MVPs: Most Valuable Programs

Posted by rtmsf on January 29th, 2008

So we must have missed this around the beginning of the month, but today we came across a neat little analysis performed by the people over at Forbes that reveals the twenty most valuable college basketball programs in the nation. Their analysis takes the following four components into consideration:

We base our valuations on what the basketball programs contribute to four important beneficiaries: their university (money generated by basketball that goes to the institution for academic purposes, including scholarship payments for basketball players); athletic department (the net profit generated by the basketball program retained by the department); conference (the distribution of tournament revenue); and local communities (incremental spending by visitors to the county during the regular season that’s attributable to the program).

Now we’ll leave it to the MBAs in the audience to figure out if theirs is a proper and defensible way to analyze the monetary value of a college hoops program, but for now, here’s their results:

2007 Forbes Values

Note: we added the two columns on the far right. We found expenses from 2007 at www.basketballstate.com, and return on investment (ROI) is our calculation dividing profit by expenses.

ROIs. Ohio St. is getting 6.85 times back in profit from what it spends on its program? There’s absolutely no way this is true – methinks this is a reporting issue (did an Enron exec end up on the OSU Board of Trustees?) In the land of economic reality, it appears Arizona, UNC and Louisville are getting tremendous returns on investment, approaching or exceeding a 3:1 ratio in each case. On the flip side, Michigan St. and Syracuse are only getting a 1:1 ratio of profit to expenses (which, if you think about it, is still very successful).

Who is Missing? After the last two years, we’re a little surprised that Florida isn’t on this list – even if they’re not as profitable, we figured their value through revenue from the tournament would be sky high. What about basketball schools such as Big East stalwarts Georgetown and Connecticut? Those aren’t more valuable basketball properties than Wisconsin or Oklahoma St.?

State Schools Rule. With the notable exceptions of traditional powers Duke and Syracuse, and the surprising inclusion of Xavier, the other seventeen schools on the list are big state schools. What’s driving that? The sheer number of fans in those states who buy seats to games? The licensing of all the gear that each school sells to those fans? Local television rights so they can watch all the games?

Flyover Country. The Midwest + Tobacco Road is where it’s at if you want profitable basketball, it appears. The only outliers to that premise are UCLA, Arizona, Texas, Maryland and Syracuse.

rtmsf (3748 Posts)


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2 Responses to “MVPs: Most Valuable Programs”

  1. LaurieD2004 says:

    Do we know how the revenue was calculate. I mean, Ohio State has a huge cushion if some of the bball overhead is paid by football.

    Plus, notice the teams on the list ACC, Big Ten and SEC dominate. I think it’s because of the TV revenue, not gate receipts or merchandise.

  2. rtmsf says:

    Dunno, Laurie – the ACC/B10/SEC schools fill the seats in larger arenas. TV revenue might be part of the equation, but the Big East does well with TV revenue, yet Syracuse is the only school in the Top 20 (perhaps not coincidentally, they have a huge arena and put 20,000+ in there twenty times/year).

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