College Football's Most Valuable Franchises
Notre Dame is most valuable, despite a dismal season.
Nov. 24, 2007 Special to ABCNEWS.com — -- In the past few years, there's been a big push by major college football teams to increase revenue through massive stadium expansions, lucrative premium seating and rich sponsorship and broadcast deals--the same blueprint the National Football League used for decades to create billion-dollar franchises.
The game plan is working in college, albeit on a much smaller scale: Last year, 10 college football teams raked in at least $45 million in revenues--among them, the University of Notre Dame, University of Georgia, Ohio State and Auburn University--compared to none five years ago.
Of course, college teams aren't sold in the open market like NFL teams. But the revenue they generate is extremely valuable. Our second annual ranking of the most valuable teams in college football is based on what the football programs contribute to four important beneficiaries: their university (the value of contributions from football to the institution for academic purposes, including scholarship payments for football players); athletic department (the net profit generated by the football program ultimately retained by the department); conference (the distribution of bowl game revenue); and local communities with a vested interest in the team (incremental spending in the county during home-game weekends). Our system weighs those four elements in declining order. This year's rankings were expanded from 15 to 20 teams.
The University of Notre Dame Fighting Irish, worth $101 million, is the most valuable team in college football. Unlike the other programs on our list, Notre Dame's athletic department operates under the umbrella of the university and is not run as its own distinct entity. As a result, a much higher share of profits are retained by university for academic use. The football team's contribution to academics totaled $21.1 million for the 2006-2007 season--that's as much as the next five most valuable teams contributed to their respective schools combined. Operating independent of the conference system allows Notre Dame to keep the entire $9 million in annual television revenue it gets from NBC, owned by General Electric.
The University of Texas Longhorns, worth $92 million, was football's most profitable team last season, earning $46.2 million, of which $4.7 million went to academics. When the Longhorns play at home, Travis County sees an estimated $9.4 million of incremental spending associated with the game, a virtual tie with St. Joseph County during Notre Dame home games.
University of Texas merchandise royalties doubled to $8 million after the Longhorns won the national championship in 2006. Premium and club seating at Darrell K. Royal-Texas Memorial Stadium generates $12 million a year. The athletic department even added an exclusive space, dubbed the Centennial Room, which is reserved for boosters who contribute the most money to the program.
In fact, 16 of the 20 most valuable teams have undergone major stadium expansions and renovations over the past 10 years, and three others have renovation plans in the works. Premium seating has proved to be a valuable revenue stream that was non-existent at the time most aging college stadiums were constructed. Ohio State (Ohio Stadium) and the University of Tennessee (Neyland Stadium), for example, added 81 and 78 suites, respectively, in recent years. Both stadiums opened in the 1920s, predating even the forward pass.
For programs like the University of Michigan, with a stadium capacity of 107,501, the largest in the country, luxury suites are a much more feasible way to increase stadium revenue than building another crowded upper deck. The 31 largest college stadiums, on average, already have 11,000 more seats than a typical NFL stadium.
One of the strongest links tying the college and professional football in recent years has been corporate sponsorships. Both PepsiCo's Gatorade brand and apparel maker Under Armour use images of college and professional football side-by-side in commercials, leaving some to wonder whether Steve Spurrier's day job is to be the head coach of South Carolina or team click-clack. Gatorade sponsors five of the six major college athletic conferences, as well as the NFL, while sister company Pepsi Bottling Group is in its third year of a 10-year, $27 million deal with the University of Florida.
College programs have taken other pages from the NFL's playbook, but not without adding their own touch. Take seat licensing and naming rights. The University of Tennessee raised $16 million of the $21.2 million contributed to the Volunteer Athletic & Scholarship Fund in the last fiscal year through reservation fees for football tickets.
While college stadiums have historically been named after the team, school or home state, companies are now taking a prominent role. Look no further than the Papa John's Cardinal Stadium at the University of Louisville, named after the eponymous pizza company following a contribution by its founder. And there's the University of Minnesota's future home, TCF Bank Stadium.
New television arrangements will only further drive up college football team values in the future. Following the NFL's lead, the Big Ten Conference launched its own network this summer, the first cable outlet to reach 30 million homes in its first 30 days on air, despite charging carriers as much as $1 per subscriber. Big 12 Conference institutions will see a $16 million boast in TV revenue next year from existing deals with Fox Sports Net, owned by News Corp., and ESPN/ABC, owned by Walt Disney Co., with some schools projected to make as much as $10 million in 2008, based on their number of TV appearances and scheduling.