Tuesday, May 7, 2019

econlife - The Market Value of a College Sports Program by Elaine Schwartz


When it comes to “adjusted tempo,” the NCAA Division 1 champs were ranked last. Yes, at No. 353, the Virginia Cavaliers gave their fans the slowest moving games.

Where are we going? To how we value a college basketball program.

College Sports Program Valuation

Although college basketball teams are never bought and sold, one assistant finance professor decided to figure out their market value. Annually, Dr. Ryan Brewer includes data about revenue, capital structures, attendance figures. He quantifies risk, future projections, team performance, and adds in the coach’s salary. There is lots more but you get the picture.

Basketball

At $64,040,000, Virginia’s program valuation was ranked No. 36. The second place team, Texas Tech, was No. 62 with a program valued at $40,290,000.




Big Ten Basketball

Meanwhile, when we look at the Big Ten schools, again we are not necessarily in the Top Ten for program valuation:




Football

Perhaps though we can get more insight from our numbers when we compare them to college football programs. At the top, the Longhorns have a $1.1 billion program value. Meanwhile, the highest valued college basketball program would be close to #20 on the football list:





Our Bottom Line: Valuation

We could say that what you measure is what you care about.

For athletic teams, the possibilities range from traditional statistics about wins and losses to the Moneyball stats that Michael Lewis memorialized. From there, we can add Dr. Brewer’s market value totals and Ken Pomeroy’s adjusted tempo and efficiency algorithms.

Whichever we select, all can remind us that we have a vast array of economic statistics from which to choose. The tough part is deciding which we value the most…

For the country and our sports teams.

My sources and more: Yesterday’s WSJ grabbed my attention when it asked, “How Much Is Your College-Basketball Team Worth?” From there I discovered that everyone refers to Ryan Brewer’s (Indiana University-Purdue University Columbus) ranking and research. I also peeked at the adjusted tempo ratings at kenpom.com and this sports column. Then, if you are interested in football program valuations, do go here.



Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.