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

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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.

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.

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