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Topic: Program Value

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ELA

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Program Value
« on: September 21, 2017, 02:07:26 PM »
From Landof10 via WSJ (although this feels like something to run in the offseason):

There’s no mistaking the fact that Ohio State has a very profitable college football program. On the field, the Buckeyes are constantly fighting to be No. 1, but off of it, they already are as the most valuable program worth over $1 billion according to a study published in the Wall Street Journal.

According to the story, the Buckeyes are valued at $1,510,482,000 and are one of three teams over the billion mark along with Texas and Oklahoma.

The study, done by Ryan Brewer, an associate professor of finance at Indiana University-Purdue University Columbus, breaks down what each team would be worth on the open market if it sold like a professional sports team.

Michigan was the only other Big Ten team in the top 10 at No. 6, worth $892,951,000.

Overall, the SEC, with five of the top 10 teams, has the highest average team value at $523 million with the Big Ten in second at $416 million.

Here are the rest of the Big Ten teams:

No. 12: Penn State ($549,497,000)
No. 14: Nebraska ($507, 679,000)
No. 16: Iowa ($483,564,000)
No. 18: Wisconsin ($439,379,000)
No. 22: Michigan State ($336,794,000)
No. 32: Minnesota ($260,264,000)
No. 44: Indiana ($178,168,000)
No. 46: Northwestern ($163,315,000)
No. 49: Maryland ($147,608,000)
No. 53: Illinois ($143,318,000)
No. 55: Purdue ($135,021,000)
No. 65: Rutgers ($72,441,000)
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Mdot21

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Re: Program Value
« Reply #1 on: September 21, 2017, 02:32:55 PM »
how do you even quantify something like this?

I have a hard time believing that Michigan isn't worth $1 billion if Oklahoma and Ohio State are.
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ELA

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Re: Program Value
« Reply #2 on: September 21, 2017, 02:38:00 PM »
Quote from: Mdot21 on September 21, 2017, 02:32:55 PM
how do you even quantify something like this?

I have a hard time believing that Michigan isn't worth $1 billion if Oklahoma and Ohio State are.
I imagine the same way you would value anything before you put it on the market.
Apparently the professor treated them as though they were pro franchises.
Didn't Michigan just use a bunch of debt financing for some projects?  I thought that was in an article a while ago, so for a snap shot right now, that could drag them down.
He's not ranking the best programs, or over time the most valuable programs, but right now how much they would value at.
But hey, maybe Stephen Ross could buy it as another tax evasion shelter.
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PSUinNC

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Re: Program Value
« Reply #3 on: September 21, 2017, 04:45:47 PM »
When the WSJ can quantify what the Catholic Church is worth, I'll believe this.
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Big Beef Tacosupreme

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Re: Program Value
« Reply #4 on: September 21, 2017, 04:55:31 PM »
Quote from: ELA on September 21, 2017, 02:07:26 PM
From Landof10 via WSJ (although this feels like something to run in the offseason):

There’s no mistaking the fact that Ohio State has a very profitable college football program. On the field, the Buckeyes are constantly fighting to be No. 1, but off of it, they already are as the most valuable program worth over $1 billion according to a study published in the Wall Street Journal.

According to the story, the Buckeyes are valued at $1,510,482,000 and are one of three teams over the billion mark along with Texas and Oklahoma.

The study, done by Ryan Brewer, an associate professor of finance at Indiana University-Purdue University Columbus, breaks down what each team would be worth on the open market if it sold like a professional sports team.

Michigan was the only other Big Ten team in the top 10 at No. 6, worth $892,951,000.

Overall, the SEC, with five of the top 10 teams, has the highest average team value at $523 million with the Big Ten in second at $416 million.

Here are the rest of the Big Ten teams:

No. 12: Penn State ($549,497,000)
No. 14: Nebraska ($507, 679,000)
No. 16: Iowa ($483,564,000)
No. 18: Wisconsin ($439,379,000)
No. 22: Michigan State ($336,794,000)
No. 32: Minnesota ($260,264,000)
No. 44: Indiana ($178,168,000)
No. 46: Northwestern ($163,315,000)
No. 49: Maryland ($147,608,000)
No. 53: Illinois ($143,318,000)
No. 55: Purdue ($135,021,000)
No. 65: Rutgers ($72,441,000)
Every time something like this happens I really question the data.  For example, Penn State keeps much of their football revenue in different buckets and is often not accounted for.   I have a hard time believe that Michigan, Alabama, etc. isn't worth over $1B, as well. 
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Brutus Buckeye

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Re: Program Value
« Reply #5 on: September 21, 2017, 07:14:37 PM »
Aren't these the same guys that valued the LA Clippers at about the quarter of the price that they sold for a few months later? 

A sports franchise is worth whatever price a billionaire is willing to pay for it. 
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ELA

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Re: Program Value
« Reply #6 on: September 21, 2017, 09:02:19 PM »
Well, obviously.  But that's true of anything.  That's not exactly the point.

Kelley and Zillow are still things
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MarqHusker

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Re: Program Value
« Reply #7 on: September 21, 2017, 09:56:16 PM »
Welcome to the world of pricing illiquid securities.  Investment management firms spend a lot money trying to do the same exercise day after day.  This is not an exact science nor is there really any fair value/valuation  regime to apply to this kind of an asset.   Even the sale of a relatively small asset will yield quite a variance depending on who is making the valuation and drafting the True Sale Opinion.  Big bucks for advisers and law firms.
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MarqHusker

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Re: Program Value
« Reply #8 on: September 21, 2017, 10:02:17 PM »
As noted by ELA, debt service, real estate holdings, real assets, royalties, licensing, media rights revenues, and other considerations can drastically impact the valuations.  
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rolltidefan

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Re: Program Value
« Reply #9 on: September 22, 2017, 09:52:41 AM »
Quote from: Big Beef Tacosupreme on September 21, 2017, 04:55:31 PM
Every time something like this happens I really question the data.  For example, Penn State keeps much of their football revenue in different buckets and is often not accounted for.   I have a hard time believe that Michigan, Alabama, etc. isn't worth over $1B, as well.  

i might can buy bama.
accounting for program for success, we're at or near the top all time, and at the top right now.
but for a market value, i'm not sure. we're in a terribly small market compared to osu, mich, texas, usc, etc. the entire state of alabama is smaller than some of the cities the colleges are in, and less than half of their states. sure, we have a large fanbase, but it's growth is limited and it's virtually maxed out right now with any band wagoners chasing successful teams firmly on board.
the good news for bama is those fans spend money on bama gear as good as anyone out there and they also travel really well.
don't get me wrong, i think bama would be near the top of the list. but if 1.5B is the top team and 1B is a limited milestone for select few teams, i don't think having bama hover just below 1B is unreasonable. we just don't have the growth potential.
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Cincydawg

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Re: Program Value
« Reply #10 on: September 22, 2017, 10:06:00 AM »
Stipulate these numbers happen to be entirely precise.  Who cares?  Why would it matter?

I bet we could all "eyeball" the "franchises" that are most and next most valuable based on things like attendance, sales of stuff, and recent success and do just as well with the obvious.

These "studies" rely on "models" and changing the coefficient of one input can change the outcome considerably.

All models are wrong; some models are useful.
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Mdot21

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Re: Program Value
« Reply #11 on: September 22, 2017, 12:17:54 PM »
Quote from: Brutus Buckeye on September 21, 2017, 07:14:37 PM
Aren't these the same guys that valued the LA Clippers at about the quarter of the price that they sold for a few months later?

A sports franchise is worth whatever price a billionaire is willing to pay for it.
Bingo!
Stephen Ross would probably pay a couple billion to own the Michigan football team if he could lol.
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Brutus Buckeye

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Re: Program Value
« Reply #12 on: September 22, 2017, 12:57:58 PM »
Yeah, OSU2 might sell for a higher price than OSU, if someone were dumb enough to engage T Boone Pickens in a bidding war. 
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ELA

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Re: Program Value
« Reply #13 on: September 22, 2017, 02:28:10 PM »
Quote from: Mdot21 on September 22, 2017, 12:17:54 PM
Bingo!
Stephen Ross would probably pay a couple billion to own the Michigan football team if he could lol.
And if UM let him hide the money there as a tax shelter :67:
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