Prices of Guarantee Games May Stop Rising, or Even Fall

Over the weekend, I recorded a podcast with the Fresno State Scout affiliate BarkBoard.com, and among the topics we touched on was that of guarantee games when Power 5 teams play Group of 5 teams.

The site broke the news last week that Alabama lined up Fresno for a game in 2017. Bama will pay out $1.4 million for the game, which is about the going rate for MWC teams these days. Alabama payed $1.5 million to Colorado State in 2013, while Auburn's 2014 and 2015 games against San Jose State cost $1.5 million and $1.6 million, respectively. Other leagues can still cost a lot too. Southern Miss got $1.4 million from Alabama last year, while Florida paid $1 million to ULL and $1.25 million to Bowling Green in 2012. These games are getting expensive.

In recent years, about the only thing available to hold costs down has been the growth of games against FCS opponents. Payouts for those games from Power 5 schools typically come in the $450,000 to $550,000 range. That is why FBS schools keep scheduling those games. It's not that beating Eastern Kentucky is that much easier than beating Eastern Michigan, but rather it's far less expensive to do so.

I think that the payouts for these games will continue to grow in the long run, but in the short to intermediate term, we may see prices stall out or even drop. The reason is due to some scheduling changes that the Power 5 conferences have implemented.

I tried to calculate the number of potential guarantee games for 2014, 2015, and 2016, as well as 2017 into the future. I have a bunch of caveats and explanations that'll go at the bottom of the post.

For this, I am looking at members of the Power 5 conferences (which includes Notre Dame) and members of the Group of Five non-power conferences (including independents). I am not including regularly scheduled games between P5 and non-P5 teams, such as Colorado-Colorado State and Notre Dame-Navy, as potential guarantee games. Any annual games between power conference teams, like the four SEC-ACC rivalries, also brought the potential number of guarantee games down. I even went through all 65 Power 5 teams to see who does and who doesn't typically line up FCS games every year. I did my best to think of everything.

In 2014, the maximum potential demand for guarantee games was 147. That would be the figure if the only non-conference games between Power 5 schools are the annual ones like Florida-Florida State and Notre Dame-USC. I accounted for the nine schools that don't regularly play FCS opponents, like UCLA and Penn State. I accounted for all independents. The number I'm going with is 147.

Now, we didn't have 147 guarantee games. There were games like Georgia-Clemson and Missouri-Indiana that aren't annual affairs. The total games between Power 5 and non-Power 5 teams was 114. Rest assured that I know that not all of those were true guarantee games; Ole Miss played Boise State in one of the Atlanta kickoff games, for instance. Most of them were, so I will continue to use "guarantee game" to refer to any P5 vs. G5 game for the sake of convenience.

In 2015, the theoretical max of demand for guarantee games goes up to 148 due to Florida swearing off FCS opponents. The total number of Power 5 vs. non-Power 5 games in 2015 will be 115. The increase of one in games played is not necessarily due to UF taking on another Group of 5 opponent, as the number of such games changed for every power conference except the Pac-12. In both 2014 and 2015, the percentage of potential guarantee slots being used for guarantee games was right about 77.7%.

Before projecting the future, let's talk about the supply of teams for these guarantee games. I assumed that Group of 5 teams all want to play an average 2.25 guarantee games a year. Every G5 conference plays an eight game schedule, giving them all four non-conference slots. Basically all, if not actually all, G5 teams play an FCS team every year, and the further reduction of three quarters of a game is a concession to the fact that not every G5 program would want to play three Power 5 teams a year if given the opportunity—but some would.

Putting all that together, we get a potential supply of 120 for guarantee games in 2014. With 114 games actually happening, that was an overage of 5.3%. In 2015, the supply rises by six to 126 as a result of Navy joining the AAC. The Midshipmen will no longer eat up seven non-conference slots for G5 teams as they typically have, but they no longer will play a non-Notre Dame Power 5 team as they typically have. That makes for an overage of 9.6%.

Already, my estimated supply is greater than demand. Prices have continued to rise in recent years despite that, though, as the overall amount of money in the game has risen. Plus, games between G5 teams can get made well in advance, which can sometimes leave last-minute shopping Power 5 teams no viable G5 partners whose schedules line up with their own. Therefore, some power programs will pay a little extra for peace of mind in future scheduling. I think this estimate is about right. Potential supply is probably higher than demand, but not by much.

Once we look into the future, things start to go bad for the Group of 5 teams. In 2016, the theoretical maximum of the demand drops from 148 to a range of 135-137. Of that drop, three games can be explained by the Big Ten going to a nine-game conference schedule while also banning FCS opponents. The demand declines by 14 thanks to the ninth conference game, but it increases by 11 because that's how many B1G schools typically schedule an FCS team.

The rest of the decline comes from the SEC's requirement that all schools must play at least one Power 5 team in the non-conference. It could be as much as 10, because that's how many SEC schools don't have annual rivalries with Power 5 schools. I am assuming a floor at eight. The SEC will allow schools to count independents as Power 5 non-conference opponents, and that includes BYU and Army. Assuming BYU and Army play no more than one SEC team a year, that adds up to two games back into the supply pool. In reality most SEC schools have been lining up at least one P5 opponent a year anyway, but we're talking theoretical maximum here.

In 2017, the ACC has its own Power 5 non-conference clause kicking in. Now, it does have a five-game scheduling arrangement with Notre Dame, and if a team gets the Irish in a given year, that can count as the P5 non-conference game. BYU, but not Army, can count as a Power 5 team as well. That policy will reduce the theoretical maximum by anywhere from four—in years when none of the SEC's rivals get ND and someone uses BYU—to as many as nine—assuming all of the SEC's rivals got ND and no one uses BYU. Beginning that year, the theoretical maximum of demand drops to a range of 126-133.

If the Power 5 conferences continue to actually play about 77.7% of the potential maximum, the number of games will decline from the 114-115 range to 104-105 in 2016. It'll then go down to 97-102 from 2017 and on. Instead of supply exceeding demand by 5-9%, we'll be talking 20-21% in 2016 and 23.5-30% from 2017 and on.

With a noticeable drop in demand, simple economics would predict a fall in prices. Because the market for these games isn't perfect, thanks to things like needing to schedule games well in advance and match making problems caused by games that are already in place, I don't know that we'll see costs actually go down by all that much, if at all. I do expect to see the costs for these games to stop growing for a time, though.

Changes on the horizon don't favor the mid-majors either, which further strengthens this prediction. The increasing popularity of neutral site games offers Power 5 teams a chance at a nice paycheck without having to shell out for the opponent. If the College Football Playoff selection committee continues to favor strength of schedule, it may encourage Power 5 teams to schedule more games against each other. Plateauing and even declining attendance at games may encourage big time programs to schedule fewer guarantee games as well. UAB's eventual return to the FBS level will mean one more mouth to feed among the G5 set, and future increases to the FBS ranks—which have grown from 117 to 128 in the last ten years—will only increase the supply further.

The only thing that would favor the Group of 5 teams in a big way would be if other Power 5 conferences follow the Big Ten's lead and ban the scheduling of FCS teams. The theoretical maximum demand for games against G5 teams would rise by approximately 44 games per year from 2016 and on by my count. The Big 12 expanding would help a little by increasing the total number of Power 5 teams, but that doesn't look likely for now.

If I was an AD of a Group of 5 program, I would be trying to schedule as many guarantee games as possible right now before these market realities set in and the big boys realize that the payouts for these games don't have to keep going up.

Notes

• I assumed the following programs to be ones that do not, by policy, schedule FCS opponents. Some of them have done so in the past, but they do it infrequently enough that I counted them out: Michigan, Notre Dame, Oklahoma, Ohio State, Penn State, Stanford, Texas, UCLA, and USC. Florida joined their ranks for 2015 and on, and I assumed no Big Ten schools would take FCS opponents from 2016 on. Iowa may get one or two thanks to some games already having been scheduled, but that's not a recurring thing to count on.
• I assumed Notre Dame will play only one true guarantee game per year. I do not count its games against the service academies as such. It will play both Miami (Ohio) and Temple in 2017, but that seems like an aberration.
• For BYU, I assumed it plays four Power 5 teams, seven Group of 5 teams, and one FCS opponent per year based on its recent history as an independent. Those figures will fluctuate, but it'll probably average out to around that. The P5 rate might go up thanks to the SEC and ACC's new rules, but we'll see.
• For Army and Navy, I also used recent history to come up with a typical schedule of two Power 5 teams, nine Group of 5 teams, and one FCS opponent. For both of them, I accounted for the fact that they always play the other two service academies and reduced the potential supply of guarantee games accordingly. In Navy's case, I accounted for one of those P5 opponents always being Notre Dame and the fact that it's no longer an independent as of 2015. Army does play Notre Dame frequently, but not frequently enough to account for it playing Notre Dame every year as I did with Navy for 2014.
• I went the extra mile and accounted for the Hawaii exemption. To help the Rainbow Warriors with scheduling, any team that plays a road game in the islands can have a 13th game on their schedule. Hawaii itself can also have a 13th game. Looking at recent seasons, generally one Power 5 and one Group of 5 team per year has taken advantage of that rule, and Hawaii basically always plays 13. So, the demand is higher by one and the supply is higher by two than they otherwise would be thanks to this rule. If MWC opponents begin to take advantage of it regularly, add anywhere from one to four to the supply count.