The Louisville Cardinals celebrated upset victories over Marquette and Notre Dame en route to winning the Big East Championship, where they defeated fourth-seeded Cincinnati. Such on-court success has come to define Louisville's basketball program in recent years, which has translated to success on the balance sheet. The Cardinals have unseated North Carolina as the NCAA's most valuable basketball team, with a total value of $36.1 million.
Louisville's value is helped by ticket sales of $1.4 million and an additional $1 million from the sales of concessions, parking and programs. But the major driver behind Louisville's financial success is contributions to the basketball team, which hit $20 million last year. Only five other teams were able to generate $20 million in total revenue, let alone from a single source. A significant portion of those contributions are tied to luxury seating. College teams don't sell seat licenses like professional teams, but rather require that fans make a minimum contribution before they can purchase season tickets or luxury seating options.
The financial windfall that seating-related contributions generate for college basketball teams is just one way that the sport is progressively emulating its professional counterpart. This is the first year that our valuations have captured the effects of Louisville's KFC Yum! Center, which opened in October 2010. The state-of-the-art waterfront arena rivals many NBA venues, and it has certainly played a major role in Louisville's 39 percent growth in value over the last two years.
The KFC Yum! Center helped the Cardinals join Kentucky and Syracuse as the three teams that averaged more than 20,000 fans per home game last season. Only four NBA teams managed the same feat last season. The similarity between college and professional basketball is also apparent in ticket prices. Louisville charges $35 per ticket for most home games. It might not sound like a lot, but seven NBA teams had a lower average ticket price last season.
College basketball's head coaches are also often paid as much as, if not more than, many NBA coaches. Louisville's own Rick Pitino is a great example. Thanks to a loyalty bonus in his contract, Pitino received over $6 million from Louisville last year. Pitino's contract is also laden with performance bonuses, and the head coach stands to make an additional $175,000 each time the Cardinals make the Final Four. If they win it all, he will receive $325,000. And Pitino isn't even the sport's highest earner. Consider that Kentucky's John Calipari rakes in nearly $4 million annually before bonuses, and he can earn another $750,000 from the team's on-court success.
College teams also reap the benefits of wealthy conference television contracts. Chris Bevilacqua, Chairman and CEO of the Bevilacqua Media Company, says that "college sports [TV ratings] are doing very well, especially in a time of media fragmentation." He notes that college football is the real driving force behind the rising prices of conference TV deals, but that basketball plays an important role. College basketball offers tonnage to networks by providing exciting programming in college football's off-season. And that's just for the regular season – CBS pays over $770 million each year for the rights to the three-week NCAA tournament.
Though college basketball is clearly big business, our methodology is a bit different. Unlike our professional team valuations, which estimate how much a team would sell for in an arms-length transaction, our ranking of the most valuable college basketball teams uses a weighted scoring system to measure the value generated by each team for three distinct areas, in order of weight: university (basketball scholarships and academic contributions), athletic department (net profit used to support other athletic programs) and conference (payouts from success in the NCAA tournament). The average value of the top-20 teams is $19.1 million, up from $18 million when we last published our list in 2010. Average basketball profit has also increased, from $10.7 million to $11.6 million over the last two years.
The biggest growth in total value belongs to the fourth-ranked Duke Blue Devils. The team's value increased by 52 percent since the last time we published our list in 2010, though the majority of that change is illusory due to changes in the school's accounting practices. Of the actual growth in value, much is tied to the Blue Devils' academic value – the athletic department contributes nearly $750,000 to basketball scholarships – and its national championship run in 2010, which helped the Blue Devils generate $4 million for the ACC last year.
The NCAA's tournament payouts reward conferences for their teams' tournament success over the previous six years, which means that Duke's championship run will continue to pay off for years to come. But no team compares to Duke's longtime rival, North Carolina, in terms of conference value. The Tar Heels are the second-most valuable team in college basketball, and they earned the ACC more than $5 million last year. North Carolina has played in 23 tournament games from 2005 to 2010, including two championship victories in 2005 and 2009.
Two schools are new to our list since the last time we published it in 2010. The Texas Longhorns, ranked No. 14, appeared on our basketball list in 2008 but have lingered outside of the top 20 until this year. Texas' athletic department contributed $6.3 million to university programs last year, boosting the team's value by at least 20 percent since 2010. The other new team is Purdue, which has cracked the top 20 for the first time. Purdue has added nearly $5 million in basketball revenue since 2010, helping the Boilermakers unseat UNLV for the final spot on our list.
College basketball's most valuable teams:
1. Louisville Cardinals, $36.1 million
2. North Carolina Tar Heels, $29.6 million
3. Kansas Jayhawks, $28.2 million
4. Duke Blue Devils, $25 million
5. Kentucky Wildcats, $24.4 million
6. Indiana Hoosiers, $23.2 million
7. Ohio State Buckeyes, $21.9 million
8. Arizona Wildcats, $18.3 million
9. Syracuse Orange, $17.7 million
10. Wisconsin Badgers, $17.2 million
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