Reaching the College Football Playoff is a lucrative business for schools

The inaugural 12-team College Football Playoff (CFP) is officially here. Once seen as a complicated process that included mathematical equations and plenty of controversy, college football’s postseason structure has changed a lot over the past three decades.

It started in 1997, when college football’s six biggest conferences came together to create the Bowl Championship Series, or BCS. This system used a complex equation to pit the top two teams against each other, ranking teams based on three criteria:

1. The average of human polls (like the AP Poll and Coaches Poll)

2. A composite of computer rankings

3. A strength-of-scheme factor

The problem with this process was that it was constantly changing and deliberately opaque. Over the years, alternative categories such as quality wins and margin of victory were added or removed. Many fans had no idea how it worked and claimed it was rigged for the blue bloods of the sport. Worst of all, the Coaches Poll and AP Poll didn’t always agree on the national champion despite a title game taking place.

So in 2014, the College Football Playoff was established. Instead of letting a computer decide the national championship, a 13-person committee would now vote to decide the nation’s top four teams. These four teams were then invited to a knockout tournament to crown that year’s national champion.

Some people say that a 13-member committee that votes to determine the nation’s best team inherently introduces more bias than a computer algorithm — hello Florida State! However, almost everyone agrees that more games are better, and given the financial success of the four-team format, the playoffs have now expanded to 12 teams.

The new format is simple: Conference champions from the ACC, Big Ten, Big 12, SEC and the top-ranked Group of Five school automatically earn a spot in the playoffs. The four top-ranked league champions get a bye to the quarter-finals, while the lowest-ranked champion plays in the first round with the other seven major teams.

First-round games take place on college campuses and host the highest seeds in each game. The quarterfinals and semifinals are run by the more prestigious bowls—the Cotton Bowl, Fiesta Bowl, Orange Bowl, Peach Bowl, Rose Bowl, and Sugar Bowl—and the national championship is at a neutral site selected by the committee.

There is a slight quirk with Notre Dame. Even though the Irish are the top-ranked team before the playoffs begin, they will never get a top-four seed (and first-round bye) because they don’t belong to a conference. But by and large, the 12-team format creates more exciting matchups while generating significantly more money for those schools.

By expanding the College Football Playoff from four to 12 teams this season, there are now 11 games with national championship implications instead of three. That extra holdings allowed the CFP Committee to sign a massive media rights expansion with ESPN last year worth $7.8 billion over six years, or $1.3 billion annually.

In fact, there is so much extra inventory now compared to previous years that ESPN has actually sub-licensed some of the early games to TNT. ESPN will still produce the games and use their own broadcast talent. It’s TNT though pays ESPN about $25 million per game to slap on the TNT logo and cash in on the ad revenue.

The individual teams and conferences also benefit from this TV money, because each conference receives a percentage of the annual turnover based on its past success.

Beginning in 2026, when the new ESPN expansion kicks in, SEC and Big Ten schools will receive about $21 million each, while each ACC and Big 12 school will receive $13 million and $12 million, respectively.

Payouts for the group of five schools will be lower, about $1.8 million each, and Notre Dame’s payout as a stand-alone will average about $12 million a year.

But these payments are only a floor. For this year’s playoffs, conferences also receive $4 million for each school that enters the 12-team field. Conferences receive an additional $4 million if one of their teams makes the quarterfinals. They get a $6 million check if one of those teams advances to the semifinals, and another $6 million payout if that team advances to the national championship game.

Take the Big Ten, for example. Ohio State, Indiana and Penn State will receive $4 million to make the field. Oregon will automatically receive $8 million because it is already in the quarterfinals with a first-round bye. Those payments don’t include the $3 million fee the conference gets for each team (per round) to cover expenses, and the total payouts could approach $50 million if a Big Ten school wins it all.

TV money is a big part of the equation, but there are other factors.

For example, first-round hosts don’t get to keep the expected seven figures in ticket revenue from home games. The College Football Playoff will redistribute ticket revenue to each participating conference when the tournament ends.

Home teams in the first round will get to keep on-field sponsorships in place, making these deals more lucrative if a team consistently makes the playoffs.

However, while paint will match a stadium’s appearance during the regular season, the CFP logo will be on each court. The CFP will also provide for the wrapping of the goalposts and control all digital signage, with schools required to cover up all advertising in the lower bowl seen on TV, so it can be replaced with CFP sponsors.

There is some uncertainty about how much of a home field advantage teams will have, as it is a unique time of year with winter break and families traveling on vacation. But the CFP did its best to keep ticket prices low before the secondary market took over, requiring all schools to sell student tickets for $25 and general admission primary market tickets between $100 and $250, excluding clubs and suites.

The common fisheries policy as well signed 90 agreements with hotels in each of the 134 FBS college towns to ensure hotels would be available for first-round games. And home teams are required to give visiting teams 3,500 tickets, including 1,500 in the lower bowl.

The College Football Playoff committee has been clear that it doesn’t know how Year 1 will go. Expectations are high, and including eight additional teams seemed to add more drama to the conclusion of the 2024 college football regular season.

This whole structure can change in a few years. Several conference commissioners are already discussing expanding the playoffs from 12 to 14 teams when the new CFP contract takes effect in 2026. But if that happens, the outcome is clear.

College football is big business. The extended playoff has made it even bigger. And with NIL budgets growing every year, the commercialization of the sport does not stop here.