How much is your favorite college football team worth? If you’re a fan of Ohio State University, the recently-crowned College Football Playoff champion, then you can say your squad is worth more than $1 billion.
BL: Jared, how was Ohio State football’s value determined?
It's insane when you realize these are, in theory, amateur athletes; these are institutions of higher education.Jared Diamond, The Wall Street Journal
JD: Well, this is something that a professor in Indiana named Ryan Brewer has been doing for a long time. He actually did his dissertation on this topic, trying to figure out how much these college football programs would be worth if you could buy and sell them the way you would buy and sell professional teams. And this year, for the first time, Ohio State came out on top, as you said, over $1.1 billion, and that was before they'd just won the national championship game. So, today, who knows what it is. It's probably gone up a few million bucks just over the last couple days.
BL: So there is no practical consequence of where you happen to fall on the list, right?
JD: No, not exactly. These teams can't be bought and sold. They're products of the NCAA. These are universities. But because they make so much money — they make as much money as a lot of professional franchises — it's interesting to see where they stack up.
And when you're talking about $1.1 billion — the Buffalo Bills, an NFL team, just sold for $1.4 billion. So that's showing just how much Ohio State is worth. And when you think about it, talking with this professor that did this research, in his mind, in the actual market it's possible teams would even go for more. And in many ways, college fandom has a deeper rooted fandom than pro sports in a lot of ways.
BL: What are some of the other blue-chippers in college football, at least in terms of revenue and overall value?
JD: In intrinsic value, the No. 2 right behind Ohio State this year was Michigan. And if you look up and down this list, it's largely what you'd expect. Maybe not the exact order, but it's clear that being a program that's been consistently good on the field for a very long stretch of time and has a long history of successful alumni, they seem to be at the top of this list, which is, going through the top five, Ohio State, Michigan, Texas, Notre Dame and Florida — those are teams that win and have large fan bases.
You look at Oregon, who was in the national championship game and has been good for a good while now — at least in recent history — they were only No. 18. That's largely because they don't have that institutional history that teams like Notre Dame have — who frankly didn't have a very good season this year and is still No. 4 just because they are Notre Dame.
BL: You say that the rise in value of elite college football programs has been tied to the value of pro franchises — you used that as a moment ago for means of comparison. How is the connection established?
JD: The fanbase and the money involved in NCAA football is as big as it is in some pro sports. You can make an argument that after the NFL, college football is the second most popular sport in the United States. And as a result, these teams, they would go on the market for as much as a lot of these pro teams just because of how much money is in college football.
It's insane when you realize these are, in theory, amateur athletes; these are institutions of higher education. But this sport, college football, and this NCAA playoff we just had for the first time, the amount of money in television and all this, it's just beyond belief, and it puts a lot of pro sports to shame. Everything but the NFL, really.
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This segment aired on January 17, 2015.