The expansion of the College Football Playoff not only adds value to the Pac-12’s regular season by turning the conference championship into a near-certain berth in the 12-team field, it also adds value — massive value — to the Pac-12’s postseason.
That windfall could give commissioner George Kliavkoff a chance to keep the conference together as it navigates the tumult caused by the departures of USC and UCLA.
How do you prevent Oregon and Washington from following the L.A. schools into the cash-rich Big Ten, if the invitation ever arrives?
By creating a path for them to become cash-rich in the Pac-12, thanks to an expanded playoff that could begin as early as 2024.
Before we explain our back-of-the-envelope math, some background on the conference’s revenue-sharing model …
Since the start of the current media contract cycle with Fox and ESPN, in 2012, the Pac-12 has used an equal-share model:
Each school receives 1/12 of the total revenue (excluding that used for conference expenses) regardless of the number of times it appears on either of the networks or is featured in primetime windows.
That model is deployed for the CFP, which began in 2014; The annual base payout to the Pac-12 (about $70 million) is split evenly — and so is the participation amount.
When Oregon (2014) and Washington (2016) qualified for the semifinals, the $6 million paycheck was divided 12 ways (operational expenses were handled separately).
But the dynamics have changed. USC and UCLA are gone (as of 2024), the playoff is expanding (as early as 2024), and the Pacific Northwest powers are candidates for future Big Ten membership — perhaps this fall, perhaps later in the decade.
By tweaking the playoff revenue distribution model, the Pac-12 could mollify schools with a wandering eye and, potentially, stabilize its future.
Tying playoff revenue to playoff participation is one of the few levers available for the conference to satisfy its top football programs.
Our math makes three assumptions:
1. The four-team playoff generates $470 million annually, plus an additional amount (roughly $200 million) tied to the New Year’s Six bowl games that aren’t hosting semifinals in a given year.
Estimates for the total revenue generated by a 12-team, 11-game, four-round event have varied. A report from CBS Sports suggested it could fetch $1.6 billion annually. Another report, from Front Office Sports, pegged the number at $2.2 billion annually.
We will use $2 billion for the purposes of this exercise. It’s a reasonable guess and a nice even number.
2. Currently, 63 percent of playoff revenue is distributed across the FBS conferences in a fixed fashion, as an annual base payout, while 37 percent is a performance-based amount (i.e., participation in the New Year’s Six games).
For the expanded playoff, the SEC and Big Ten undoubtedly will demand a higher percentage be set aside for participation. (Between them, the behemoths could gobble up four or five of the six at-large berths.)
We have split the payouts evenly, with 50 percent as the annual base for all FBS conferences and 50 percent — or $1 billion annually — paid out for participation.
3. In our model, the $1 billion for performance is divided into four buckets of $250,000,000, one for each round of the four rounds of the playoff. (It might be weighted differently when the contract becomes official.)
With $250,000,000 allocated for each round, the next step is to divide by the number of teams participating in the respective rounds.
We gave each of the 12 participants an equal share of the $250,000,000 in the opening round, even though the top four seeds will have byes into the quarterfinals.
That works out to $20.8 million per school, simply for qualifying.
Reach the quarterfinals, either via victory or bye, and the splits increase to $31.25 million for each of the eight teams.
Under the current equal-share model, each of the 10 remaining schools in the Pac-12 would receive $2.08 million if one team (the conference champion) were to qualify.
But if the Pac-12 wanted to appease Oregon and Washington, it could create an unequal-share model and give the participants an outsized portion of the revenue.
How much?
It could let CFP qualifiers keep their entire participation share ($20.8 million for making the playoff).
Or it could allow playoff teams to retain 50 percent of the total earned. If the Ducks reached the quarterfinals, for example, they would get half of the roughly $52 million earned ($20.8 million plus $31.25 million).
There are any number of ways to create a performance-based model — the same goes for NCAA tournament revenue, as well — and they all help the Ducks and Huskies close the gap on their peers in the Big Ten and SEC, if they qualify for the playoff.
(Another benefit: It incentivizes every school to spend more on football, which, in theory, would strengthen the Pac-12 for nonconference competition during the regular season.)
In the Big Ten, the Ducks and Huskies could reasonably expect to receive $30-35 million more in annual revenue than if they remained in the Pac-12, based on the disparity in broadcast rights for regular-season games.
Depending on the structure of the Pac-12’s unequal sharing model, that difference could be partially or largely offset with a playoff appearance.
And because their tradition, resources and brand power are greater than most, if not every school remaining in the Pac-12, the Ducks and Huskies seemingly would have a reasonable chance to reach the CFP on a regular basis (either with the automatic berth or as an at-large team).
Granted, participation frequency is merely a projection, like the exact shape of an unequal-share revenue model.
What’s not up for debate is that playoff expansion will give the Pac-12, if desired, enough cash to dangle in front of the Ducks and Huskies — perhaps enough to keep them in the fold if the Big Ten comes calling.