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The most valuable franchises in North America’s major professional sports leagues are well documented. But as private equity firms look to get into college sports, what will happen to the valuations of top athletic programs?
CNBC’s Michael Ozanian released his ranking of the 75 most valuable college athletic programs in 2024 on Thursday. The list includes valuations ranging from about $150 million up to $1.3 billion.
There are four athletic programs valued at more than $1 billion, with Ohio State leading the way at $1.318 billion. The Buckeyes generate the most revenue of any program at $280 million, and Ozanian said football accounts for about 75 percent of revenue for most large athletic programs.
The Texas Longhorns ranked second with a valuation of $1.281 billion, followed by the Texas A&M Aggies ($1.264 billion) and Michigan Wolverines ($1.062 billion). The Alabama Crimson Tide ranks fifth with $978 million.
Rounding out the top 10 are the Notre Dame Fighting Irish ($969 million), the Georgia Bulldogs ($950 million), the Nebraska Cornhuskers ($943 million), and the Tennessee Volans. Tears ($940 million) and Oklahoma Sooners ($928 million).
Other programs valued at more than $900 million include the Penn State Nittany Lions ($924 million), USC Trojans ($923 million), and LSU Tigers ($916 million) .
You can see the complete list of the top 75 below.
This ranking is based on Ozanian’s previous evaluations of NFL and NHL franchises. So how did he come up with the college version?
Now, after talking with sports bankers and people considering investing in college athletic programs, Ozanian began calculating valuations using a revenue multiple of four. For context, Ozanian said the valuation-to-earnings multiple for professional franchises typically ranges from about 5 to 10.
Set an initial revenue multiple and then base this number on a variety of factors, including television revenue, size of alumni and fan base, amount of deal with NIL, and whether the program relies on student grants. I adjusted it up and down slightly. Or school.
The rankings are dominated by Big Ten and SEC programs, which Ozanian said reflects the large television deals these conferences have. Big Ten and SEC programs occupy 21 of the top 22 spots, with Notre Dame being an outlier at No. 6.
Ozanian noted two things that surprised him when creating the list. It’s how much money some shows make from donors and how little profit some shows make in areas like sponsorships, licensing, and merchandise.
“I think that’s one of the things that private equity is looking at and one of the reasons why we made this valuation,” Ozanian said. …With that passion and fan base, we can make more money from these things. ”
The possibility of private equity money entering college sports is emerging as the NCAA moves closer to settling a major antitrust lawsuit. The agreement will see the five major conferences pay thousands of former and current athletes $2.78 billion over 10 years, but it also opens the door for athletes to receive compensation directly from their schools. Ozanian said investment from private equity groups could help pay for the program’s future costs.
However, this idea does not necessarily have unanimous support. In October, Big Ten Commissioner Tony Petiti and SEC Commissioner Greg Sankey joined forces to fight the private equity group’s proposal.
“There is still nothing in any of the plans that I have learned the details of that we couldn’t implement ourselves or our colleagues at A4,” Petiti said at the time, via ESPN. “At the end of the day, there is a strong insistence that we have the ability to do all of this ourselves.
“…The idea that college football is broken, that what we’re doing is broken, is simply not true.”
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