NCAA Hoops: Shooting for Dollars

The Wall Street Journal has an intriguing piece today about the most monetarily valuable NCAA basketball programs (if they could be sold like a professional franchise). Surprisingly, Louisville tops the charts. Not surprisingly, Indiana is No. 3, and Purdue made the top 20 at No. 18.

Oh, and congrats to "that team from the SEC" for winning the championship last night.

While Kansas and Kentucky battle it out Monday night for the national championship, college basketball’s real No. 1 will be sitting back on the sideline, counting its considerable cash.

The Louisville men’s basketball team is far and away the most valuable program in the sport, according to a recent study. Despite not even being the most prestigious team in its own state—that would be Kentucky, which beat the Cardinals on Saturday for a spot in the national-title game—Louisville would be worth an estimated $211.5 million if it could be bought and sold like a professional franchise. Kansas ($146 million) is second, while Kentucky ($73.7 million) stands a distant 16th.
 
Louisville head coach Rick Pitino, right, shakes hands with Kentucky head coach John Calipari before the first half of Saturday’s Final Four game.

Ryan Brewer, an assistant professor of finance at Indiana University-Purdue University Columbus, calculated the intrinsic valuations of 100 top Division I programs, including all 74 major-conference ones. Among other factors, the study examined each program’s revenues and expenses and made cash-flow adjustments, risk assessments and growth projections for every school.

Louisville blew away the field in part because of the massive revenues it has been making at the recently built KFC Yum! Center. The Cardinals, who began playing in the 22,000-seat arena in the fall of 2010, reported $40.9 million in revenue in the last fiscal year, according to government data—nearly $12 million more than any other team.

But conference-wise, the Big Ten came out on top. The Big Ten’s 12 schools have an average value of $68.3 million, followed by the Atlantic Coast ($58.2 million) and Big 12 ($50.2 million). The Big East ($40.3 million) is weighed down by its smaller members, while the Pac-12 ($35.0 million) and Southeastern Conferences ($30.7 million) are well behind.

Hat tip to Chamber staffer Ashton Eller for passing along the article.

IU Football Symbolizes Decisions Universities Must Make About Importance of Athletics

As an IU alum and football fan, this was obviously of great interest to me. The Indianapolis Business Journal’s recent article on the state of the school’s football program seems to highlight the risk vs. reward dilemma facing larger universities’ athletic budgets. When is it worth a major investment, and when should the pursuit of winning be scaled back?

Athletic Director Fred Glass has emphasized marketing, been the point man in radio and television commercials, and is leading the charge into a season that promises football financial gains not seen in Bloomington in a very long time.

While success on the field is not guaranteed, Glass is promising significant attendance increases and a continued rebirth of the football program that he believes will lead to critical fiscal gains for the school and its athletic department.

IU has a long way to go, and some critics wonder if it’s wise for the Hoosiers to chase the likes of Ohio State University … or even the University of Wisconsin. IU’s $55.7 million athletic department budget looks small compared with the Buckeyes’

“College athletics is a very dangerous investment for schools,” said David Ridpath, a professor of sports administration at Ohio University and past president of The Drake Group, a not-for-profit that bills itself as a watchdog for academic integrity in the face of big-time college sports.

“Schools can get caught up in chasing bigger programs with many more resources, and it becomes difficult to justify the expenses based on true return on investments.”