In the early 20th century, up-and-coming communities across the United States, like Pasadena, CA and New Orleans, LA, sought ways to stimulate their economy while drawing tourists to their cities. These communities ultimately settled upon hosting college football bowl games to achieve these goals. Generally, these bowl games were organized by community groups or nonprofit organizations located within the city's border. In 2013, many bowl games continue to operate under the auspices of a nonprofit organization. However, in recent years, a number of bowl games have shifted to being owned and operated by for-profit corporations.
Leading the way of corporate ownership and operation of bowl games isESPN Regional Television, a sports marketing, syndication and production company subsidiary of ESPN. This year, seven of the 35 college football bowl games played are owned and operated by ESPN Regional Television: the BBVA Compass Bowl, Beef 'O' Brady's Bowl, Bell Helicopters Bowl, MAACO Bowl Las Vegas, Gildan New Mexico Bowl, Meineke Car Care Bowl of Texas and Sheraton Hawaii Bowl. Each of the seven bowls is broadcast on either ESPN or ESPN2.
Operating bowl games is not an inexpensive venture. The most recent tax return documents for bowl games operated by nonprofit organizations demonstrate that expenses for hosting a bowl game range from anywhere between $700,000 to upwards of $18 million. While most bowl games generate a positive net income, the bowl games' most recent tax filings demonstrate that several non-BCS bowl games suffered a loss. What then, motivated ESPN Regional Television to become an owner and operator of seven non-BCS bowl games?
ESPN Regional Television officially became more than a broadcaster of bowl games when it acquired the Las Vegas Bowl in 2001. According to ESPN Regional Television's vice president, Pete Derzis, the company was "... there to satisfy the needs of a number of [their] partner conferences, many of whom were under-served at the time." These conferences included Conference USA, the WAC and Mountain West. According to Derzis, "these conferences didn't have a lot of bowl opportunities ten years ago. They had teams that could have qualified for bowls by NCAA standards, but had nowhere to go."
Seeing an opportunity to meet the needs of an unfulfilled market, ESPN Regional Television first purchased the Las Vegas Bowl. It would then go on to launch two of its own bowl games and purchase another four. Notably, ESPN Regional Television owns and operates all seven of the bowls, meaning that it does not have to expense the operations and event planning for the bowls to an outside entity. "When we talk about owning and operating the events, we are responsible for building the model and executing all facets of it. We handle the expense side from team guarantees to game officials, marketing budgets to staff expenses and all overhead. On the revenue side, we go into the marketplace seeking entitlements, sponsorships, and ticket sales. Given this, all of the revenues and expenses end up in a single profit and loss statement," Derzis said.
Operating bowl games in this manner has arguably proven cost effective for ESPN Regional Television. Unlike the bulk of other bowl games, tax returns for the seven bowl games owned and operated by ESPN Regional Television are not publicly available, since ESPN Regional Television is a private corporation. However, Derzis explains that oftentimes, there is a "point of diminishing return for bowl eligible teams," and that the corporation's "focus is to expand [its] current business model and use it to provide a great experience for the student-athletes and a great opportunity for communities." Building upon the opportunities a community receives when ESPN Regional Television hosts a bowl game in its location, Derzis notes that, "many of our teams are in communities that did not have a bowl game. They realize the economic impact in a positive way." Furthermore, ESPN Regional Television's ownership and operation of bowl games arguably allows the community partners who previously operated the bowl games to return to their original focuses. "The Las Vegas Convention and Visitors Authority owned the Las Vegas Bowl before we took over. We met with them and they had a need for the game to continue, but their job was to generate revenue for Las Vegas. During the course of a series of meetings, it was determined that they could be more effective in a sponsor role and we could be more effective in an owner/manager role," said Derzis.
As the college football world is abuzz with conversations over NCAA conference realignment and changes to the BCS bowl game model, one can expect that ESPN Regional Television's role in college bowl games may shift. Conference realignment arguably may necessitate the creation of new bowl games to meet the geographic needs of schools leaving their current conference for another. However, the new BCS four-team playoff system may grant some programs a chance they never had to play in a BCS game. Given these factors, Derzis-like most-admits that he doesn't "... know what the marketplace will look like once the new formats are put in place under the new BCS bowl game." That being said, one can expect ESPN Regional Television to continue growing the presence of its seven bowl games, but shouldn't be surprised if it adds to its stable.
Alicia Jessop is a Colorado-based attorney and the founder of the sports law website RulingSports.com. Follow her @RulingSports and at AliciaJessop.com.