Since 2020, Georgia & SEC have greatest financial return on investment. UCLA, Rutgers & Big Ten at the bottom. List of FBS schools & conferences.

I’ve been discussing some financial concepts with my Sport Finance class, and began to think of value with respect to all of the investment in college athletics programs, especially the amount of debt paid to enhance athletics facilities and, in some ways, help to pay for golden parachutes for college athletics coaches. Debt was also used to help keep some athletic departments (such as Iowa, Indiana, and South Carolina) stable and above water during the limited athletics campaign in the COVID 2020-2021 epidemic. 

Return on Investment of Capital (ROIC)
 

So, I began to think of Return on Investment of Capital as a concept to rate an athletics department’s financial value relative to other athletics departments. Return on Investment = Earnings / (Debt + Equity) (link). An interesting part for this exercise was not earnings (revenue - expenses), but rather the “capital” side of the denominator beyond athletically-related debt. How, or should, we measure equity?  

Research shows higher education programs, like businesses, consider government support and private grants as equity when making financial decisions (link, link). Colleges that receive this type of support on an annual basis become accustomed to this support and roll it into their budgeting decisions. It goes like this: government “equity” helps to fund a product (higher education) to benefit the greater good (building of minds and our future leaders).  

Institutional and government support of educational programs is equity: this money received by an institution turns into an investment from the institution back into the educational enterprise, with future societal benefits (including a richer tax base). Institutional support of athletics would be similar to a company (say, Nike) investing cash into its business to build a new production facility for a new line of shoes. Government support specifically to athletics is rare and fairly insignificant, often related to a state law (say, Title IX) requiring investment for meeting certain legal requirements.  Therefore, the focus of this article includes subsidization as equity in the ROIC calculation. 

 
Read the full article here: https://www.linkedin.com/pulse/since-2020-georgia-sec-have-greatest-financial-return-hirko-ph-d-/