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IUPUC professor calculates financial worth of colleges’ athletics programs

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After watching coach Gregg Marshall lead Wichita State to the Final Four for the first time in 48 years, school officials wanted to do everything in their power to keep him from leaping to a bigger job.

That, of course, meant opening the checkbook. But the Shockers weren’t sure how much Marshall was really worth.

That prompted the school to put in a call to Ryan Brewer. The assistant professor of finance at IUPUC had done studies on the valuation of college football and basketball programs and was in the process of researching how much college basketball coaches were worth.

So in September, Wichita State announced that it was raising Marshall’s base salary to $1.6 million on Nov. 9 and $1.75 million in April.

“They wanted to retain their coach because he took their team to the Final Four, and they wanted to know what I thought they ought to pay him,” Brewer said. “I told him, and they locked him into a deal for that amount.”

Brewer, 44, a former basketball and tennis player at Columbus East, worked as a valuation analyst for a firm out of Chicago and still does valuation studies on businesses. A few years ago, he was valuing a tennis partnership, and one of the clients asked him if he had a PhD in sports finance.

“I thought he was joking, so I laughed,” Brewer said.

“I said ‘No, I don’t have a PhD in sports finance, but I do have an MBA from Indiana University and went on to tell him how great that was. He wasn’t laughing.”

The client referred Brewer to an individual who leads a doctoral program in sports business at Indiana University. For his thesis, he had to study something that no one had done before.

The light came on when Brewer attended an IU-Penn State football game.

“Even in Bloomington, Indiana, where it’s arguable that they don’t even have a football team, there were a lot people there, and there was a lot of interest in that game,” Brewer said.

So Brewer started looking into numbers and found that college football generates about 80 percent of all college revenue.

“They literally drive the bus for all of the other college sports to run off of their production,” Brewer said. “But for football, there would be very little money to run these programs without having to get the money from the student body or from other resources.”

The burning question for Brewer became, “If one of the programs was going to be sold on the open market, how much would it be worth?”

So Brewer researched factors such as stadium size, size of school, size of endowment, conference affiliation, size of the town and whether there was any other amenity to do in town on all 116 Football Bowl Subdivision schools and ran regression models. His work became his 275-page doctoral thesis, “An Intrinsic Valuation of Non Market Commercial Sport Enterprises,” which he finished in 2011.

“The numbers don’t necessarily come out like you would think they would,” Brewer said. “There are a few surprises here and there.”

One of those surprises came when IU, at $125.8 million, was ranked No. 46, two spots higher than Purdue, which he valued at $114.6 million, despite the Boilermakers having far more success on the field than the Hoosiers over the the past 15 years.

“I always like to beat Purdue, and I’m glad we did again in these rankings,” IU athletics director Fred Glass said. “These kind of studies are generally mostly fun fodder for water cooler conversations, but this one is done by a serious academician based on an objective analysis.

“Of course it is still only as good as the data available, which isn’t always consistently reported by the institutions. I can’t say the study will have any direct impact on decisions we make here at IU, but it does underscore the value and relative strength of Indiana University football.”

Purdue AD Morgan Burke, through a spokesman, declined to comment.

Texas heads the list at

$875 million. Notre Dame is second at $811.5 million.

Brewer said on-field performance is related to value if the on-field performance has enough history. Recent on-field performance doesn’t have a high correlation to value, but long-term on-field performance does have a high correlation to value. That’s why even though Notre Dame — aside from 2012 — hasn’t been among the nation’s elite in the past

20 years, it still comes out near the top.

Brewer has also studied ticket prices and other operations of college football programs. For example, when the recession hit and state governments started asking state-funded universities where they could tighten budgets, Ohio State sold its parking operation to a private company.

“When you allow the private sector to engage, all of a sudden, they understand demand and supply a little bit better than the command and control mentality that we all know didn’t work from the Soviet Union and the Eastern Bloc,” Brewer said.

Brewer, who said he has heard from officials at Penn State, Iowa, Northern Illinois, TCU and Hawaii, is doing his third college basketball valuation this year. He said he’s a big sports fan, so he enjoys what he is doing.

“I think sports does so much for people,” Brewer said. “Sports is an opportunity to learn a good work ethic, to be a good teammate, to learn to open your mind to differences and to break down barriers of communication that results in achieving a common mission. I think the lessons that I learned as a child were fantastic, and I reach back into that basket all the time.

“I think sports is one of the most fantastic things that could ever happen to somebody because it breaks down so many barriers,” he said. “You’re buddies with all these people from all these different backgrounds, and you have a common cause and a common goal.”

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