Expansion Project Vol I
Expansion Project Vol II
Brand & Culture, pt 2 – The Numbers
Act II – Part 2
Within the article on Branding and Culture I discussed two ways to quantify brand and culture; the amount an athletic department makes on its rights revenue and the size of the school. The reason for both is rather simple; the schools who are making the most off their rights have larger brands and the schools with larger alumni bases have a greater ability to mobilize fan support to drive success.
As you may imagine, the schools who make the most off their rights are the ones you’re most accustomed to viewing as elite football schools. Generally speaking they are all state schools in very populous areas who have had a lot of success. What is interesting is that, within the top ten, while four conferences are represented (Florida State is the highest in the ACC at #13) the list is dominated by one conference; the Big Ten.
Texas leads the list with over $60 million in revenue, followed by Michigan and Alabama who both made over $50 million. The rest of the top ten made over $40 million. Of that list five of the teams were in the Big Ten, two were in the Big 12, two were in the SEC, and one was in the Pac 12. This $40 million number also defines the top tier of fifteen athletic department brands. While there are only 15 teams in the top $20 million, there are 42 teams who make between $20 and $40 million. Only one of those schools are outside the Power Five; Connecticut, with $25 million.
What is interesting is that a lot of the schools who do very well with their rights usage, are not schools that generally are at the tip of everyone’s tongue when talking about the most valuable athletic departments. A great example of this is the University of Minnesota. While the school generally keeps to itself in the national discourse, it is also the only game in town when looking at college sports within Minnesota. It has no major in state competition. This allows it to dominate its region to a degree that it is number eleven on our list.
Another thing that becomes clear is that areas without professional teams tend to be able to support schools at a higher level than areas where pro sports dominate the markets. Just below Minnesota sits the University of Iowa. Its placement isn’t overly shocking, most people know the Hawkeye brand around the nation from the Haden Fry era in football. However, instate rival, Iowa State University, is number 40 on the list with $30 million in rights revenue, about $10 million less than Iowa. What this indicates is that the limited population in the state of Iowa is supporting $70 million in rights revenue between two flagship universities, most likely due to there not being any professional teams to steal eyeballs. Along those same lines, Rice and Houston, who sit right smack dab in one of the largest metro areas in the country, combine for less than half as much rights revenue as Iowa State. The concept that only large metro areas matter is one of those myths that needs to die a quick and painless death. What matters is your brand within your specific region, not your DMA.
There are some anomalies in the data, however. Two things make the numbers a bit difficult to work with. First, a lot of this information is parsed differently through multiple systems. To keep some continuity with what has been reported, I’m using the information from USA Today’s financial database when at all possible. Private schools are not included within that list, however, so I’ve tracked down numbers for them from other reporting groups, like the ones who track Title IX spending. The downside is they are not always reporting the same categories equally. Notre Dame stands out in this sense. I would have expected their revenue in this category to be higher than what I found, since they are a giant brand, but by and large the rest fall into place. One last note on Notre Dame, since the bulk of their sports are within the ACC and they have a scheduling agreement in football, they appear within that conference instead of Independent.
To provide a bit of a benchmark as we go forward, here are how the Big 12 stack up against each other in regards to amount of rights money generated by the athletic department. Texas and Oklahoma dominate the top, as expected, and Baylor and TCU are bringing up the rear. Standing out is that the rest of the teams are all within a few millions of each other. That’s a very solid core of athletic departments.
In order for someone to come in and compete with them, without the natural advantage TCU and Baylor have being located within Texas, they’ll have to have a strong brand. It will be that brand that generates interest for potential games, not only for fans to buy tickets, but also for media partners to market and provide value to the conference.
It is far easier to energize alumni, who are eager to see wins, than it is to energize band-wagon fans, who only watch because of wins. Additionally, each region of the United States has its own culture and the bulk of universities support a very specific region. The more alumni you court within that region, the stronger your culture grows.
In short, your alumni base is powerful. A larger school will have an easier time capitalizing on winning than a small school and there are some very large universities in the nation. The chart to the side highlights the top fifteen universities by enrollment, much like we ranked all of the FBS schools by how much they made in rights and licensing.
Those top fifteen schools account for 750,000 college students, and that is just one year! That is real benefit to enrollment because while one year will give an indication to the size of the school, those differences in size multiply over the years. If a school has 40,000 students, that equates to about 10,000 graduates a year, giving you an active alumni base of around 300-400,000 people. It is hard to keep up with that if you are a small private school.
The Big Ten dominates the enrollment numbers again with six teams in the top fifteen. However, the Group of Five makes an appearance when looking at enrollment with Central Florida and Cincinnati having 100,000 students between the two of them. This fades when looking you look at enrollment trends within conferences.
It is easy to see why the Big Ten commands so much media attention. Even with people lamenting the fading population base within the Rust Belt, the Big Ten Universities are averaging around 40,000 students, and that is including Northwestern who only has 15,000 enrolled. And, as mentioned previously, the Big Ten has held this advantage for generations. They claim nearly a million alumni from New York to DC, which is what led to their expansion into New Jersey and Maryland.
While the South and West are growing in numbers, they haven’t been as large for as long. Additionally, they are not as consistently large. The Pac 12 is the closest to the Big Ten in size, thanks in large part to Arizona State and Washington, but their deviation from top to bottom is greater than the Big Ten. The SEC is very similar and has been growing over the past few decades, though its jump on this chart is primarily due to Texas A&M claiming the highest enrollment in the nation. However, even with that, they still are 8,000 students on average lower than the Big Ten, with a greater standard deviation.
The Big 12 sits just a shade below the average with 28,120 students on campus per school. Their drop on the list is basically due to swapping Texas A&M’s 62,185 students, with TCU’s 10,033. If you average up the eight public institutions within the Big 12 you get 36,769, which puts it on par with the SEC and Pac 12. It does highlight one specific thing for us to factor in when talking expansion, the Big 12 is unlikely to go small. Prior to 2011, the Big 12 had one private school, like the Big Ten and SEC, but now they have two. There is little value to adding more private schools to the roster, unless the private school they are adding comes with a gigantic amount of brand to back up their reduced enrollment.
If you looked at the top fifteen in enrollment though, you may have thought the same thing I did, “does a commuter school in Florida really have a bigger brand than Duke just because they have five times the amount of students?” The answer is clearly “no”, so we cannot just use enrollment numbers as a straight comparison. Additionally, these numbers are for full enrollment, not just undergraduates. Generally speaking your most fervent fan base is your undergrads and they will continue to support the school even if they get an advanced degree somewhere else. Due to both of those a modifier was needed to normalize the enrollment numbers back to what they are meant to be, a sign of potential.
I tried a lot of different options before finally settling on a formula that ties enrollment and brand together; providing a bonus to small schools with large brands and limiting the value of huge schools with little to no brand. The key component in this was developing a ratio of rights and licensing revenue to students.
Once this was complete I was able to assign points for rights and licensing, enrollment, and the modifier to keep enrollment in check to each of the 122 schools within FBS that I could find full information on. With points tabulated each school is then ranked from highest to lowest. As you can see from the chart, the top brands are a mix of large state schools or smaller schools who reap large revenues from their rights.
Texas, Michigan, and Alabama continue their dominance of the top three, but schools like Florida State and Stanford made the list due to the massive amount of revenue they received on a per student basis. To not account for that obvious advantage would be a mistake.
Noticeably absent from the top of this list is Notre Dame, who I mentioned prior. My gut tells me the amount of revenue they earn from their rights is much higher than what was reported, but, unfortunately, I do not have any way to quantify that assumption. There will always be some outliers when looking at this much data and I’m afraid the Irish fall into that camp. They still represent well, just not as well as the massive state schools at the top of the list.
As you could probably deduce from the previous charts, the Big Ten leads the way, by a sizable amount, over the rest of the conferences. The SEC, Pac 12 and Big 12 are all within about ten points of each other, with the Big Ten 25 points above and the ACC over 40 points below.
At first I was a bit surprised that the ACC did so poorly with their rights and licensing, but the numbers are shocking. Outside Florida State, the next highest ACC school was North Carolina, who earned as much on its rights as Iowa State, the lowest public school within the Big 12. As if that example were not dramatic enough, nine ACC schools earned less than Baylor.
The ACC, due to having so many private schools, also has an incredibly small alumni base. They average 22,566 students, with a rather small deviation, but some schools are tiny. Five ACC schools have less than 20,000 students with Wake Forest not even breaking 10,000. This provides the ACC the award for smallest average enrollment for all FBS conferences.
When benchmarking the Big 12 against potential expansion candidates, its rankings are fairly strong. There were a few results that may shock some who are not as versed on each school, but most of it is fairly cut and dry. The three schools that will likely make someone look twice are Texas Tech, Iowa State, and Oklahoma State.
Texas Tech edged past Kansas on the list for two reasons; while Kansas made slightly more revenue on rights, Texas Tech had 8,000 more students. The only way to factor in casual fans is in licensing, but when looking at growth potential, Texas Tech is performing extremely well. Kansas will move higher in the list due to other categories, such as financial support and attendance, but for enrollment and rights, Texas Tech just edged them out
Iowa State has a similar story to tell. Their numbers are nearly identical to Texas Tech’s, except the Red Raiders are just slightly higher on both counts. Kansas Basketball is clearly a bigger brand name, but across all sports Texas Tech and Iowa State possess surging fan bases that should not be discounted.
Oklahoma State was a surprise because they have one of the largest athletic budgets in the Big 12. However, like Kansas, that will be factored in when we look at financial support. When comparing line items on the ledger, Oklahoma State makes about the same amount as Texas Tech and Iowa State in their rights and licensing. However, they have over 10,000 less students enrolled than both. Matter a fact, they are the smallest public university within the Big 12.
That little bit of information does give us a guide to use going forward. The Big 12 does not need more small schools with low brands, since they already have Baylor and TCU. Adding more of them would decrease the Big 12’s position and align them closer to the ACC than the Pac 12. The question becomes, are there any teams out there who fit within and bring value to the branding and culture of the Big 12.
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