How the New College Football Playoff System Will Affect Corporate Sponsorships

Discover and Tostitos are dropping two of college football's biggest sponsorships, and more changes are in store.

Jun 11, 2014 at 7:32AM

This week, SportsBusiness Daily revealed Discover (NYSE:DFS) and PepsiCo's (NYSE:PEP) Tostitos will no longer sponsor the Orange and Fiesta bowls. An exact motivation is still unknown, but it's likely the moves were financially driven. Division I's new postseason format, the College Football Playoff, could cost title sponsors $5 million to $10 million more per year than the Bowl Championship Series. And more changes are coming.

A new playoff system
A successor to the much-derided Bowl Championship Series, the inaugural College Football Playoff will launch at the end of this season, and it should have far-reaching effects on the sport.

Fiesta Bowl

2010 Fiesta Bowl. Image via Sean Hobson, Flickr.

Disney's (NYSE:DIS) ESPN, which paid over $7 billion for exclusive broadcasting rights through 2025, recently released a primer on the subject. According to the network, the country's best teams will play in a four-team playoff, culminating in a new National Championship game. The condensed schedule is the system's most notable feature. ESPN explains:

Six of the most prestigious bowl games in the country will take place over 36 hours -- played as back-to-back tripleheaders on New Year's Eve and New Year's Day. This bowl marathon will include the Peach Bowl, Fiesta Bowl, Orange Bowl, Cotton Bowl, Rose Bowl, and Sugar Bowl...The bowls that will host the semifinals rotate on a three-year cycle.

The Rose and Sugar bowls will host the playoff semifinals this season, while Orange/Cotton and Peach/Fiesta pairings will follow in 2015 and 2016, before resetting. Cities will bid to host the National Championship game, mirroring how the NFL determines Super Bowl locations.

The dollars and cents
Estimates of the playoffs' financial footprint vary, but the rise in rights fees alone are worth noting. ESPN will pay a little over $600 million per year to televise the games and all related coverage, including the selection process. That's about five times the amount the network had paid to broadcast the BCS since 2011.

And for the new National Championship game, the Super Bowl comparison is apt. At the time the playoffs were announced, sports media consultant Neal Pilson told CBS Sports, where he once served as president,  "It will kind of be the Super Bowl's ... brother or sister," adding, "I call it the biggest American sports event that hasn't happened yet."

In terms of impact, he thinks advertising rates and TV viewership will be about half as large as a typical Super Bowl -- a potential audience of 50 million and 30-second ad rates of $2 million. By comparison, the 2014 BCS National Championship captured just 26 million viewers, and most 30-second commercials cost near $1 million. 

So why are Discover and Tostitos leaving?
It is understandable why bowl game sponsorships could be more expensive this year. But why the advertiser exodus? It's possible both brands believe the new playoff format isn't all it's cracked up to be. Two potential issues come to mind.

First, a condensed New Year's schedule could lead to bowl overload. Fans have already expressed concern with a diluted postseason in the past, and the CFP ups the total number of bowl games to 39 from 35. CBS Sports reports there will be 40 by the end of the 2015-16 season. Because the majority of the bowl schedule will occur before New Year's, some viewers could be burned out by the time the playoffs begin.

Second, and more importantly, the Orange and Fiesta bowls are now out of the National Championship rotation. In the BCS era, each bowl hosted the title game once every four years, and sponsors reaped the extra exposure. The 2013 game, for example, was officially the Discover BCS National Championship, while 2011's contest was linked with Tostitos.

The new playoff format eliminates this tradition. Sponsors are now downgraded from a championship rotation to a semifinal rotation, something Discover and Tostitos could've taken issue with.

The bottom line
Although the College Football Playoff has potential, success isn't a guarantee. Like the BCS, there will still be controversy over the selection process, and there will be years when matchups are less exciting than others. Given that sponsors like Discover and Tostitos are walking away, it's worth considering a scenario where the playoffs don't live up to the hype. Only time will tell.

A more bankable strategy
In college football, uncertainty remains. But give me five minutes and I'll show you a much more bankable strategy in the world of investing. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Jake Mann has no position in any stocks mentioned. The Motley Fool recommends PepsiCo and Walt Disney. The Motley Fool owns shares of Discover Financial Services, PepsiCo, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers