Could the "Power" Programs Split?

"Have we got a college? Have we got a football team? Well, we can't afford both. Tomorrow we start tearing down the college!" The line is from a 1932 Marx Brothers film. Maybe all the talk of the emphasis on athletics isn't quite so new.

A current hot topic is splitting Division I with the five "power" leagues defecting. How realistic is the talk and could it actually happen?

Sports columnist topic seem to run in fads. Need a playoff. Do something about injuries. Do something about paying players. Academic integrity. Early draft of players. Right now it is split Division I. Again.

Go back and you can find columns about the inevitability of a split. Whether it is the 2010's, the 2000's, the 1990's or even the 1950's the topic has been hashed out time again in the same apprehensive tone. There are a group of schools so big in the sport that they no longer have anything in common with the little guys and need their own place to play.

Why after sixty plus years of doom predictions has the split not happened and why might it yet happen?

It hasn't happened yet for two reasons. It isn't a fear of lawsuits nor political repercussion, though both could be real risk. The reasons are simpler. Collegiality and the nature of the enterprise have held the NCAA together.

Collegiality, the cooperative nature of colleges at its simplest can be reduced to this maxim. Presidents don't like kicking other presidents out of the room and when they do they want the standards to be uniform and potentially be standards that can be met. The general rule is that once someone enters the club, they don't like changing the rules to eliminate members of the club, even though they may make the standards nearly impossible for new members.

The nature of the enterprise boils down to this fundamental thing that so many in the media fail to grasp as they write and read stories about the money involved in modern college athletics. College football is in a different business than the National Football League.

The NFL is in the business of selling television content, merchandise, tickets and premium entertainment experience (ie the luxury box).

The NFL shares equally or near equally three of those revenue streams. Owners aren't worried that much if a team isn't selling out unless it impacts TV because it is a smaller part of the revenue picture. The NFL owner is profit driven. Maybe not season to season he but at least anticipates a large capital gain upon sale. A gain artificially fueled by supply constraint (ie. there is a relocation premium in each sale, paying it to move a team or to stave off the relocation buyer).

TV is the largest revenue source and merchandise according to some reports has passed ticket sales as a revenue source.

The NFL hands a sop to the fan of the poor performing squad, premium selection rights for new talent and the knowledge that your better performing rival will not outspend you. The NFL will also adjust your schedule to make it easier to find success.

College football is primarily in the business of selling tickets and soliciting donations and sponsorships. Only at the weaker end of each P5 league do you see conference revenue representing about 50% of revenue and that conference revenue is a mix of TV, CFP/BCS distribution, NCAA distribution, conference sponsorship agreements, and revenue from league championship events.

At the upper end of the P5 leagues that conference revenue represents around 30% of revenue.

Successful revenue generation in the P5 (and FBS and Division I in general) is centered not on television revenue but ticket sales, sponsorships and donations.

The CFB is not profit driven. Even the richest programs routinely dip into university operating funds to allow them to spend competitively against rivals. There is neither an annual profit motive nor a long-term capital value growth motive. There is little constraint against entry into the marketplace. If you are an accredited four year college and have the resources you have a good chance of being able to enter Division I and possibly even play FBS football.

The fan of the unsuccessful program understands that a lack of success makes it more difficult to attract top talent (conversely of the NFL where failure provides better access to rookie talent). There is no overseeing body that acts to make sure the next year schedule is easier.

For schools demand for tickets and interest in donating are not just the prime source of revenue, they are revenue sources that respond to success or failure on the field in a fairly quick way. The value of sponsorship in large part rests on attendance.

The economic model of college football dictates that schools should schedule in a manner that provides teams with as many credible victories as possible and it is apparent that splitting the schedule 7 home and 5 away is considered ideal. Anecdotal evidence indicates that fans discern a difference between P5 and G5 and reflect that with more no-shows and reduced sales and likewise a difference between G5 and FCS and reflect that in attendance as well.

Because of these differences, it is not in financial interest of P5 as a whole to schedule exclusively within the group. Doing so would require a move to more 6 home 6 away scheduling. Losing a home game results in about a 14% drop in ticket inventory. There would be a reduction in sponsorship value with fewer games in the venue. It would create a degree of political pressure as the local community loses a weekend of full hotel occupancy and full restaurants and shops. A reduction in win percentages reduces the number of programs with a happy or satisfied fan base.

Playing completely within the P5 group is not impossible but would require dramatically changing the economy of college football with some pretty serious shocks to the system.

The system is designed to discourage the oft-touted split of the 60ish power schools away from the so-called mid-majors.

So what is the risk of a split?

The greatest threat is that in any business, the people running the business lose sight of what business they are truly in.

Conferences and athletic departments are increasingly being run by people who either have come over from enterprises other than college athletics, or are grounded in college athletics but lack a rounded background to understand the big picture of the business.

We have just gone through a major phase where conference realigned to maximize television revenue at the P5 level and Conference USA and the Big East, now American Athletic Conference have added members to try to replicate on a smaller scale what the P5 schools have done. This is a far cry from the Mountain West Conference, which was created in large part because a group of schools had grown frustrated with their inability to schedule the games most attractive to their fans to drive ticket sales and donations.

If the people making decisions lose sight of their real source of revenue, the fabled split could occur, but unless that happens,it remains nothing more than column fodder for writers.