The Saint Louis Rams are more valuable than the San Francisco 49ers.
George Steinbrenner is the kind of owner any fan should want.
Georgetown's scholarship basketball players earn the equivalent of $22.46 an hour, while Texas-El Paso's could get better compensation behind the counter at Burger King.
Those are a few of the provocative conclusions Notre Dame business economist Richard G. Sheehan comes to in his new book on the business of college and pro sports, Keeping Score: The Economics of Big-Time Sports (Diamond Communications Inc.).
In the book, Sheehan names names and separates fact from fiction on such topics as salary caps, free agency, whether players are overpaid, whether team owners are losing money, how many colleges profit from their football and men's basketball programs, and why Major League Baseball owners can't seem to do anything right.
In gathering financial data, Sheehan says he received almost no cooperation from the teams he was studying, which isn't surprising, given that nearly all pro teams are privately owned. But wielding the Freedom of Information Act he was able to piece together statistics from public universities, the few pro teams that are at least partly publicly owned and other sources.
As part of his number crunching, Sheehan calculated for each college and pro team a net market value -- defined as the amount someone could be expected to pay to own an entity that is generating the annual profits the team is generating. Using that formula -- adjusted for the apparent ego value that boosts purchase prices of some pro franchises beyond what their profits merit -- Sheehan declares the most valuable franchise in sports to be the defending NFL champion Dallas Cowboys ($428 million). But the perennial cellar-dwelling Saint Louis Rams are a close second, because they benefit from a stadium deal bordering on extortion that they received for relocating from Los Angeles.
Notre Dame, which Sheehan says nets more than $15 million a year on its football and men's basketball programs ($14 million of it from football), is the nation's 23rd-most-valuable "franchise" with a net market value of $212 million. He says the most valuable program in college sports belongs to the University of Michigan ($252 million).
One of Sheehan's themes in Keeping Score is that the business problems facing today's pro leagues result mainly from team owners caring a lot about what's best for their teams and almost nothing about overall league health. The inevitable result is that big-market teams enjoy an unfair advantage over teams in small markets, because the big-city franchises can generate more revenue from sources such as sales of local TV broadcast rights.
Some leagues have tried to level the playing field in recent years by limiting total roster payrolls. But these so-called salary caps have proven impossible to enforce because a smart general manager can always find loopholes.
Sheehan would have owners share total revenues more equitably (how teams divide up gate and TV money currently varies by league). He would also impose a two-part "tax."
Under this scheme, owners like Steinbrenner who try to buy a championship by signing star free agents and who bid-up player salaries beyond the league average, would pay a tax to compensate fellow owners for higher labor costs being imposed on them. At the same time, loser teams like the Tampa Bay Buccaneers and Los Angeles Clippers, which diminish interest in the sport, would pay an incompetence tax. This would help keep the league competitive and boost fan interest, Sheehan says.
Some of Sheehan's other ideas and conclusions:
-- Fans should hope for an owner who is an egomaniac with deep pockets and at least half a brain. That way the owner will be willing to spend whatever it takes to win the championship. Steinbrenner, 49ers owner Edward J. DeBartolo Jr. and Atlanta Braves owner Ted Turner are examples of these zealous title-chasers. But being rich and eager isn't enough. Ted Stepien, then-owner of the NBA's Cleveland Cavaliers, amassed the highest payroll in the league in the early 1980s by making millionaires of undeserving players. The ineptitude of his squad earned it the nickname "Cadavers."
-- Higher player salaries don't cause higher ticket prices, it's the other way around. Sheehan says owners charge whatever they think the public will pay for tickets. They either pocket the added revenue or use it to bid for prized free agents.
-- The Notre Dames and Michigans of the world are rare. Three-quarters of the athletics programs at NCAA Division I institutions lose money or struggle to break even.
-- Some college athletes are "underpaid." Sheehan calculated the worth of athletics scholarships based on each school's cost of tuition and room and board. He adjusted the figures according to each's graduation rate for athletes -- the assumption being that if an athlete doesn't graduate, his scholarship was worth only room and board. Next, Sheehan figured an hourly "pay" rate based on the time a player could be expected to spend in practice and competing in games. Using that formula, Georgetown's basketball players are receiving the nation's top "implicit wage" of $22.46 an hour (Notre Dame is ninth at $16.27). The worst-paid Division I basketball players are Texas-El Paso's, who receive the equivalent of $2.27 an hour.