Tag Archives: basketball

BCS vs March Madness

BCS Payouts vs. March Madness Payouts

Quite frequently in the debate over the BCS there are comparisons to March Madness. Proponents of moving to a playoff system point to the approximately $771 million a year (beginning in 2011) March Madness generates in television alone (previously an average of $545 million). Meanwhile, the BCS bowls will generate just $125 million beginning in 2011 (previously$96.4 million per year ).

While it’s true March Madness generates more television revenue overall, that doesn’t necessarily mean more money for each athletic department. A total of $452,200,000 was distributed by the NCAA in 2010-2011, and less than half of all monies distributed went back into the athletic department with no strings attached (via the Basketball Fund). Here’s the breakdown:

Basketball Fund ($180,467,000): Monies are distributed based on a six-year rolling period. Institutions receive one unit for each appearance, not including the championship game. Each unit was worth $239,664 in 2010-2011.

Academic Enhancement ($22,461,000): Each Division I institution gets $66,000 to use for academic support service for student-athletes.

Conference Grants ($8,115,000): Each conference receives $261,744 less an agreed upon amount remitted to the regional officiating advisors program. Funds must be used to improve officiating, enhance conference compliance and enforcement programs, drug abuse education, enhancement of opportunities for ethnic minorities, and development of gambling education programs.

Sports Sponsorship Fund ($60,155,000): Each school’s share is determined based on the number of varsity sports sponsored. Points begin with the 14th sport (the number required in Division I), and $30,091 is distributed for each sport above thirteen. These monies may be directed to individual institutions or to the conference for distribution, as decided upon by each conference.

Grants-In-Aid Fund ($120,309,000): Each school’s share is determined based on the number of grants-in-aid awarded. These monies may be directed to individual institutions or to the conference for distribution, as decided upon by each conference.

Student Assistance Fund ($59,738,000): This fund also consists of the Special Assistance Fund and the Student-Athlete Opportunity Fund. For the Student Assistance Fund, all athletes are eligible to receive these funds, even if they have exhausted eligibility or no longer participate due to medical reasons. These monies are distributed to the conference who decides how to allocate. This fund is to be used to assist student-athletes with financial needs that “arise in conjunction with participation in intercollegiate athletics, enrollment in an academic curriculum or that recognize academic achievement. The Student-Athlete Opportunity Fund is distributed by conferences based on the formula used for sports sponsorship and grants-in-aid. The Special Assistance Fund is to be used to meet student-athlete financial needs of an emergency or essential nature for which other financial aid is not available.

Supplemental Support Fund ($955,000): Used to support campus-based initiatives designed to foster student-athlete academic success at eligible limited resource institutions.

At the end of the day, most conferences receive larger payouts from the BCS than March Madness when it comes to money going back into the athletic department with no strings attached. Below is a look at the payouts for the past four years. Totals in red reflect conferences who received a larger payout from basketball than football for the given year. You should also note the football payouts indicated for the non-AQ conferences (Mountain West, Mid-American, Sun Belt, C-USA and Western Athletic) are based on the payout from the BCS before the agreement between the conferences to split BCS money equally between all non-AQ conferences kicks in. Also, these numbers do not include payouts for non-BCS bowl games.

ACC 2006-2007 2007-2008 2008-2009 2009-2010
Football $18,088,675 $18,324,992 $18,672,725 $19,787,058
Basketball $14,149,120 $15,090,053 $15,863,538 $18,220,902
Difference  $3,939,555 $3,234,939 $2,809,187 $1,566,156
         
Big 10 2006-2007 2007-2008 2008-2009 2009-2010
Football $22,588,675 $22,824,992 $23,172,725 $24,287,058
Basketball $13,087,936 $13,561,946 $13,803,338 $15,332,222
Difference $9,500,739 $9,263,046 $9,369,387 $8,954,836
         
Big 12 2006-2007 2007-2008 2008-2009 2009-2010
Football $18,088,675 $22,824,992 $23,172,725 $19,787,058
Basketball $14,325,984 $15,663,093 $16,275,578 $17,109,871
Difference $3,762,691 $7,161,899 $6,897,147 $2,677,187
         
Big East 2006-2007 2007-2008 2008-2009 2009-2010
Football $18,088,675 $18,324,992 $18,672,725 $19,787,058
Basketball $14,856,576 $16,618,160 $19,365,880 $23,109,436
Difference $3,232,099 $1,706,832 ($693,155) ($3,322,378)
         
Pac 10 2006-2007 2007-2008 2008-2009 2009-2010
Football $18,088,675 $18,324,992 $18,672,743 $19,787,058
Basketball $11,849,888 $12,606,880 $13,391,298 $14,665,604
Difference $6,238,787 $5,718,112 $5,281,445 $5,121,454
         
SEC 2006-2007 2007-2008 2008-2009 2009-2010
Football $22,588,675 $22,824,992 $23,172,725 $24,287,058
Basketball $13,087,936 $14,708,026 $15,657,518 $15,110,015
Difference $9,500,739 $8,116,966 $7,515,207 $9,177,043
         
Mountain West 2006-2007 2007-2008 2008-2009 2009-2010
Football $3,529,600 $3,724,000 $9,788,800 $9,878,710
Basketball $3,183,552 $4,011,280 $4,120,399 $3,999,710
Difference $346,048 ($287,280) $5,668,401 $5,879,000
         
Mid-American 2006-2007 2007-2008 2008-2009 2009-2010
Football $1,964,800 $1,508,000 $2,094,400 $2,139,355
Basketball $1,945,504 $1,910,133 $1,442,140 $1,333,237
Difference $19,296 ($402,133) $652,260 $806,118
         
Sun Belt 2006-2007 2007-2008 2008-2009 2009-2010
Football $1,443,200 $2,062,000 $1,529,600 $1,559,570
Basketball $1,061,184 $1,146,080 $1,854,180 $2,222,061
Difference $382,016 $915,920 ($324,580) ($662,491)
         
C-USA 2006-2007 2007-2008 2008-2009 2009-2010
Football $2,486,400 $2,616,000 $2,659,200 $2,719,140
Basketball $7,782,016 $8,213,573 $9,064,879 $8,507,523
Difference ($5,295,616) ($5,597,573) ($6,405,679) ($5,788,383)
         
Western Athletic 2006-2007 2007-2008 2008-2009 2009-2010
Football $9,008,000 $9,170,000 $3,224,000 $7,798,925
Basketball $3,006,688 $3,247,227 $3,090,300 $3,110,886
Difference $6,001,312 $5,922,773 $133,700 $4,688,039

I think it’s interesting to note that AQ football conferences are bringing in more from March Madness than non-AQ football conferences. Some of that has to do with the smaller size of some of the non-AQ conferences, but it’s still rather sizeable disparity. Nonetheless, I imagine people still find the March Madness system more digestible because it is a playoff system and because payouts are based on number of appearances.

Special thanks to my research assistant Eric Heckman for helping me compile the data.

Big East Basketball Tournament Most Expensive

If you read this site regularly or follow me on Twitter, you know that I am in Ireland from May 17-25th. While I’m away, I’m sharing with you the work of Patrick Rishe, my collegue at SportsMoney on Forbes.com. This is the fifth of a series of pieces Patrick did for SportsMoney on college basketball finance. You can find all of my pieces on football finance here.

By: Patrick Rishe

If we can surmise anything from secondary ticket price data in sports, it’s the ebb and flow of real-time demand and value that consumers place on various sporting events.

That said, it seems that fans of the Big East Men’s Basketball tournament at Madison Square Garden in New York City place a greater premium and significance on that tourney than fans of all other BCS post-season basketball tourneys.

My source from StubHub furnished the following average secondary ticket price data for each round of each of the 6 BCS conferences in an effort to gauge the relative significance and importance that fans assign to each tournament respectively.

The results:

Round Big East Big 12 ACC Pac 10 Big Ten SEC
Early Rounds $70 $62 $48 $69 $54 $29
Quarters $279 $132 $127 $113 $110 $74
Semis $368 $268 $287 $153 $171 $123
Finals $217 $214 $201 $143 $106 $130
             
AGGREGATE PRICE $934 $676 $663 $478 $441 $356

Focusing on “aggregate prices” (i.e. the sum of the 4 rounds for each tourney), the Big East tourney is the most expensive BY FAR.  Its average “aggregate price” for all sessions on the secondary market is $934, over $250 more expensive than the “aggregate price” for either the Big 12 or ACC tourneys.

The Big East tournament is likely the most expensive because of location.  Being in New York drives the value of those tickets.

It’s also not surprising to see these 3 conferences lead the way in “secondary market ticket prices” because they are the most popular conference tournaments, according to 2010 NCAA attendance data. Specifically, in 2010 these 3 conferences had the highest attendance per session (ACC – 23,371; Big East – 19,375; Big 12 – 18,900).

So in the context of valuing a sports entity, the Big East tournament is the most prized, valued, and popular of the BCS men’s basketball tournaments.  And the fact that the games are played amidst the glitz and glamour of New York City in the historic Madison Square Garden are reasons that drive these facts.

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Follow Patrick @ SportsDocRock or visit www.patrickrishe.net

ACC Basketball Financials Heavily Skewed by UNC and Duke

If you read this site regularly or follow me on Twitter, you know that I am in Ireland from May 17-25th. While I’m away, I’m sharing with you the work of Patrick Rishe, my collegue at SportsMoney on Forbes.com. This is the fourth of a series of pieces Patrick did for SportsMoney on college basketball finance. You can find all of my pieces on football finance here.

By: Patrick Rishe

Part I of our coverage of the economics of college basketball compared the revenues of the top 14 rated Division I conferences as listed by the RPI ratings. And Part II provided an overview of the top revenue generating basketball programs in the country.

Part III of our assessment of college basketball financials took an in depth look at the college basketball financials of the Big East Conference. Part IV of our assessment of college basketball financials took an in depth look at the college basketball financials of the Big Ten Conference.  Based on data from the 2009-10 academic year, we saw that (a) the average Big Ten school earned $12.5 M in revenue with Wisconsin topping the list at $17.6 M, (b) men’s basketball revenues grew roughly 214% from 2003 to 2009 largely due to the advent of The Big Ten Network, and (c) the conference generated approximately $138 M in revenues which is 2ndbest among BCS conferences behind the Big East.

Part V of our look at college basketball financials herein focuses on the Atlantic Coast Conference (ACC).

Recall from our earlier pieces that the financial data for these programs comes from the U.S. Department of Education and is for the 2009-10 academic year.  For reasons described in the afore-linked pieces, this data is highly robust and credible as schools must report their financials to the U.S. Department of Education.

ACC REVENUES AND PROFITS SKEWED WILDLY BY DUKE AND UNC

ACC schools average $11.6 M from men’s basketball, but the median is more than $2 M below the mean at $9.2 M.

This is because Duke and North Carolina greatly skew the mean.  Both ranked among the top 5 revenue-generating programs for the reporting year as they respectively earned 130% and 77% more revenue than the league average.

No other ACC team generated men’s basketball revenues above the league average, and 4 schools (Boston College, Miami, Clemson, and Florida State) earned at least 30% below the mean.

TEAM MBB REV RATIO
Duke $26,667,056 2.30
North Carolina $20,551,168 1.77
Maryland $10,739,282 0.92
North Carolina State $10,354,157 0.89
Virginia $9,788,223 0.84
Virginia Tech $9,252,293 0.80
Georgia Tech $9,143,914 0.79
Wake Forest $9,064,780 0.78
Boston College $8,026,369 0.69
Miami $7,081,121 0.61
Clemson $7,054,691 0.61
Florida St $5,756,857 0.50
     
MEAN $11,611,187  
MEDIAN $9,252,293  

Not surprisingly, Duke and North Carolina are also far above their conference peers in terms of profits.

Duke earned $14.3 M in men’s basketball profits for the reporting year, North Carolina earned $13.9 M, and then the next closest school was NC State at $7.2 M.  The league average was roughly $5.3 M.

TEAM MBB REV MBB EXP MBB PROFIT
Duke $26,667,056 $12,286,475 $14,380,581
North Carolina $20,551,168 $6,647,459 $13,903,709
North Carolina State $10,354,157 $3,104,152 $7,250,005
Maryland $10,739,282 $5,160,381 $5,578,901
Georgia Tech $9,143,914 $3,873,987 $5,269,927
Wake Forest $9,064,780 $4,196,104 $4,868,676
Virginia Tech $9,252,293 $4,790,553 $4,461,740
Clemson $7,054,691 $4,217,341 $2,837,350
Miami $7,081,121 $4,651,481 $2,429,640
Virginia $9,788,223 $7,390,325 $2,397,898
Florida St $5,756,857 $5,126,393 $630,464
Boston College $8,026,369 $8,026,369 $0
       
MEAN $11,123,326 $5,789,252 $5,334,074
MEDIAN $9,198,104 $4,958,473 $4,665,208

“BASKETBALL RELIANCE” OFF THE CHARTS FOR DUKE

Due to both the strength of their basketball program and the relative weakness of their football program, Duke generates nearly 39% of their total revenue from men’s basketball.  This is one of the largest “basketball reliance” statistics among Division I BCS schools.

      MBB Rev as
Team MBB Rev Tot Rev % of Tot Rev
Duke $26,667,056 $68,536,289 38.9%
North Carolina $20,551,168 $67,613,805 30.4%
Wake Forest $9,064,780 $42,253,156 21.5%
Maryland $10,739,282 $51,641,771 20.8%
North Carolina State $10,354,157 $50,335,991 20.6%
Georgia Tech $9,143,914 $46,983,216 19.5%
Virginia Tech $9,252,293 $58,115,929 15.9%
Miami $7,081,121 $56,084,064 12.6%
Boston College $8,026,369 $64,502,395 12.4%
Clemson $7,054,691 $57,562,999 12.3%
Virginia $9,788,223 $81,841,632 12.0%
Florida St $5,756,857 $75,209,179 7.7%
       
MEAN $11,123,326 $60,056,702 18.7%
MEDIAN $9,198,104 $57,839,464 17.7%

Alternatively, schools with a greater history in football relative to basketball (e.g. Florida St, Virginia, Clemson, Boston College, and Miami) have much smaller “basketball shares”.  Florida State, with the most storied football history, only generated 7.7% of their revenues from men’s basketball.

To this point:

TEAM MBB REV FB REV FB REV / MBB REV
Clemson $7,054,691 $30,994,503 4.39
Miami $7,081,121 $24,631,029 3.48
Virginia Tech $9,252,293 $31,155,870 3.37
Florida St $5,756,857 $18,958,861 3.29
Georgia Tech $9,143,914 $24,870,064 2.72
Boston College $8,026,369 $19,184,902 2.39
North Carolina State $10,354,157 $22,018,738 2.13
Virginia $9,788,223 $19,004,653 1.94
Wake Forest $9,064,780 $10,227,922 1.13
Maryland $10,739,282 $11,540,368 1.07
North Carolina $20,551,168 $22,077,550 1.07
Duke $26,667,056 $16,109,324 0.60
       
MEAN $11,123,326 $20,897,815 2.45
MEDIAN $9,198,104 $20,601,820 2.39

This shows that (a) the average football revenue for ACC schools was $20.9 M per school for the reporting year, and (b) ACC schools averaged $245 in football revenue for every $100 in men’s basketball revenue.

Other interesting points on this topic:

-        4 ACC schools (Clemson, Miami, Virginia Tech, Florida State) generate at least 3 times as much revenue from football than men’s basketball;

-        Duke actually generated more revenue from men’s basketball than football, perhaps one of the only schools among BCS Division I programs for which this is true.

CONFERENCE ANALYSIS

ACC 2009 2003 Ratio
MBB REV $133,479,911 $98,850,529 1.35
WBB REV $13,783,701 $6,047,077 2.28
ALL REV: MEN+WOMEN SPORTS $420,234,244 $323,565,900 1.30
       
MBB Rev as % of Total 31.8% 23.5% 1.35
WBB Rev as % of Total 3.3% 1.4% 2.28
Basketball as % of Total 35.0% 32.4% 1.08

Comparing aggregate conference revenue data from 2003 to 2009 and controlling for inflation by measuring both years in constant 2009 dollars, we can surmise that:

- Men’s basketball revenues have grown roughly 35% during that span while women’s basketball revenues have increased by 128%;

- Men’s basketball comprised nearly 32% of the conference’s revenue from men’s and women’s sports in 2009, the largest percentage of any of the 3 conferences analyzed thus far;

- Jointly men’s and women’s basketball comprised 35% of aggregate revenue from men’s and women’s sports in 2009, only up 8% from 2003 but rivaling the Big East for the highest “share”.

That basketball is such a high percentage of total revenues in the ACC speaks to (a) the immense popularity and tradition of college basketball on Tobacco Road and (b) the relatively weaker football revenues generated collectively among ACC schools.

But make no mistake…these financials are wildly skewed by the 2 programs at the top of the table.  Duke and UNC.

Many thanks to Saint Louis University Sports Business students Bryan Beasley, Jacob Fish, Brett Goldman, Jeff Tiedman, Jordan Erk, and Andrew Moses for their contributions to this article.

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Follow Patrick on Twitter @ SportsDocRock or visit www.patrickrishe.net

Who’s Making Money on Basketball in the Big Ten?

Image from Flickr via @yowzer

 If you read this site regularly or follow me on Twitter, you know that I am in Ireland from May 17-25th. While I’m away, I’m sharing with you the work of Patrick Rishe, my collegue at SportsMoney on Forbes.com. This is the fourth of a series of pieces Patrick did for SportsMoney on college basketball finance. You can find all of my pieces on football finance here.

By: Patrick Rishe

Part I of our coverage of the economics of college basketball compared the revenues of the top 14 rated Division I conferences as listed by the RPI ratings. And Part II provided an overview of the top revenue generating basketball programs in the country.

Part 3 of our assessment of college basketball financials took an in depth look at the college basketball financials of the Big East Conference.  We saw that its 16-team conference generated the most conference revenue from men’s basketball among any conference in the country, topping $154 M in revenue for the 2009-10 season.

However, the Big Ten Conference actually generates more revenue from men’s basketball per school than the Big East, showcasing that there can be some drawbacks from having a mega-conference.  Namely, you have more mouths to feed and thus more sharing must take place.

Part IV of our look at college basketball financials focuses herein on the Big Ten.

According to NCAA financial data, over the last 6 years the Big Ten has earned $82.9 M in March Madness money based on their conference’s collective postseason performance.  This amounts to $13.5 M per year, 4th best among all other Division I basketball conferences behind the Big East, Big 12, and ACC.

So with that as a framework, let’s further review the financials of individual schools within the Big Ten.  And recall from our earlier pieces that the financial data for these programs comes from the U.S. Department of Education and is for the 2009-10 academic year.  For reasons described in the afore-linked pieces, this data is highly robust and credible as schools must report their financials to the U.S. Department of Education.

WHICH BIG TEN TEAMS EARN THE MOST REVENUE?

Big Ten schools average $12.5 M from men’s basketball with a median of $13.7 M.

Wisconsin earned the most revenue from men’s basketball among Big Ten schools, with Indiana, Ohio St, and Michigan St not too far behind.  These schools earned between 29-41% more revenue than the league average.

TEAM MBB REV RATIO
Wisconsin $17,666,311 1.41
Indiana $16,570,158 1.32
Ohio St. $16,190,723 1.29
Michigan St. $16,138,167 1.29
Illinois $14,413,222 1.15
Minnesota $13,733,316 1.09
Northwestern $10,048,801 0.80
Iowa $8,796,540 0.70
Penn St. $8,384,315 0.67
Michigan $8,321,413 0.66
Purdue $7,791,967 0.62
     
MEAN $12,550,448  
MEDIAN $13,733,316  

Four schools in the conference (Iowa, Penn St, Michigan, and Purdue) earned significantly below $10 M in men’s basketball revenues for the reporting year, ranging between $7.8-8.8 M.

OHIO STATE AND WISCONSIN THE MOST PROFITABLE

When you factor in expenses, Ohio St and Wisconsin are the only 2 schools that earned profits in excess of $10 M.  Purdue again ranked last in the conference, earning only $2.6 M in men’s basketball profits.

For the conference, the average men’s basketball profits reported was $6.9 M and the median profits was $8.5 M.

TEAM MBB REV MBB EXP MBB PROFIT
Ohio St. $16,190,723 $4,554,908 $11,635,815
Wisconsin $17,666,311 $7,539,418 $10,126,893
Illinois $14,413,222 $4,980,589 $9,432,633
Indiana $16,570,158 $7,653,945 $8,916,213
Minnesota $13,733,316 $5,692,149 $8,041,167
Michigan St. $16,138,167 $8,250,450 $7,887,717
Northwestern $10,048,801 $4,158,854 $5,889,947
Penn St. $8,384,315 $4,147,124 $4,237,191
Iowa $8,796,540 $5,243,813 $3,552,727
Michigan $8,321,413 $4,913,440 $3,407,973
Purdue $7,791,967 $5,171,495 $2,620,472
       
MEAN $12,550,448 $5,664,199 $6,886,250
MEDIAN $13,733,316 $5,171,495 $8,561,821

INDIANA AND ILLINOIS HAVE THE LARGEST “BASKETBALL SHARES”

With respect to what I’ve called the “basketball reliance” metric, the table below shows that Illinois and Indiana earned 26.9% and 24.1% of their “men’s sports revenue” from basketball.  The only other schools with “basketball revenue shares” greater than 20% were Northwestern and Michigan State.

      MBB REV AS
TEAM MBB REV TOT REV % OF TOT REV
Illinois $14,413,222 $53,502,485 26.90%
Indiana $16,570,158 $68,769,582 24.10%
Northwestern $10,048,801 $48,921,823 20.50%
Michigan St. $16,138,167 $80,064,147 20.20%
Wisconsin $17,666,311 $93,901,820 18.80%
Minnesota $13,733,316 $73,599,999 18.70%
Ohio St. $16,190,723 $89,375,805 18.10%
Purdue $7,791,967 $61,508,748 12.70%
Iowa $8,796,540 $88,510,052 9.90%
Penn St. $8,384,315 $106,614,724 7.90%
Michigan $8,321,413 $106,666,191 7.80%
       
MEAN $12,550,448 $79,221,398 16.90%
MEDIAN $13,733,316 $80,064,147 18.70%

In short, the data shows that the typical Big Ten school earned roughly 17% of its “men’s sports revenue” from men’s basketball.

Schools like Michigan, Penn St, and Iowa received less than 10% of their overall men’s revenues from  basketball, largely because of the relative disparity between their revenue-generating ability in football relative to their basketball programs.

To this point:

TEAM MBB REV FB REV FB REV / MBB REV
Penn St. $8,384,315 $70,208,584 8.37
Michigan $8,321,413 $63,189,417 7.59
Iowa $8,796,540 $45,854,764 5.21
Ohio St. $16,190,723 $63,750,000 3.94
Michigan St. $16,138,167 $44,462,659 2.76
Minnesota $13,733,316 $32,322,688 2.35
Purdue $7,791,967 $18,118,898 2.33
Northwestern $10,048,801 $22,704,959 2.26
Wisconsin $17,666,311 $38,662,971 2.19
Illinois $14,413,222 $25,301,783 1.76
Indiana $16,570,158 $21,783,185 1.31
       
MEAN $12,550,448 $40,578,173 3.64
MEDIAN $13,733,316 $38,662,971 2.35

This shows that (a) the average football revenue for Big Ten schools was $40.6 M per school, and (b) Big Ten schools averaged $364 in football revenue for every $100 in men’s basketball revenue.

Penn St, Michigan, and Iowa were the only schools to earn at least 5 times more football revenue than men’s basketball revenue.

REVENUE GROWTH FOR THE CONFERENCE

Big 10 2009 2003 Ratio
MBB Revenues $138,054,933 $43,976,630 3.14
WBB Revenues $8,619,769 $12,837,167 0.67
Total Rev – Men+Women Sports $656,351,301 $493,419,907 1.33
       
MBB Rev as % of Total 21.0% 6.7% 3.14
WBB Rev as % of Total 1.3% 2.0% 0.67
Basketball as % of Total 22.3% 11.5% 1.94

Comparing aggregate conference revenue data from 2003 to 2009 and controlling for inflation by measuring both years in constant 2009 dollars, we can surmise that:

- Men’s basketball revenues have grown roughly 214% during that span while women’s basketball revenues have shrunk by 33%;

- Men’s and women’s basketball comprised 22.3% of aggregate revenue from men’s and women’s sports in 2009, significantly up from 11.5% in 2003.

One must surmise that the creation of The Big Ten Network has had a significant impact on the growth of men’s basketball revenues.

BIG TEN TOURNAMENT – A WEAKER DRAW AMONG BCS CONFERENCES

Lastly, based on attendance data from the NCAA for the 2009-2010 season:

- The Big Ten tournament ranked 5th in average attendance per session in 2010 with 16,325 fans per session (ACC, Big East, Big 12, and SEC Tournaments all had higher attendances per session);

This stands in contrast to the regular season, where in 2009-2010 the Big Ten was the only conference with an average attendance in excess of 12,000 fans per game.

All in all, and likely in large part to the creation of The Big Ten Network, the Big Ten’s men’s basketball revenues are among the best in the nation.

Many thanks to Saint Louis University Sports Business students Bryan Beasley, Jacob Fish, Brett Goldman, Jeff Tiedman, Jordan Erk, and Andrew Moses for their contributions to this article.

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Follow Patrick on Twitter @ SportsDocRock or visit www.patrickrishe.net

Duke, Louisville and UNC are College Basketball’s Financial Heavyweights

Image via Getty Images by @daylife

If you read this site regularly or follow me on Twitter, you know that I am in Ireland from May 17-25th. While I’m away, I’m sharing with you the work of Patrick Rishe, my collegue at SportsMoney on Forbes.com. This is the fourth of a series of pieces Patrick did for SportsMoney on college basketball finance. You can find all of my pieces on football finance here.

By: Patrick Rishe

Duke University is the top revenue generating men’s basketball program in the country, generating over 160% more revenue than the national average among other BCS basketball programs.

In Part I of my review of college basketball financials entitled “Revenue Comparisons Among Division I Men’s Basketball Conferences” using financial data for the 2009-2010 academic year, we saw that:

- The Big East Conference was the only conference that generated over $150 M in men’s basketball revenue;

- The Big Ten and ACC were the only other conferences that generated over $133 M in men’s basketball revenue;

- Only 3 conferences (Big Ten, ACC, SEC) generated over $10 M in men’s basketball revenue per school.

In Part II of my analysis of college basketball financials herein, I analyze which BCS-conference schools generate the most revenues from men’s college basketball.

In Pictures: The Top Earning College Basketball Coaches

Similar to my first report, the data reported herein was obtained from the U.S. Department of Education. Federal statute requires schools to report the financials for their athletic departments, and it also helps define itemized expense and revenue categories which builds uniformity in data reporting.  This makes for a robust data source.  The most recent data available is for the 2009 academic year.

DUKE, LOUISVILLE, NORTH CAROLINA TOP THE REVENUE LIST

There are 6 BCS Conferences (Big East, Big Ten, Big 12, ACC, Pac 10, SEC) with a combined 73 teams.

The average BCS Men’s Basketball program generated $10.1 M in revenue.  The median revenue was significantly lower at $8.8 M, which suggests (as we’ll soon see) that some teams near the top of the distribution were significant outliers and were well above the national average.

The table below ranks all 73 BCS teams in terms of their men’s basketball revenue reported in 2009, and calculates a ‘ratio’ between that team’s revenue relative to the national mean.

Rank Team MBB Rev Index
1 Duke $26,667,056 2.64
2 Louisville $25,890,003 2.57
3 North Carolina $20,551,168 2.04
4 Arizona $19,285,038 1.91
5 Syracuse $18,309,470 1.82
6 Wisconsin $17,666,311 1.75
7 Kentucky $16,781,239 1.66
8 Indiana $16,570,158 1.64
9 Ohio St. $16,190,723 1.61
10 Michigan St. $16,138,167 1.60
11 Kansas $16,116,502 1.60
12 Texas $15,602,348 1.55
13 Arkansas $15,515,830 1.54
14 Illinois $14,413,222 1.43
15 Marquette $13,877,475 1.38
16 Minnesota $13,733,316 1.36
17 West Virginia $13,306,654 1.32
18 Tennessee $13,301,579 1.32
19 Pittsburgh $13,117,849 1.30
20 UCLA $12,353,487 1.23
21 Oklahoma State $12,085,306 1.20
22 Washington $11,481,376 1.14
23 Alabama $10,766,327 1.07
24 Maryland $10,739,282 1.06
25 NC State $10,354,157 1.03
26 Florida $10,184,136 1.01
27 Georgetown $10,074,618 1.00
28 Northwestern $10,048,801 1.00
29 Virginia $9,788,223 0.97
30 Auburn $9,588,191 0.95
31 Missouri $9,540,265 0.95
32 Virginia Tech $9,252,293 0.92
33 South Carolina $9,190,794 0.91
34 Vanderbilt $9,182,578 0.91
35 Georgia Tech $9,143,914 0.91
36 Wake Forest $9,064,780 0.90
37 Texas A & M $8,853,325 0.88
38 Iowa $8,796,540 0.87
39 Oklahoma $8,626,247 0.86
40 Arizona St. $8,591,421 0.85
41 Penn St. $8,384,315 0.83
42 Georgia $8,331,515 0.83
43 Michigan $8,321,413 0.83
44 Mississippi State $8,205,804 0.81
45 Boston College $8,026,369 0.80
46 Purdue $7,791,967 0.77
47 Connecticut $7,745,145 0.77
48 Villanova $7,652,470 0.76
49 Kansas State $7,259,800 0.72
50 Iowa State $7,182,665 0.71
51 University of Miami $7,081,121 0.70
52 Clemson $7,054,691 0.70
53 California $6,967,208 0.69
54 Ole Miss $6,821,532 0.68
55 LSU $6,767,009 0.67
56 St. John’s $6,741,298 0.67
57 DePaul $6,528,661 0.65
58 Providence $6,460,838 0.64
59 Seton Hall $6,215,923 0.62
60 Stanford $6,191,021 0.61
61 Nebraska $6,022,208 0.60
62 Florida State $5,756,857 0.57
63 Baylor $5,737,350 0.57
64 Texas Tech $5,092,921 0.51
65 Oregon St. $4,938,930 0.49
66 Cincinnati $4,927,771 0.49
67 Rutgers $4,634,026 0.46
68 South Florida $4,588,627 0.46
69 Notre Dame $4,051,468 0.40
70 Colorado $3,587,371 0.36
71 Washington St. $3,544,745 0.35
72 USC $3,535,629 0.35
73 Oregon $3,240,150 0.32
       
  MEAN $10,083,959  
  MEDIAN $8,853,325  

Significant points to note:

- The Top 3 schools financially in men’s basketball (Duke, Louisville, North Carolina) are the only schools that (A) generated over $20 M and (B) earned at least 100% more men’s basketball revenue relative to the national average.

Duke and Louisville truly stand out, generating 164% and 157% more than the national average, respectively.

- 13 schools generated at least 50% more revenue from men’s basketball than the national average.

The Big Ten leads the way with 4 of those teams (Wisconsin, Indiana, Ohio St, Michigan), then 2 each from the ACC, Big East, SEC, and Big 12, and only 1 Pac 10 school (Arizona).

- Conversely, there are 9 schools that generated at least 50% less revenue from men’s basketball than the national average.  Not only are 4 of those 9 schools from the Pac 10 (Oregon, USC, Washington St, Oregon St), but another of these 9 schools (Colorado) will be joining the Pac 12 next season.

Indeed, we see why Larry Scott, new Commissioner of the Pac 12 Conference, was hired to infuse new life, vitality, and aggressive revenue-seeking behavior into this entity.

BIG TEN HAS SEEN THE MOST GROWTH

Likely linked to the creation of The Big Ten Network which launched in August 2007, the Big Ten has shown the most growth in men’s basketball revenues since 2003.

The table below compares men’s basketball revenue for the entire conference in 2009 to 2003.  It corrects for inflation by using CPI data from 2009 and 2003 to calculate the 2003 revenues in “2009 dollars”.  Lastly, a “growth ratio” is calculated to see the growth in “real revenues” from 2003 to 2009.

Conference 2009 2003 2003 (in 2009 $) Growth Ratio
Big Ten $138,054,933 $37,708,837 $43,976,630 3.14
ACC
$133,479,911
$84,761,805
$98,323,694 1.57
Big East $154,122,296 $88,058,061 $102,147,351 1.51
SEC $124,636,534 $73,261,482 $84,983,319 1.47
Big 12 $105,706,308 $67,572,143 $78,383,686 1.35
Pac 10 $80,129,005 $54,537,074 $63,263,006 1.27

4 of the 6 BCS conferences have seen real growth rates in men’s basketball revenue between 35-57%.

However, the Big Ten has seen the greatest growth by far.  Their conference revenues from men’s basketball are 214% greater than in 2003 after adjusting for inflation.

Data like this makes it clear why conferences want their own sports networks.

If any of the conferences could use a cable network to promote its own sports league, its the Pac 10.  At 27% growth, their men’s basketball revenues have grown the least over that 6 year span.

Please be sure to check back in later this week as our look into the Economics of College Basketball continues, including a more detailed look at individual conferences.

Many thanks to Saint Louis University Sports Business students Bryan Beasley, Jacob Fish, Brett Goldman, Jeff Tiedman, Jordan Erk, and Andrew Moses for their contributions to this article.

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Follow Patrick on Twitter @ SportsDocRock or visit www.patrickrishe.net

Image via Getty Images by @daylife

Comparing Revenue in Division 1 Basketball

Image via Getty Images by @daylife

If you read this site regularly or follow me on Twitter, you know that I am in Ireland from May 17-25th. While I’m away, I’m sharing with you the work of Patrick Rishe, my collegue at SportsMoney on Forbes.com. This is the fourth of a series of pieces Patrick did for SportsMoney on college basketball finance. You can find all of my pieces on football finance here.

By: Patrick Rishe

One of my SportsMoney colleagues, Kristi Dosh, recently pieced together a string of interesting and informative posts regarding the economics of college football.

With March Madness upon us, it’s time to pay similar attention to the financials associated with the other cash cow of collegiate athletics – Division I men’s basketball.

Today’s piece marks Part 1 of a multi-layered analysis of the business of college basketball that will span the next several months.

The purpose of today’s piece is to simply whet the reader’s appetite and provide a general overview of the financial landscape of the largest Division I men’s basketball conferences and their revenue-generating ability.

THE DATA

Like the afore-mentioned college football stories, the data reported herein is from the U.S. Department of Education. Federal statute requires schools to report the financials for their athletic departments, and it also helps define itemized expense and revenue categories which builds uniformity in data reporting.  This makes for a robust data source.

OVERVIEW OF MEN’S BASKETBALL REVENUE AMONG THE TOP CONFERENCES IN DIVISION I

Part 1 of this series focuses just on (a) the size of men’s basketball revenue among the top Division I conferences and (b) the percentage of revenue from just men’s sports that owes itself to basketball.

To begin, I identified the Top 14 Division I men’s basketball conferences as rated by the RPI.  The RPI is a ranking system that has been given some credence for being more analytically-based than oft used media-based or coaches-based polls.  The conference RPI rankings as of Monday, February 28th are as follows:

Rank Conference Avg. RPI Avg. SOS SOS Rank Teams
  1 Big East 0.5860 0.5809 1 16
  2 Big Ten 0.5797 0.5744 2 11
  3 Big 12 0.5771 0.5615 3 12
  4 Mountain West 0.5642 0.5569 4 9
  5 Atlantic Coast 0.5596 0.5511 6 12
  6 Southeastern 0.5573 0.5549 5 12
  7 Pacific-10 0.5477 0.5498 7 10
  8 Conference USA 0.5382 0.5290 9 12
  9 Atlantic 10 0.5288 0.5304 8 14
  10 Colonial Athletic 0.5257 0.5224 10 12
 
  11 Horizon League 0.5146 0.5130 11 10
  12 Missouri Valley 0.5127 0.5119 12 10
  13 Western Athletic 0.5118 0.5045 14 9
  14 West Coast 0.5021 0.5103 13 8

Next, summary financial data from the U.S. Department of Education for the 2009-2010 academic year is obtained to conduct a financial comparison among these conferences.  Note that this data does not coincide with play from the 2010-11 season.

The table below simply reports (a) men’s basketball revenue by conference, (b) total “men’s sports” revenue by conference, and (c) the percentage of men’s basketball revenue to total “men’s sports” revenue for each of the 14 conferences examined.

Conference MBB Rev TOTAL MEN’S REV MBB % of Total
Big East
$154,122,296
$419,389,823
36.7%
Big Ten
$138,054,933
$621,975,779
22.2%
ACC
$133,479,911
$420,260,194
31.8%
SEC
$124,636,534
$763,780,565
16.3%
Big 12
$105,706,308
$554,184,706
19.1%
Pac-10
$80,129,005
$350,080,460
22.9%
A-10
$54,582,759
$126,729,725
43.1%
C-USA
$42,163,719
$182,752,787
23.1%
Mountain West
$36,440,056
$145,610,917
25.0%
Missouri Valley
$28,781,605
$72,307,303
39.8%
Colonial
$27,144,900
$94,402,425
28.8%
WAC
$22,804,109
$103,977,216
21.9%
West Coast Conf
$18,330,286
$41,377,204
44.3%
Horizon
$17,664,239
$37,612,403
47.0%

Based on the table:

- The Big East, perhaps not surprisingly given the number of teams within the conference and the quality of the conference, is the top revenue-generating conference for men’s basketball with over $154 M in revenue and $16 M ahead of its closest revenue competitor;

- The Big Ten and ACC are 2nd and 3rd with $138 M and $133.4 M respectively, with nearly a $9 M advantage over the lower-tiered BCS conferences in terms of basketball revenue;

- Not surprising that the other 3 BCS conferences (SEC, Big 12, Pac 10) rank 4th, 5th, and 6th in men’s basketball revenue, ahead of all non-BCS conferences;

- What is surprising is the considerable drop-off between the SEC and Big 12 (nearly $20 M) and the further drop between the Big 12 and Pac-10 (over $25 M drop).

- The Pac-10′s conference revenues from men’s basketball ($80.1 M)  is almost equidistant between the Big 12′s take ($105.7 M) and the Atlantic 10′s take ($54.6 M).  Now you can see why relatively new Pac-10 commissioner Larry Scott was needed to infuse more aggressive revenue-seeking behavior among conference members;

- Among the 6 BCS conferences, the Big East and ACC are the only 2 conferences that receive at least 30% of their total “men’s sports” revenue from basketball.  This speaks both to the tastes and preferences for men’s basketball in those conferences and regions as well as the relatively lower football earnings realized by those conferences;

- Analogously, the strongest football conference financially (SEC) has the least reliance on basketball revenues as it comprises only 16.3% of their league’s “men’s sports” revenues;

- Conversely, the non-BCS conferences that lack FBS football squads (the A-10, Missouri Valley, West Coast Conference and Horizon Leagues) all count men’s basketball as at least 40% of their overall “men’s sports” revenues.

The last portion of this summary and introductory analysis is to compare “men’s basketball revenue per school”.  Here, we simply take the aggregate conference revenue reported for men’s basketball and divide by the number of teams in the conference.  This metric is useful because it controls for the number of teams in the conference, since failing to do so may inflate how well a conference is truly doing financially compared to its peers.

Comparing the conferences by this metric yields the table below:

Conference MBB Rev Per School
Big Ten
$12,550,448
ACC
$11,123,326
SEC
$10,386,378
Big East
$9,632,644
Big 12
$8,808,859
Pac-10
$8,012,901
Mountain West
$4,048,895
A-10
$3,898,769
C-USA
$3,513,643
Missouri Valley
$2,878,161
WAC
$2,533,790
West Coast Conf
$2,291,286
Colonial
$2,262,075
Horizon
$1,766,424

Interesting notes:

- Bigger isn’t always better for individual schools.  The Big East is only the 4th most lucrative men’s basketball conference on a ‘per school’ basis using this metric.  Clearly, having a “16-team mega-conference” creates the most men’s basketball revenue as we saw in the preceding table, but the flip-side with having a large conference is you have more members to split the revenue pie with;

- The Big Ten is the most lucrative men’s basketball conference, generating $12.5 M per school.  The ACC is 2nd at $11.1 in men’s basketball revenues per school, followed by the SEC’s $10.4 M;

- The Big 12 and Pac-10 yet again lag behind their fellow BCS members, generating $8.8 M and $8.0 M in men’s basketball revenues per school for the 2009-10 season;

- And lastly there is a big jump in “per school” men’s basketball revenues between the BCS and non-BCS schools.  The gap between the Pac-10 and Mountain West is approximately $4 M per school, with the top revenue-generating non-BCS conferences per school being the Mountain West, A-10, and C-USA each pulling in somewhere between $3.5 M and 4.0 M per school.

Questions to ponder:

- Which schools have the most profitable men’s basketball programs?

- How strong is the correlation between the profitability of a men’s basketball program and the graduation rates of the student-athletes that go through those programs?

- How strong is the correlation between teams that “make it to the dance” and their student-athlete graduation rates?

- Which programs have seen the most financial growth over the last 5 years?

Stayed tuned as we delve deeper into the economics of college basketball in Part 2 of this series.

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Follow Patrick on Twitter @ SportsDocRock or visit www.patrickrishe.net.