NCAA Basketball: 10 most valuable programs in terms of finances

CHICAGO, ILLINOIS - DECEMBER 22: A detail view of a Wilson basketball on the court during the game between the Kentucky Wildcats and North Carolina Tar Heels during the CBS Sports Classic at the United Center on December 22, 2018 in Chicago, Illinois. (Photo by Dylan Buell/Getty Images) /

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NCAA Basketball Mark Emmert (Photo by Maxx Wolfson/Getty Images) /

Methodology

To find the net worth of any given school, I calculated three valuations and averaged them. The three valuations are based on the last 3 years’ revenue average, last 3 years’ earnings (profits) average, and estimated future earnings.

For 3-years’ average revenue and earnings, I used Forbes articles on NBA valuations and College Basketball financials. To compare the most valuable college teams with those of the NBA, I calculated the combined price/sales ratio and combined price/earnings ratio of the 5 most valuable NBA franchises and applied these factors to the college teams’ revenues and profits.

For estimated future earnings, I used data from the U.S. Department of Education. The earnings growth rate is calculated based on available data from 2008 to 2018. If there were outlier years for certain schools (i.e. Duke is very profitable but had a couple of uncharacteristic years where they experienced a significant financial loss), I offset that by calculating growth rates using time periods shorter than 10 years.

From there, I projected 30 years of future profits for each school. To stay realistic with long-term growth, I used conservative assumptions (for example, Kentucky and Duke are not likely to sustain double-digit annual growth through 2050.

I adjusted their future growth to 5%). To adjust for inflation, I discounted future earnings by 2%, which is roughly the rate of a 30-year treasury bond. I then summed the 30 years of future profits for each school. This created the Net Present Value of earnings a.k.a. future earnings valuation.

Ohio State, for example, had the following valuations:

Based on 3-year avg. revenue: $302.5 mil
Based on 3-year avg. earnings: $296.4 mil
Based on future earnings: $360.5 mil

Overall valuation: $320 million.

Please note that no valuation metric is perfect – these are all best-guesses.

**Other sources not named above include annual reports and individual financial statements from select schools.

Schools that just missed the cut

These five basketball programs barely missed the top 10. Below are the teams and their respective market values.

15. UCLA: $263 million

14. Michigan State: $283 million

13. Arizona: $307 million

12. Illinois: $314 million

11. Ohio State: $320 million

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