JR told me to make a thread for this. :3

FB values: https://graphics.wsj.com/table/NCAA_2019
BB values: https://www.wsj.com/articles/how-much-is...1554739458

This underscores a few things that have been said.

-For one, the Big 12 is capable of surviving. The combined values make them a clear cut 3rd place.

-The PAC 12 doesn't have a great deal of potential for improvement beyond some of their brands performing better.

-The ACC has some serious issues and nothing is a simple fix.

(05-19-2021 10:47 PM)AllTideUp Wrote:  This underscores a few things that have been said.

-For one, the Big 12 is capable of surviving. The combined values make them a clear cut 3rd place.

-The PAC 12 doesn't have a great deal of potential for improvement beyond some of their brands performing better.

-The ACC has some serious issues and nothing is a simple fix.

Given that half the Big 12's total value is in UT and OU, I would not say it's an especially stable conference.

(05-19-2021 11:24 PM)Nerdlinger Wrote:  

(05-19-2021 10:47 PM)AllTideUp Wrote:  This underscores a few things that have been said.

-For one, the Big 12 is capable of surviving. The combined values make them a clear cut 3rd place.

-The PAC 12 doesn't have a great deal of potential for improvement beyond some of their brands performing better.

-The ACC has some serious issues and nothing is a simple fix.

Given that half the Big 12's total value is in UT and OU, I would not say it's an especially stable conference.

Just depends on what Texas and Oklahoma want.

They could make it work, but they may not want to try.

My point was they could make a go of it should they desire it.

Louisville, the most valuable member of the ACC, would be the 8th most valuable member of the Big Ten and the 11th most valuable member of the SEC.

Now we have a criteria as to who the dead weights are to each conference.

I still maintain these calculations are bullshyte. UCOnn FB #56 on the list, even over some P5 schools— who put this list together?

I’m curious to what degree these valuations are based by the company a school keeps. Ex. Florida is double the value of Florida St but surely Florida St’s value sky rockets if you put them in the SEC.

I wonder where the valuations would be if you took say Texas, Oklahoma, and 5 CTZ Big 12 schools and paired them with some of the stronger, football oriented ACC schools to make a 14 team conference.

Would being bundled with Texas and Oklahoma cause Florida St, Miami, Clemson, Louisville, etc significantly increase their value and the overall value of the new entity?

(05-20-2021 04:06 PM)Fighting Muskie Wrote:  I’m curious to what degree these valuations are based by the company a school keeps. Ex. Florida is double the value of Florida St but surely Florida St’s value sky rockets if you put them in the SEC.

I don't know the details of the calculations, but I would agree with this assessment in general.

(05-20-2021 05:20 PM)Nerdlinger Wrote:  

(05-20-2021 04:06 PM)Fighting Muskie Wrote:  I’m curious to what degree these valuations are based by the company a school keeps. Ex. Florida is double the value of Florida St but surely Florida St’s value sky rockets if you put them in the SEC.

I don't know the details of the calculations, but I would agree with this assessment in general.

Yes, your conference’s payouts are an increasingly important variable in valuations. Conference payouts are currently about 30% of ACC schools’ revenues...this percentage has been growing for all P5 conferences.

A simple valuation example using round numbers (and assuming 2020 media payouts are constant in the foreseeable future)...

If FSU could shift to the SEC, their conference media payouts would increase by about $16m per year. They’ll probably spend an incremental $6m per year to remain a top tier SEC football school. The remaining $10m per year would become discretionary “profit”...that translates to about $80m valuation in a 10 year pro-forma.

As the ACC-ESPN deal has become known, valuations of ACC schools have been decreasing.

It would be nice for someone with access to the NYT to post the methodology.

(05-20-2021 08:20 PM)Statefan Wrote:  It would be nice for someone with access to the NYT to post the methodology.

It's the WSJ. I don't have access -- I was just able to sneak in with a free view it seems.

(05-20-2021 08:46 PM)Nerdlinger Wrote:  

(05-20-2021 08:20 PM)Statefan Wrote:  It would be nice for someone with access to the NYT to post the methodology.

It's the WSJ. I don't have access -- I was just able to sneak in with a free view it seems.

https://www.wsj.com/articles/how-much-is...1546875092

This article provides the broad parameters of their methodology.

(05-20-2021 09:40 PM)Wahoowa84 Wrote:  

(05-20-2021 08:46 PM)Nerdlinger Wrote:  

(05-20-2021 08:20 PM)Statefan Wrote:  It would be nice for someone with access to the NYT to post the methodology.

It's the WSJ. I don't have access -- I was just able to sneak in with a free view it seems.

https://www.wsj.com/articles/how-much-is...1546875092

This article provides the broad parameters of their methodology.

This link to a paywall is as nourishing to the intellect as a photograph of oxygen to a drowning man.

(05-20-2021 09:54 PM)Statefan Wrote:  

(05-20-2021 09:40 PM)Wahoowa84 Wrote:  

(05-20-2021 08:46 PM)Nerdlinger Wrote:  

(05-20-2021 08:20 PM)Statefan Wrote:  It would be nice for someone with access to the NYT to post the methodology.

It's the WSJ. I don't have access -- I was just able to sneak in with a free view it seems.

https://www.wsj.com/articles/how-much-is...1546875092

This article provides the broad parameters of their methodology.

This link to a paywall is as nourishing to the intellect as a photograph of oxygen to a drowning man.

I once had a subscription to WSJ online. It was ridiculously overpriced, but their content was good.

I would be more suspicious about valuations like this if they came from random media people, but WSJ is in the business of business. That and they're not directed connected to one of the media companies that pays for content so they really have no dog in the fight.

(05-20-2021 09:54 PM)Statefan Wrote:  

(05-20-2021 09:40 PM)Wahoowa84 Wrote:  

(05-20-2021 08:46 PM)Nerdlinger Wrote:  

(05-20-2021 08:20 PM)Statefan Wrote:  It would be nice for someone with access to the NYT to post the methodology.

It's the WSJ. I don't have access -- I was just able to sneak in with a free view it seems.

https://www.wsj.com/articles/how-much-is...1546875092

This article provides the broad parameters of their methodology.

This link to a paywall is as nourishing to the intellect as a photograph of oxygen to a drowning man.

You are high maintenance :(
Joining the WSJ is free if you are doing this on a trail basis. I'll copy the relevant paragraphs, second copied paragraph is the key.


The article was in the WSJ, written by Andrew Beaton and published on Jan 7, 2019

"That honor belongs to Texas, according to an annual study conducted by Ryan Brewer, an associate professor of finance at Indiana University-Purdue University Columbus. The Longhorns are worth $1.1 billion, according to Brewer’s analysis, which moved them into the top slot after Ohio State had held that role for the prior three years."

"Brewer’s study calculates what a college team would be worth on the open market if it could be bought and sold like a professional sports franchise. Brewer analyzes each program’s revenues and expenses along with cash-flow adjustments, risk assessments and growth projections."

"Brewer’s analysis found that across the Football Bowl Subdivision, adjusted revenues were $5.6 billion, up 6.4% from a year ago, and the cash flow of $2 billion marked a 2.7% jump. But the value of the college sports properties, he said, are also a product of the economy in general which he said is at a “fork in the road” with more negativity than a year ago—hurting team values."

(05-20-2021 07:20 AM)CliftonAve Wrote:  I still maintain these calculations are bullshyte.

They're not relevant to TV money, that's for sure. They appear to be one person's idea of what each team would be worth if bought and sold as a pro sports franchise, including the value of location, ticket sales, sponsorship money, etc.

What each team is worth to TV broadcasters is based on the size of the group that might potentially watch that team and the percentage of that group that is likely to watch. If people don't watch on TV, then whether or not the team sells tickets doesn't help the TV broadcaster one bit. Conversely, if a million people in New York City or Atlanta are watching on TV, then the TV provider doesn't care that those people in NYC or Atlanta never set foot in the team's stadium or arena a thousand miles away.

And, given that regular-season college basketball TV audiences are very small compared to regular-season college football audiences, the alleged basketball team valuations listed in that article greatly exaggerate the TV value of any college basketball team in the context of a regular-season TV contract.

(05-20-2021 07:20 AM)CliftonAve Wrote:  I still maintain these calculations are bullshyte. UCOnn FB #56 on the list, even over some P5 schools— who put this list together?

Clifton, this is why I asked Wahoo for the methodology. Links to a paywall and references in an article to something that is not shown is not a substitute for methodology. I had seen the following years ago but did not want to have to track it down again:

Somehow I just knew I would have to dig this out myself:

“DATA COLLECTION
To analyze how changes in socioeconomic and political status are associated with changes in program value, we used a balanced panel dataset of variables across three presidential election years: 2004, 2008, and 2012. With 100 observations in each year and three years of data, the panel includes 300 observations. Following is a description of the variables used in our analysis:
Revenues: Program revenue is not reported directly and thus must be approximated. The estimate was made using the method described in Brewer and Pedersen (2013b), by summing the pro rata percentage of non-allocated revenues with those revenues directly attributed to football, as reported in the EADA cutting tool (U.S. Department of Education, 2013). The pro rata percentage of non-allocated revenues was established by assessing the fraction of total allocated revenues within each athletic department that comprised football operations, and multiplying this fraction by the non-allocated revenues. This product was estimated to reflect revenues arising from football. No adjustments were made for intangible value attributions such as goodwill to the university, the "Flutie Effect," differential state appropriations, or other indirect revenues arising from sport presence.
Program Value: our second dependent variable represents football program valuations for programs at the 100 public universities in NCAA Division I football (Brewer & Pedersen, 2013b). Program values represent consideration of two distinct valuation methods: revenue multipliers and discounted cash flow analysis. In professional football, teams are valued primarily by their ability to generate revenue, which prospective buyers of teams prefer to consider as expense levels can vary quite significantly among franchises, rendering cash flow analysis less useful than in other industries. Thus, the first valuation method uses NFL-based revenue multiplies for college football program value indication. The general value equation is given below:
... (1)
Football teams are valued on revenue, however, given their ability to cash flow. While financial losses are rare in the NFL, expenses sometimes exceed revenue in NCAA Division I football programs having less brand development. Therefore, valuing college football programs solely on revenues would fail to reflect the risks associated with running expense-intensive football program lacking a market sufficient to produce positive earnings. The second valuation method implements a constant growth model, using the cash flow in the year following the valuation year projected forward at a constant rate, a discount rate in the form of a weighted average cost of capital, and a growth rate. The general valuation model is given below:
... (2)
where CF1 is the program's cash flow in the valuation year, k is the program's estimated weighted average cost of capital, and g is the projected growth rate.
The value (dependent) variable used in this report represents the average of these two valuation methods, both of which are invested capital indications that do not consider debt level or capital structure, and is denominated in millions of dollars. Note that if the resulting value indication was negative, the program was assigned a valuation of zero (0).
Table 1, below, shows the top ten programs, ranked by valuation as of 2012 (Everson, 2013). Revenues and coach's salary are included for reference.
Income: The income variable is the average per capita income in the program's state, denominated in thousands of dollars. Data was retrieved for each state and year from Stats Indiana (Stats Indiana, 2014).”

Freeman, K.M. andBrewer, R.M.(2016). The Politics of American College Football.Journal of Applied Business and Economics. 18(2), 96-107

As you can see from the above quote, this particular methodology is akin to a shaped meta-analysis where highly disparate objects are pushed into a shape for comparison.

In this case the shape is a professional football franchise with a market defined according to a statewide population.

In general this is just as good as most any set of variables and descriptors when it comes to a rough comparison between all schools, but it is not accurate for specific schools. it can't be.

Any program with the political need to hide revenue will be penalized. Those with the political need to overstate revenue will be rewarded, in this type of analysis. Programs sharing the same market will be difficult to value in comparison to others in the full list. Programs that are not being operated to maximize income will be penalized compared to those running at full bore.

Brewer has used this valuation model in a number of articles and over time he has touched on various socio-demographic issues that he notes represents trends that will attack value. A lot of people don't like social science research and don't like to read about sociological trends even when they are true.

Put another way, some P-5's have evolved into something akin to a girl's school with a little added testosterone. Non baby boom, non male alumni just don't support football like male baby boomers. Some P-5s have politics that incompatible with other p-5s and this is not new as it was the case in the Jim Crow years until the mid 1960's and early 70's.

Who adds the most value of a conference today, and who will still be adding that value in 2040 is the real conundrum.

I don’t have a concern with the methodology. Valuations are estimates. As someone who worked in high-level finance roles for decades...I just accept that there is uncertainty and volatility associated with forecasting future events. Even valuations of publicly traded companies are speculative. Common accounting standards and disclosure requirements can’t mitigate all risk.

My concern is that ACC schools’ current valuations are all being dramatically impacted (i.e., depressed) by short-sighted Conference contracts and decisions. The SEC also signed a bad media deal in 2008, but the SEC pivoted and regained leverage to once-again share in media rights growth. In the meantime, the ACC doubled-down on its errors by extending its deal. Expected future revenue growth rate is the most important factor in these valuations. Relative to other conferences, the ACC media deal is an anchor...suggesting that the ACC is not truly interested in aggressively working for higher football media rights growth. The ACC has pursued a very conservative and static business model.

Clemson’s fundamentals are objectively better than their down-state rivals, yet USC has an astonishingly 50% higher valuation. Clemson has won three national championships, while the Gamecocks were lucky to be one-time SEC CCG participants. IMO, Warren Buffett would invest in Clemson over USC because it is easier to fix flawed decisions/contracts. The ACC can create a lot of value by getting all their members to invest and focus more on football. With the right support from ACC leaders, Clemson’s valuation (as well as other ACC schools) can double.

(05-22-2021 09:38 AM)Wahoowa84 Wrote:  I don’t have a concern with the methodology. Valuations are estimates. As someone who worked in high-level finance roles for decades...I just accept that there is uncertainty and volatility associated with forecasting future events. Even valuations of publicly traded companies are speculative. Common accounting standards and disclosure requirements can’t mitigate all risk.

My concern is that ACC schools’ current valuations are all being dramatically impacted (i.e., depressed) by short-sighted Conference contracts and decisions. The SEC also signed a bad media deal in 2008, but the SEC pivoted and regained leverage to once-again share in media rights growth. In the meantime, the ACC doubled-down on its errors by extending its deal. Expected future revenue growth rate is the most important factor in these valuations. Relative to other conferences, the ACC media deal is an anchor...suggesting that the ACC is not truly interested in aggressively working for higher football media rights growth. The ACC has pursued a very conservative and static business model.

Clemson’s fundamentals are objectively better than their down-state rivals, yet USC has an astonishingly 50% higher valuation. Clemson has won three national championships, while the Gamecocks were lucky to be one-time SEC CCG participants. IMO, Warren Buffett would invest in Clemson over USC because it is easier to fix flawed decisions/contracts. The ACC can create a lot of value by getting all their members to invest and focus more on football. With the right support from ACC leaders, Clemson’s valuation (as well as other ACC schools) can double.

This is good to know. In other words, the ACC’s value is lower not (entirely) because its inherent value is low but because it got into a bad media contract, correct?

Then if the ACC doesn’t mess up the next media contract, the ACC may be able to close the value gap without going through the crazy realignment exercise, which is being discussed in a separate thread.

By the way, how come WVU’s value is so incredibly low? The Big 12 contract should give them enough revenue, no?