Bowl Games Face Subtle Revenue Shortfall: Decline in Local Sponsorship
Sportico’s Eben Novy-Williams recently highlighted the fact that “all across the country, college basketball properties are adding sponsors right as their games look to be most precarious.” But as brands seemingly jump (pun intended) at the opportunity to place their names on early-season hoops tournaments (see: Biosteel, Camping World and Manscaped), bowl games are being canceled in part due to a lack of sponsorship interest. Eleven postseason football games have been called off to date.
Nick Carparelli (executive director, Bowl Season) explained the juxtaposition is not as it seems. Like the basketball showcases, bowl games seemingly outperformed expectations securing seven top-tier sponsorships—each paying two to three times what the basketball sponsors paid—during a difficult time. The problem is “secondary sponsorships, those sponsors below the title and presenting sponsorships level, tend to be local [in nature] and constitute a big portion of [bowl] sponsorship sales figures,” Carparelli said. And with fan attendance limited, many of those companies have opted out or sought to reduce their financial commitment this year, leaving the games with an operating shortfall.
Our Take: It’s important to understand the fundamental differences between the business models of early-season college basketball tournaments and postseason bowl games. “The basketball tournaments are a series of games made for television with very little community engagement,” Carparelli explained. “The games are played, they are televised nationally, and then they move on. Where they are played is almost irrelevant to TV and to the sponsors.” (The location is important to the participating teams because of the distance to alumni centers and the opportunity it provides for the athletes.) As a result, relative to bowl games, there are very few local sponsors involved in these basketball tournaments (i.e., nearly all are national exposure plays).
By contrast, secondary sponsorships are a critical component of the bowl revenue model and without them, the games face a meaningful shortfall. Bowl games generate revenues through ticket sales, corporate sponsorships and television rights, and as Carparelli said, “TV is pretty much the only one still fully intact for [the ’20 postseason]. Ticket sales for a lot of games is going to be zero, and the sponsorship side of the bowl financial equation is going to be hit this year a lot more than people realize.” That’s because “a big chunk of [bowl] corporate sponsorship dollars is local and tied to local activations or onsite game-day experiences—and [those opportunities] just aren’t going to exist [this year],” the bowl executive added. For perspective, the Holiday Bowl estimates 75% of its sponsorship revenue is local.
The losses at the local level are not limited to corporate partnerships. In El Paso, there is a rental-car tax that helps to cover the Sun Bowl’s contracted conference payouts. But as Bernie Olivas (executive director, Sun Bowl) said, “Nobody is traveling [this year], so there are no cars [being rented].” While the game has since been canceled, the lack of tax revenue collected left the bowl in an even deeper financial hole. It should be noted Olivas said the decision to pull the plug on the ’20 game was ultimately pandemic-driven (El Paso could be considered COVID-19’s epicenter in the U.S.). Other games will be forced to do without the “money pulled by the [local] sports commission or convention and visitors bureau because the bowl game won’t be bringing an economic impact to the city this year without fans in attendance. It’s a big hit that people don’t talk about,” Carparelli said.
Bowl games will be more like regular away games for the participants this year. Teams are going to “come in, practice once, play the game and go home,” Olivas said. The altered schedule has led the bowls to call off many of the events surrounding the actual football game. While that does mean a reduction in operating costs, it’s certainly not enough to offset the lost revenues.
If every bowl game is going to experience lost gate and sponsorship revenues, it’s fair to wonder how those intending to press forward will cover the losses. The answer: Those still planning to host a game have managed to successfully renegotiate bowl payouts with their conference partners, bringing them in line with the anticipated reduction in revenues. “You will not see any conference receive a payout comparable to what was expected from the game a year ago,” Carparelli said. Conferences are willing to accept less because some revenue is preferable to no revenue, and it certainly doesn’t behoove the conference to put one of its postseason games in a position where its future could be jeopardized.
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