Exclusion and the BCS

Hal Singer —  7 November 2011

Every year around this time—around week 10 of college football season—we are reminded of the inequity of the Bowl Championship Series (BCS) system. Instead of permitting an open playoff system to determine the college football champion, as is done by most other NCAA sports including Division II football since 1973, and more famously, NCAA basketball, the BCS uses a computer algorithm and polls to decide the contestants according to, among other things, regular season performance, the teams’ conferences (BCS-approved or not), and strength of schedule. In particular, six of the ten BCS playoff slots are set aside for teams from BCS conferences.

While choosing the best team in the country is relatively easy, choosing the second-best team is highly controversial, as the second-best team will have some warts. Going into the ninth week of the season, here is a look at the BCS standings: LSU (.9931), Oklahoma State (.9447), Alabama (.8836), Stanford (.8749), and Boise State (.8473). Despite losing at home to LSU this weekend, Alabama is BCS-ranked above undefeated Stanford and Boise State.

In today’s Washington Post, columnist John Feinstein makes a compelling antitrust argument against the BCS:

But here’s the real nightmare scenario for the boys of the Bogus Championship Series: Oregon beats Stanford; Oklahoma beats Oklahoma State. That’s when the BCS apologists will start screaming for an LSU-Alabama rematch.

Is Boise State better than Alabama? Who knows? If college football were a real sport with a real playoff system or tournament, we might get a chance to find out. But you can bet all the TV money in the world that if you were to acquire [Alabama’s head coach] Nick Saban’s cellphone records you wouldn’t ever find a call to the 208 area code to set up a home-and-home with Boise State.

That’s why the money-huggers who argue that Boise’s schedule doesn’t make it worthy of playing for the championship have no argument at all. All of the so-called big-time schools who have played Boise in recent years — Georgia, Virginia Tech and Oklahoma come to mind — have lost. In fact, Boise’s only two losses in the last four years were to TCU and Nevada, who also aren’t worthy of playing for anything meaningful, according to the money men.

What Mr. Feinstein has articulated sounds very much like a coordinated refusal to deal by BCS conferences and their schools against Boise State (and perhaps against TCU in prior years) to maintain their share of the profits generated from post-season Division I football. In economic parlance, a non-BCS team’s strength of schedule—the key factor cited by BCS teams to support exclusion from sharing in the prize—depends on the willingness of BCS teams collectively to schedule games against the attacker. Proving coordinated refusals to deal are quite difficult—the inquiry concerns whether each participant would find it in its unilateral interest not to schedule games with tough non-BCS teams in the absence of the alleged conspiracy—but I am confident that several economists (including your fearless writer) would line up to correct this inequity.

One might argue that no BCS team has an incentive to schedule a tough non-conference opponent, for fear of adding a loss to its record. To this I say poppycock: Bubble teams—teams from weak BCS conferences (like the ACC or Big East) or teams at the bottom of a strong BCS conference (like the SEC)—seek a tough non-conference opponent to bolster their conference victories. In contrast, a team at the top of the SEC simply needs to win its conference. That Virginia Tech (of the weak ACC) and Georgia (at the bottom on the SEC) invited Boise State to play in 2010 and 2011, respectively, does not disprove Feinstein’s conspiracy theory—those teams needed to prove something. Better evidence would be an invite from LSU or Alabama. But alas, those teams seem to schedule tough non-conference games with BCS conference teams. LSU invited Oregon (Pac 10, BCS) and West Virginia (Big East, BCS) this year. It would be good for football—and the competitive process generally—if these non-conference invitations were made irrespective of the opponent’s conference (BCS conference or not).

10 responses to Exclusion and the BCS

  1. 

    Does anyone remember the system we had before the BCS? Anyone recall both Penn State and Nebraska being undefeated and not able to pay each other due to bowl commitments? I have yet to hear anyone on the anti-BCS side articulate why they think a playoff system will be the result of the end of the BCS. My view is that we will revert back to the old method of sportswriters and coaches simply declaring a winner. The Pac-12 and the Big 10 are not going to give up their lucrative connection to the Rose Bowl without getting something in return. That return is the automatic bid to the BCS. You will not see a change to a playoff system if the BCS dies. On that basis alone, the antitrust issues should fall away. The law doesn’t require parties to create the most competitive system. They simply need to avoid conspiring to harm consumers. The BCS clearly did not harm consumers when compared to the old system.

    • 

      Jerry,

      Thanks for weighing in. I’m not sure consumer welfare under the pre-BCS system is the proper benchmark by which to judge the competitive impact of the alleged BCS exclusionary scheme. Instead, the proper benchmark is welfare in a but-for world in which the six BCS conferences did not (allegedly) conspire to exclude rivals from the pot of gold. For that reason, a playoff system alone would not solve the problem. You have to end the (alleged) exclusion as well. The perfect world would be a four- or eight-team playoff in which invitations were made irrespective of BCS affiliation. As long as the BCS controls the invites, this will never happen.

      Hal

      • 

        Hal,

        I think I understand your point, but I respectfully disagree. The law can’t force alleged competitors to cooperate to make a “perfect” system. It can only prevent them from doing affirmative harm. If the BCS is found to violate the Sherman Act, the judicial remedy will not be to install a playoff system. Schools and conferences will go back to the stauts quo ante. But putting the antitrust issues aside, I want to hear someone describe why they think a playoff system will be in the economic interests of the conferences. That’s the only way we’ll ever see a playoff system.

        Jerry

  2. 

    Georgia fans will be interested to learn that their program is at the bottom of the SEC.

    The main problem with the BCS/antitrust arguments is that they conflate wins with money. A school like Boise State cannot even sellout a stadium with under 40,000 seats. Those schools don’t get their share of the profits in part because their share of the profits is frightfully low. And even the argument that those teams are being excluded from the money grab is peculiar. TCU and Boise State have been to two BCS bowls apiece in the past few seasons. Hawaii and (then minor-conference) Utah were also invited to BCS bowls. They earned just as much money from their appearances as their opponents Wisconsin, Oklahoma, Georgia, and Alabama, and just as much money as the national championship participants.

    The major conferences have even afforded those schools a chance at upward mobility. Utah is now a member of a major conference. TCU joins one next year. So does Boise State, if you want to count the Big East. Hawaii won’t, mostly because of geography and partly because their big season was a bit of a mirage, but plenty of other marginal powers are also enjoying upward mobility. If there’s a cartel, it’s a cartel that as of next season will consist of every single meaningful school from the past 40 years (except maybe BYU *by choice*), plus another dozen or two others, and a cartel in which its members compete vigorously against one another.

    Finally, and apart from the tedious antitrust stuff and more on the subject of fairness in sports while the BCS isn’t the system I’d create ab initio, every championship awarded in its history has been to a team that has been at least arguably the best in the nation. The same cannot be said for most playoff systems, which have suffered through fluky small-sample playoffs, including the NFL (2007 NY Giants), MLB (2006 Cardinals), and the NCAA tournament (UConn this past season). You compile a large data set during the regular season, at which point one two or three or seven teams might plausibly be considered best. A playoff is a concession that we cannot have limitless regular seasons. Most leagues err on the side of including every plausible team plus a number that have no legitimate claim to being the best over the course of that entire season. The BCS Championship is a playoff of two that errs on the side of including too few teams. I don’t see one error type as any more costly or delegitimizing as the other.

    • 

      SMD,

      First, my sincere apologies to all Georgia fans. Saying that Georgia is at the bottom of the SEC football powers is like saying that your college is at the bottom of the Ivies or that your house is at the bottom of Beverly Hills. This was a clumsy compliment.

      Now on to your arguments. While TCU and Boise State have been invited to meaningless BCS exhibition games (like the 2007 Fiesta Bowl or the 2011 Rose Bowl), they have routinely been shut out of the BCS championship game by virtue of not belonging to the right conference. Is this not the essence of discrimination? While a playoff system might produce a “fluke” champion, the winner must earn the championship by upsetting the favorite. In contrast, the BCS system can (and does) result in teams with legitimate claims to the championship being denied the right to even compete for the title (Auburn 2004, Boise State 2009, TCU 2010, and the list goes on). If you did not enjoy the playoff-induced upsets of the 2007 New York Giants or the 2006/11 St. Louis Cardinals, then something may be wrong with your preferences; a bubble team crashing the party and dethroning the favorite likely enhances consumer welfare more than any other sports event. I suggest you consult a physician.

      While TCU and Boise State were eventually invited to BCS conferences—under the threat of Congressional investigations—that is no consolation for past harms suffered by those schools. Nor is it consolation to the non-BCS conferences from which good teams were forced to flee. Under the current BCS design, an excluded conference like the Mountain West, which assembled Utah, TCU, BYU and soon Boise State, cannot retain talented football programs and therefore cannot compete effectively against the BCS conferences. Is this not the essence of anticompetitive foreclosure?

      That the BCS paired an undefeated TCU (ranked fourth) and an undefeated Boise State (ranked sixth) in a meaningless BCS game (2010 Fiesta Bowl) is also consistent with Feinstein’s conspiracy hypothesis. In a prior year, the BCS failed to invited either, forcing the teams to match up in the worthless Poinsettia Bowl, the first non-BCS game ever in which both teams were ranked higher than both participants in a BCS bowl game in the same season (the 2009 Orange Bowl). What better way to suppress information on whether either team was comparable to a BCS powerhouse?

      Finally, that Boise State can’t fill up their stadium seems inconsistent with the school’s current plans to expand capacity from 32,000 to 53,000 by 2013. Although staring at the blue turf for longer than two hours can make one go blind . . .

      Hal

    • 
      The Head of Alfredo Garcia 8 November 2011 at 8:39 am

      “The major conferences have even afforded those schools a chance at upward mobility. Utah is now a member of a major conference. TCU joins one next year. So does Boise State, if you want to count the Big East. Hawaii won’t, mostly because of geography and partly because their big season was a bit of a mirage, but plenty of other marginal powers are also enjoying upward mobility. If there’s a cartel, it’s a cartel that as of next season will consist of every single meaningful school from the past 40 years (except maybe BYU *by choice*), plus another dozen or two others, and a cartel in which its members compete vigorously against one another.”

      I think a summary of how the BCS works would help illuminate the faults with this logic. If you are an AQ (automatic qualifying) conference, at least one of your teams gets an automatic birth to one of the big bowl games. If you have a second school selected, you get an extra perk (extra 6 million or so depending on the year). There have always been 6 AQ conferences: ACC, SEC, PAC10/12, Big East, Big 10, Big 12. Therefore, each AQ conference is guaranteed over $20 million per year in BCS mulla plus an additional kicker if they get a second team to one of the big games.

      The non AQ conferences only get a single automatic birth if one of their teams is in the top 12 in the polls or is higher ranked than any AQC member team receiving an automatic birth. Since 2005, the first year (as I recall) that AQ stranglehold was slightly loosened, a non AQ school has appeared in the BCS series bowls only 7 times. Six of those instances were automatic births under the above rule, and the seventh was an at large bid by either BSU or TCU when they were pitted against one another back in the 2010 Fiesta Bowl.

      The end result of this system is that BY AGREEMENT roughly 65 teams in 6 conferences divvy up roughly $150 million, whereas the mid-major conferences (five conferences with roughly 50 schools) will divvy up about $25 million per year when one of their teams is selected. (Note that the mid-majors enjoyed this $25 million only after 2004 when they were given one birth but only in some years. If the mid majors don’t qualify in one year, they only get about $10 to $14 million).

      This is not a chance at “upward mobility.” It’s a glass ceiling! The system is set up from the start to guarantee that the lion’s share of the wealth from college football goes to a select few conferences. Other conferences were thrown a scrap of bread as a concession. Hence, the fact that “marginal powers” are enjoying any upward mobility is, to me, amazing given the system. It is not amazing that TCU will be in an AQ conference or that BSU, Air Force, and Navy could be in an AQ conference. They have survived despite the system and will now be admitted to the club because there is money to made from them! What is truly amazing is that despite being shut out or handicapped in their ability to enjoy the benefits of the BCS series (money, big games, press attention, and all the recruiting benefits that go with it) these programs have been consistently good or even great for a long time. Given how they were short-changed, it’s amazing they are doing as well as they are today.

      Finally, as for your so-called “vigorous competition” I presume you are referring to the recent movements of teams between AQ conferences? To this I ask how many of those teams moved into mid-major conferences? Who is rushing to join Conference USA? The answer is no one, because the cartel set up by the AQ conferences completely discourages this movement. That the AQ schools sat around a table, hashed out a system that guarantees them up to 90 percent and no less than 80 percent of the revenues from the BCS series is the essence of cartel behavior. The final bit of proof is that even in a year when an AQ conference has only one team in the show its revenues are very similar to AQ conferences with two teams. (In 2010-11, the 1 team conferences received $21 million whereas the two-team conferences got $27 million.) Competition might exist in greater amounts if the AQ system were destroyed and any team that’s a contender about 50 percent of the time (say LSU, OSU, TX) had incentive to leave an AQ conference for, say, the MAC. But that is beside the point.

      • 

        There’s a lot, so I’ll go through quickly:

        1.) It’s not about enjoying or not enjoying upsets. It’s about accepting the limitations of a small sample size playoff system. Playoffs can be lots of fun and very enjoyable. Let’s not pretend that playoffs were set up because the leagues are interested in setting up a system designed to produce the best team as champion. I can appreciate both systems. I don’t see why every American league must follow the same system.

        2.) For a libertarian-ish blog, there’s a lot of assumptions here that wealth just sorta kinda exists, and then that wealth needs to be split up. Programs and conferences create value. The Big Ten’s market share will always dwarf that of the Mountain West, apart from any issues of competitiveness. 48k+ people attended New Mexico State at Minnesota. It was televised on a network popular enough to demand placement on a network on standard-tier cable and owned by the Big Ten Conference. And everyone knew that Minnesota was awful; indeed, the Gophers lost at home to New Mexico State.

        The next week, New Mexico State played the University of Texas El-Paso at home. Fewer than 20k attended. When Tulane played Memphis at the Superdome earlier this season, fewer than 1,000 people (that’s not a typo) went through the turnstyles. Those games were untelevised except for online streaming. The reasons were entirely unrelated to competitiveness; all five of those teams are really, really bad.

        Success on the field =/= economic success. You absolutely cannot conflate the two. And you cannot start from an assumption that because a team enjoys on field success they somehow deserve a larger share of the economic success. People were filling Michigan Stadium and Bryant-Denny before the BCS. Notre Dame/Miami drew 14 shares before there was a national championship game. The two probably correlate, but only roughly and the causation is uncertain.

        3.) The BCS payouts are decent but relatively minor in the grand scheme of things. A two BCS team conference will earn about $26 million from the BCS. For the SEC, let’s say, that works out to a little bit more than $2 million per team. Meanwhile, the SEC makes over $17 million per team from national television alone, and that doesn’t count ticket sales, radio syndication rights (surprisingly lucrative), and donations (unsurprisingly lucrative). The Big Ten makes even more than that. That’s not going to change even if you guarantee every Sun Belt champion a spot in a sixteen team playoff. We could split playoff money evenly across all 120 teams each season and it will hardly make a difference.

        4.) This whole antitrust conversation is somewhat strained because we don’t really have it in any other context. Baseball exists in an explicitly antirust-free zone, and football, basketball, and hockey are largely off-limits because of their CBAs. More recent leagues are specifically designed to avoid these problems (the MLS is a single entity, for example).

        Bork pointed out, and I’m sure others before him did as well, that competition in a sports league is necessarily different because you don’t really want too much competition. Teams have to agree to field size, rules, etc. They have to agree to schedules. They have to agree whether some teams will be excluded; I can’t just form the Chicago Posners and scream “antitrust!” when the Bears refuse to play me.

        College football is different because the system has never been quite so closed. Any system looking to impose structure upon that will, by necessity, be more restrictive that the original free-for-all. That’s true of the BCS. It’s also true of a playoff, whatever the structure.

        The most sophisticated antitrust argument against the BCS I can muster is this: the system is purposely designed to downplay the postseason by creating a playoff of one game. By doing so, it adds greater emphasis on the regular season. Larger conferences have a greater advantage in regular seasons (fewer patsy games, television contracts they are not obligated to share outside their numbers, etc.), and this perpetuates their strength.

        5.) Be careful where in the country you utter “meaningless” and “Rose Bowl” in the same sentence :). I have a friend who swears he would trade ten years from his life to see Indiana make a Rose Bowl. I think he’s kidding, but I’m not positive.

  3. 
    The Head of Alfredo Garcia 7 November 2011 at 10:43 am

    “One might argue that no BCS team has an incentive to schedule a tough non-conference opponent, for fear of adding a loss to its record. To this I say poppycock: Bubble teams—teams from weak BCS conferences (like the ACC or Big East) or teams at the bottom of a strong BCS conference (like the SEC)—seek a tough non-conference opponent to bolster their conference victories.”

    I agree, but this doesn’t go far enough. Remember, when VTech played BSU, VTech was ranked #10 and BSU was #3. That’s one reason this game got so much attention. But this aside, any analysis of the NCAA and its elite conferences must recognize the fact that the BCS was a major money grab by these big conferences. Teams like TCU, Boise State, and possibly a Fresno State in some years (good programs in lesser conferences) were and are a significant threat to the money grab perpetrated by the big conferences. Consequently, a plausible conspiracy theory is that the decision for a big conference team playing Boise State could be a decision made by the CONFERENCE and not a single school. Because all teams in the conference have incentive for BSU to lose just to shut them up, but because no one team in the conference wants to play them (for fear they might lose) they draw straws to see who plays. Normally I don’t buy conspiracy theories. But these guys make schedules, fix prices, and share revenues with more coordination than OPEC. I would put nothing past them.

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