College football fans have to wait until January 9 for the BCS Championship Game to decide this season’s college football champion, but no game is needed to determine this year’s money winner: the University of Texas Longhorns have once again topped our ranking of College Football’s Most Valuable Teams, with a value of $129 million.
Texas’ total value is driven largely by a football profit of $71 million last season, up from $65 million in 2009. Texas football generated $96 million in revenue, $36 million of which came from ticket sales. Another $30 million was comprised of contributions tied to amenity seating like club seats and luxury suites. The Longhorns also benefited from $10 million worth of sponsorship deals, with Coca-Cola, Nike and PepsiCo’s Gatorade giving a combined $2 million last year.
But Texas football’s revenue streams are only part of the reason why it sits at number one on our list. Unlike our NFL Team Valuations, which estimates each team’s enterprise value in an arms-length transaction, our college football ranking evaluates the financial impact each team has on four distinct areas. The two areas most important to our study are a team’s academic value, or the revenue directed towards university programs and spending (including football scholarships), and its athletic value, which is the football revenue used to support other athletic programs. The remaining two areas are weighted less heavily in our scoring system. They consist of the distribution of bowl game revenue amongst conference teams and the economic impact of visiting fans for each team’s home games.
The University of Texas Athletic Department contributed over $6 million to university programs last year, and each home football game generated nearly $10 million in local spending. Both values were among the highest in college football and helped put Texas easily in first place, despite not making a bowl game last season.
The Longhorns’ dominance in our ranking should continue in the future courtesy of the rich revenue stream generated by the Longhorn Network, which debuted in August. The University of Texas partnered to launch the cable channel with Disney-owned ESPN and IMG College, a division of sports and media company IMG Worldwide, in a landmark 20-year deal worth a total of $300 million. Revenue generated from the Longhorn Network, which is the first devoted exclusively to a single university’s athletics, is not captured in this year’s evaluations, but will no doubt help extend the Longhorns’ lead on the competition in our future rankings.
The Longhorn Network also helps illustrate the way in which television revenue is redefining the economics of college football. TV revenue constitutes a large and rapidly growing portion of each football program’s annual income. The athletic conferences generally negotiate TV rights agreements with networks like CBS, ESPN and FOX. All three have inked major deals in recent years, some worth hundreds of millions of dollars a year. ESPN annually pays $60 million to the Big 12 and $10 million to the Big Ten for first-tier TV rights. In 2008, CBS and the SEC agreed to a deal worth approximately $825 million over 15 years, nearly double the annual rate of their previous agreement. The eight SEC football programs on our list have seen their football revenues jump by an average of nearly 20% since the conference agreed to terms with CBS.
In March, FOX and the Big 12 revealed a new 13-year cable deal worth a reported $90 million annually, or $1.17 billion over the length of the agreement. Then in May, the Pac-12 agreed to terms with both ESPN and FOX to establish the richest media rights deal in college sports. The contract goes into effect next season and is worth $225 million per annum for twelve years. This new conference revenue will greatly help Pac-12 athletics compete financially with other major college programs.
The 20 teams on our list had an average value of $83 million, up from $79 million in 2009 and $68 million in 2007. TV rights agreements played a major role in this growth, helping drive the average team’s football revenue from $56 million to $62 million over the past two seasons.