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Sunday, December 19, 2010

Mark Cuban And The BCS

Mark Cuban offered to bankroll a college football playoff. It was a cheap publicity stunt for him. He won't accomplish anything.

If he did it as a publicity stunt, good for him.

If he seriously accepted colleges to accept his offer, he's an idiot.

Why would colleges share the playoff revenue with him? If colleges needed to raise $1B to finance a playoff, they could easily get that money from ESPN or another network.

In a for-profit business, if you double your revenue, the CEO doubles his salary. It's either salary-cash or salary-options.

Colleges are technically non-profit. Suppose each university made an extra $5M/yr by adopting a playoff. Could the college president double his salary? No, he can't. Students would say "Why am I paying $50k/yr in tuition, just so the president can make $5M/yr."

Colleges are technically non-profit. There's a political limit to how much the college president and athletic director may pay themselves. They're already at that limit.

That's the advantage of the BCS/bowl system. The college president appoints his idiot brother-in-law to be on the bowl committee. Those bowl committee directors get paid a lot of money, but they only actually work a few days a year.

There's no point having the playoff money go to the colleges. The college president can't use that many to pay himself a higher salary. The bowl system maximizes the college president's profit. He can appoint his friends to be on the bowl committee.

If there was a unified playoff system, then there would be fewer people on the committee. The college presidents wouldn't be able to steal as much.

That's the whole obstacle preventing a college football playoff. Colleges are technically non-profit. There's no incentive to maximize revenue. The current system is perversely optimal, because it maximizes the amount the college presidents may steal.

Even if the college presidents did want to reform the system, they'd do it themselves. They wouldn't share the profits with Mark Cuban. They don't need his money or support.

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