Texas remains college football's financial No. 1

LSU and Alabama battled for the BCS National Championship on the gridiron in New Orleans Monday night.

But neither one of them is the real No. 1—financially speaking anyway.

That distinction belongs to Texas this year, according to Indiana University business professor Ryan Brewer, who spent two years studying college football program valuations.

I first wrote about Brewer’s study in September. In December, Brewer completed an update of his study to include 2011 valuations in addition to the original 2010 valuations. He also added private schools such as Notre Dame and Southern Cal to his study. The Wall Street Journal published an article about Brewer’s work last week.

Brewer’s 200+ page dissertation details his methods. I won’t go into all that now expect to say he values college football programs much the same way a financial analyst puts a value on a for-profit business.

In some instances there were some big increases in the 2011 valuations compared to 2010. I asked Brewer why.

"The biggest change came from looking at a value indication based on a multiple of adjusted revenues, and considering that with equal weight versus value based on discounted adjusted cash flows," Brewer said. "Also, I adjusted discount rates based upon what I found in the 2010 study, which is that programs having greater physical capital and a higher long-term on-field performance ratio posed less risk.

"But the key to answering your question is that for 2011, I considered adjusted revenues and adjusted risk-affected cash flows," he added. "Last year I considered only risk-adjusted cash flows. These numbers are not apples to apples. From a pure discounted cash flow perspective, the numbers from 2011 would be different."

The bottom line is, most college football programs are worth even more than Brewer initially estimated. Add in to that, the business of college football is definitely growing.

For Indiana area college football fans, IU ranked No. 42 in the new study with a $121.2 million valuation for 2011, and Purdue is No. 48 with a $111.2 million valuation. Ball State's football team has an $18.5 million valuation and is ranked No. 104 out of all Football Bowl Subdivision programs.

I’ll put up a longer listing on Tuesday. For now, I’ll list the top 15 and their percentage change from 2010.

1 Texas (Big 12) $805.1 million, -5.1 percent
2 Florida (SEC) $630.2 million, +49.4 percent
3 Michigan (Big Ten) $618.6 million, +57.5 percent
4 Notre Dame (Independent) $581 million
5 Georgia (SEC) $564.6 million, +16.7 percent
6 Alabama (SEC)( $522 million, +39.5 percent
7 Ohio State (Big Ten) $520.9 million, +77.9 percent
8 LSU (SEC) $504.2 million, +26.9 percent
9 Auburn (SEC) $488 million, +35.8 percent
10 Oklahoma (Big 12) $470.2 million, +37.1 percent
11 Tennessee (SEC) $442 million, +37.6 percent
12 Nebraska (Big Ten) $415.1 million, +45.8 percent
13 Penn State (Big Ten) $408.1 million, -8.7 percent
14 Arkansas (SEC) $345.5 million, +46.6 percent
15 Iowa (Big Ten) $315.6 million +28.4 percent
16 Southern Cal (Pac 12) $302.3 million
17 Wisconsin (Big Ten) $289.4 million, +88.8 percent
18 Texas A&M (Big 12) $287.3 million, +16.8 percent
19 South Carolina (SEC) $281.3 million, -11.2 percent
20 Florida State (ACC) $267 million
21 Michigan State (Big Ten) $261.5 million, +9.2 percent
22 Washington (Pac 12) $213.1 million, +56.5 percent
23 Virginia Tech (ACC) $212.9 million, +58.6 percent
24 Kentucky (SEC) $207.7 million, +36.2 percent
25 Oklahoma State (Big 12) $206.9 million, +33.3 percent
26 Oregon (Pac 12) $199.2 million, +95.3 percent
27 Clemson (ACC) $179.9 million, +37.3 percent
28 Texas Tech (Big 12) $160.9 million, +60.3 percent
29 Colorado (Pac 12) $156 million, +27.1 percent
30 Arizona State (Pac 12) $154.9 million, +46.7 percent
31 Kansas State (Big 12) $153.4 million, +156.5 percent
32 Minnesota (Big Ten) $148.3 million, +17.2 percent
33 Mississippi (SEC) $142.1 million, +4.5 percent
34 Northwestern (Big Ten) $137.6 million
35 Cal Berkley (Pac 12) $135.4 million, +142.2 percent
36 West Virginia (ACC) $132.7 million, -6 percent
37 Illinois (Big Ten) $127.1 million, +4.2 percent
38 North Carolina (ACC) $126.6 million, +94.2 percent
39 UCLA (Pac 12) $122.6 million, +85.5 percent
40 North Carolina State (ACC) $122.2 million, +20 percent
41 Miami of Florida (ACC) $121.7 million
42 Indiana (Big Ten) $121.2 million, +55.8 percent
43 Louisville (Big East) $120 million, +294.7 percent
44 Oregon State $119.4 million, +62.7 percent
45 Missouri (Big 12) $115.7 million, +16.4 percent
46 Utah (Pac 12) $113.8 million, +154 percent
47 Iowa State (Big 12) $112.8 million, +88.3 percent
48 Purdue (Big Ten) $111.2 million, +98.9 percent
49 Georgia Tech (ACC) $108.2 million, +27.3 percent
50 Mississippi State (SEC) $106 million, +144.8 percent

The SEC's 12 schools have an average valuation of $359.6 million. That's tops among all FBS conferences. The Big Ten is second with an average valulation of $289.6 million for its 12 schools. Those two conferences are followed by the Big 12, which has an average valuation of $240.4 million for its 10 schools,. The Pac 12 is fourth with an average valuation of $147.5 million for its 12 schools, followed by the ACC with an average valuation of $128.9 million of its 12 schools.