College Football’s Most Valuable Teams: Texas A&M Jumps To No. 1

Courtesy of Forbes:

For years, the Texas Longhorns have been hailed as college football’s ultimate cash cow. In 2011, Texas was the first college football team ever to record $100 million in revenue. In 2014, the team generated more in profit – $92 million – than all but two teams made that year in revenue.

But there’s a new No. 1, and you don’t even have to leave the state to find them: Texas A&M is now college football’s most valuable program.

Across the three years prior to last season, Texas A&M averaged annual revenues of $148 million, the most of any program in the nation. That not only tops the Longhorns; it leaves them in the dust. Over the same time period, Texas football averaged $133 million in revenue, making the Longhorns a distant second.

It’s been widely reported that the Aggies closed the gap with the cross-state rival Longhorns because of a vast increase in contributions. And indeed, from 2014 through the 2016-17 season, the Texas A&M athletic department earned $260 million in contributions, nearly double what any other school made in that time. For reference, in those years, Texas had total athletic contributions of $123 million; Florida, which ranks second in the category, totaled contributions of $138 million. Texas A&M, meanwhile, allocated $119 million of its total contributions just to the football team.

Texas A&M’s rise to the top isn’t just from alumni contributions, though. The team ranks third in ticket revenue, averaging some $41 million per year, and it’s sixth in money from royalties and licensing. And the 2012 move to the SEC certainly hasn’t hurt – the conference’s most recent revenue distribution was $41 million per member school while Big 12 programs each received just $34 million from their conference.

Yet while there’s no denying the Aggies’ tremendous financial success, there’s also an important, lingering question: How long will it last?

The surge in contributions is the Texas A&M faithful’s response to fundraising efforts started in 2014 to fund some major construction efforts: Kyle Field underwent a $485 million renovation that made it college football’s third-largest stadium, and another $68 million was put toward building new stadiums for softball and track and field. But as those projects are completed, the contribution revenue should ebb back toward normal levels. And if the team’s on-field performance doesn’t soon improve from the mediocre finishes of the last few years, then some of those other revenue streams may also begin to dry up.

Lying in wait is Texas. Although the runner-up this year, the Longhorns remain a financial powerhouse across the board. The team is among the best in nearly every revenue stream that’s not tied to conference money or bowl game payouts; the Longhorns are top-five in contributions, ticket sales, endowments, concessions and even youth camps. And Texas football’s $31 million from licensing, royalties and advertising is 50% more than any other team makes from the category.

No wonder, considering Texas athletics gets nearly $10 million per year on average from Nike, making it the third-biggest apparel deal in college sports (UCLA and Louisville rank first and second). Texas also receives increasingly juicy rights payments from ESPN for the Longhorn Network; this year, the university and its athletic department will split $11.6 million from the school-specific network, and that payout increases by 3% annually. The LHN contract runs through the end of June 2031.

Michigan edges out Alabama for third on our list; both have averaged $127 million in football revenue over the three most recent years for which financial data is available, but the Wolverines come out ahead in our ranking thanks to greater profits in that time ($75 million to $59 million). Alabama actually ranks just 10th in team profit, since no other program comes close to matching the Crimson Tide in spending: Alabama football spends an average $68 million per year, a staggering 22% more than any other team in the nation. Ohio State rounds out the top five with $120 million in average annual football revenue.

This is the first time Forbes has ranked college football teams since 2015, and this year we’ve taken a different approach to the endeavor. Our list of college football’s most valuable teams ranks the nation’s top programs by average annual revenue, rounded to the nearest million. Ties in revenue were broken using average profits, and any ties in both areas were broken by using single-season revenue for the 2016-17 fiscal year.

To determine team revenues and expenses, we relied on annual filings made by each school’s athletic department to the NCAA and the Department of Education. Revenues and expenses allocated to football were also adjusted to account for differences in accounting practices among athletic departments. In order to prevent year-to-year aberrations from skewing things, our revenue and expense numbers are three-year averages across the 2014, 2015 and 2016 football seasons, which are the three most recent years for which data is available. Financial data for last season won’t be reported to the NCAA until January.

The SEC has long dominated the sport on the field, winning nine of the last 12 national championships, and the conference is also the strongest when it comes to money: Our financial top 25 features 10 teams from the SEC, the most from any conference. The Big Ten comes next with seven programs, and no other conference has more than three teams on our list. Perhaps unsurprisingly, the SEC and the Big Ten are the two conferences that have experienced tremendous success with their conference-specific networks.

The one outlier in the conference talk is, of course, the football independent Notre Dame, which ranks seventh with team revenues of $112 million. Although the Irish don’t get conference money for football, the team still receives a reported $15 million per year from NBC for broadcast rights to its home games. What’s more, Notre Dame’s athletic department doesn’t even report the vast majority of contributions tied to the football team’s ticket lottery, since most of those are made directly to the university.

Following Notre Dame are four SEC teams: Auburn, LSU, Florida and Tennessee. Calling the SEC home means a huge boost to conference-level revenues, and each program also excels in a different area. LSU, for instance, ranks fifth in ticket sales with an average of $37 million per year; Florida is second in contribution revenue, taking home some $40 million annually. This group also rounds out what’s essentially college football’s upper class, as there’s a precipitous drop from No. 11 Tennessee at $108 million to No. 12 Oregon, which has averaged $92 million in annual revenue.

By our count, college football’s 25 most valuable teams generate a combined $2.5 billion per year in revenue, and they clear more than $1.4 billion annually after expenses. A tremendous portion of those earnings goes toward supporting non-revenue sports like softball and swimming, which helps explain why even some of the nation’s biggest athletic departments can still struggle to break even.

But when it comes to college football’s elite class, it’s hard to believe any arguments that there isn’t enough money to go around. From 2014 to 2016, the 23 teams at public schools on our list combined to spend an average $239 million per year on salaries and severance for football coaches, but just $90 million per year on student aid for football players. In the 2016-17 fiscal year alone, those teams’ athletic departments spent a combined $800 million on capital expenditures and $250 million on debt service for athletic facilities. That year, those same athletics programs combined to transfer just $65 million back to their universities to support academic programming.

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