IU Columbus professor examines financial value of college basketball teams
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIn the realm of college basketball, financial success doesn’t always correlate with on-court performance.
A recent study conducted by an Indiana University Columbus professor is putting a financial spotlight on college basketball programs. Ryan Brewer’s methodology looks at a college program like one would with a professional franchise.
“I’m looking to answer the question, if a university were to sort of say, ‘Hey, we’re just going to focus on academics; let’s sell the football team. If we did that, how much could we get for it as a lump sum?'” Brewer said.
The results from Brewer’s study released in April found that the University of North Carolina tops the list for men’s basketball programs with a total enterprise value of $378 million. The Tar Heels are followed by Duke University at $370 million.
“These values can change, and they do over time,” Brewer told Inside INdiana Business. “The two right now that I have at the top are Duke in North Carolina. They’ve cornered the market. They are well ahead of everyone else.”
Perhaps the biggest surprise is Indiana University, which ranks third with an enterprise value of $279 million.
“The IU revenue for men’s basketball is a pretty significant number. It’s the most in the big 10, and it’s consistently the most in the big 10. And that goes back as long as I’ve been looking at this,” he said. “It doesn’t matter if they win. What matters is they generate cash flow. Valuation isn’t about winning directly. Valuation is about the generation of cash flow and the prediction that cash flow will continue to be generated.”
Brewer said it is clear that times have changed when it comes to the valuation of college teams, which is why he wanted to conduct his analysis.
“It used to be Paul ‘Bear’ Bryant would always keep his salary $1 less than the university president, specifically because he didn’t want to get into a price war,” he said. “Well, eventually that cat got out of the bag. Coaches started getting paid a lot, particularly in football and men’s basketball. And at that point, you kind of knew that these franchises to call them that…were worth something if they were to be sold in the open market.”
The other Indiana institutions on the list are:
- 20. Purdue University
- 50. Butler University
- 70. University of Notre Dame
- 199. Indiana State University
- 220. Ball State University
- 247. Indiana University Indianapolis
- 347. University of Southern Indiana