“Corn won’t grow at all on Rocky Top …
Dirt’s too rocky by far.
That’s why all the folks on Rocky Top …
Get their corn from a jar.” “Rocky Top” University of Tennessee Fight Song
That Texas and Clemson’s Dabo Swinney are at the top of my post holiday football list may come as a surprise, as neither made the first playoff. While my living room resonated recently with fight songs and touchdowns, I cocooned with HGTV and perused a fascinating article in Forbes Magazine about the business of college football.
Texas finished last year’s campaign at 8-4, but finished first in several other categories, including the all important bottom line. The Longhorns were simply a wildly profitable enterprise. Texas was first in program worth and merchandise sales and enjoys the most “lucrative school specific TV deal” in the country, according to Forbes.
The Longhorns’ football program was worth $139 million at the end of last season, about 20 percent more than second place Notre Dame. Rounding out the top 10 in net worth a year ago were Alabama, LSU, Michigan, Florida, Oklahoma, Georgia, Ohio State and Nebraska.
My individual coaching hero is Clemson’s Dabo Swinney. If Clemson fires him before his contract is up, Swinney’s buyout clause requires the Tigers to ante up some $21 million. If I’m Dabo, I’m hoping I get the axe.
In many respects, big time college football mirrors the American economy. CEO’s of extremely successful corporations are rewarded with incredible salaries and bonuses. Meanwhile, middle class families are struggling to make ends meet, even when two partners work full-time and contribute to household income.
Nick Saban, Mark Richt and perhaps Jim McElwain (we’ll see, right?) are worth their salaries to the Tide, the Bulldogs and the Gators, respectively, because if they win big, the university wins financially. Football profits can support academics and non-revenue sports. It’s unclear who said it first, but major college football often represents “the front porch” of a university, or the most visible part of the school. If the front porch has curb appeal, enrollment applications ascend and alumni donations flow.
Alabama grossed $110 million a season ago, made a $45 million profit, and contributed over $6 million to academic programs. Florida profited by $47 million. Georgia generated $91 million in revenue and generated a $40 million profit.
But the University of Alabama Birmingham, with a 6-6 record, announced two months ago that it is dropping football for financial reasons. Fielding a team is apparently financially feasible only if it’s a publicity-generating, donation-inducing, winning machine. So for some programs, the financial reality is win big or go home.
Meanwhile, a new program is being started at the University of West Florida in Pensacola. Will it lead to increased exposure, new enrollment applications and generous alumni donations? Go Argonauts!
Margaret R. McDowell, ChFC, AIF, a syndicated economic columnist, is the founder of Arbor Wealth Management, LLC, (850-608-6121 — www.arborwealth.net), a “fee-only” registered investment advisory firm located near Sandestin. This column should not be considered personalized investment advice and provides no assurance that any specific strategy or investment will be suitable or profitable for an investor.