th ranked TCU was the best non-AQ, and WAC champ Boise wasn't even ranked), it'd be a hell of a lot harder to argue that the access decisions made at the time were discriminatory.

In summary, this chart does a good job of highlighting the unfair revenue distribution system that the BCS currently uses. However, it does not reasonably address access or auto-bids, and in no way should be used as a talking point on that issues, much less "proof." Anyone who chooses to do that either doesn't fully understand what the chart is, says, and ought to mean, or is intentionally being misleading.

Mr Pac-10's 2009 Blog

Questions, comments or suggestions? Email me at cfn_ms@hotmail.com

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