Is Your College Football Team Worth What the Wall Street Journal Says It Is?
Reese Strickland-USA TODAY Sports
The Wall Street Journal published a rather interesting chart earlier this week, setting theoretical "prices" for major college football programs if they could be bought and sold like professional franchises. Their conclusions, um, might surprise.
You can peruse the entire ranking here, but being that this is the Big Ten Blog, here is a list of the Big Ten schools in order, with their overall ranking and their estimated value:
2. Michigan ($731.9 million)
5. Ohio State ($586.6 million)
11. Iowa ($384.4 million)
13. Nebraska ($360.1 million)
16. Penn State ($300.8 million)
17. Wisconsin ($296.1 million)
21. Michigan State ($224.8 million)
35. Northwestern ($148.8 million)
38. Purdue ($145.1 million)
40. Indiana ($142.7 million)
42. Minnesota ($139.7 million)
48. Illinois ($117.3 million)
And just in case you were feeling great about the Big Ten's latest expansion...
56. Maryland ($96.0 million)
63. Rutgers ($64.1 million)
Here's more on the methodology, according to the Journal:
Ryan Brewer, an assistant professor of finance at Indiana University-Purdue University Columbus, calculated the intrinsic valuations for 115 of the teams in the top-tier Football Bowl Subdivision. Among other factors, the study looked at each program's revenues and expenses and made cash-flow adjustments, risk assessments and growth projections for each school. The resulting figures represent what the teams might fetch if they could be bought and sold like pro franchises.
Now, it's impossible to look at that list and not immediately notice that Iowa is sitting at No. 3 in the Big Ten. According to this list—and we'd just like to reiterate right now that these are not our own numbers—Iowa has a more valuable program than Nebraska, Penn State or Wisconsin.
A few other things to point out: Value like this is not strongly tied to on-field results, at least in the short term. So yes, Northwestern won 10 games this season. That doesn't make the Wildcats more valuable from a revenue-generating standpoint than anyone below them in the standings. Be smarter than that in the comments.
Further, we don't have access to those risk assessments or growth projections. Mr. Brewer's methodology is his own. But we do have a little data in terms of revenues and expenses, especially as they pertain to ticket sales, and here the decision to rank Iowa so high meets a bit of resistance.
First, USA Today's salary database also includes data on overall profits in college football programs. Not all of the football teams in the country make money as a whole, but all of the Big Ten teams do. Not surprisingly, Michigan leads the way in the Big Ten here too at nearly $44 million in profit in 2012. That's very good. But here, Penn State clocks in at second best, followed closely by Ohio State, then by Nebraska and Michigan State before we get to Iowa down at about $24 million.
That order of things passes the smell test a little better when thinking about teams that would be profitable (and thus valuable) as franchises.
Second, back in 2011, BusinessofCollegeSports.com listed ticket revenue figures for all the public Big Ten schools in the 2009-10 school year. Again, the top tier was more what you'd expect it to be:
Granted, these numbers are a little dated, but aside from Penn State's sanctions, there really isn't a lot that has affected any of the athletic programs' financial standings in a very meaningful fashion from then until now.
Overall, The Wall Street Journal's ranking of the program is about in line with the data we have available, so we're not assailing it as a bad list—nor should you. It sure would be nice to know what led to things like Iowa being named the third-most valuable football team in the conference, though. Right now, we don't see it.
What do you think about where your team is listed? How far up will Rutgers and Maryland climb once the Big Ten revenue starts flowing? Let us know.
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