CALLING ALL CPA'S, FINANCIAL WIZARDS, CEO-TYPES, BUSINESSMEN

Help me answer the following question:

Let's assume that after Mason was fired, the UofM was willing to make, and indeed did make, its next coach the highest paid coach in the country. Because of that compensation, the U landed what everyone agreed was one of the very best coaches in football. This coach took the Gophers from 3 wins, to 5 wins, to 7 wins, to 9 wins over the last four years. We began to "land" a few of the most highly sought after players in the country, and the coach brought with him a couple of outstanding players who had committed to him previously. Gopher Nation was gaga crazy. Since the announcement of his hiring, every game has been sold out (months and months in advance). In fact, the U slowly but surely raised ticket prices because demand was so strong. Gopher gear was selling like never before. For each of the last four years, concessions sales were a good 25% higher than the year before he was hired. Advertising sales had increased somewhat as had donations from former athletes, alumni and the season ticket holders.

Would someone please do the math, factoring in everything that is reasonable (for example buy-out money, search firm money, opportunity cost of all the U administrative time spent looking for a new coach four years later, etc.) but being very conservative in your numbers, and tell me if the U would be ahead or behind financially compared with where things stand today. Although we all would agree that there would be other intangible benefits as well, let's leave those out of the discussion for now. I also realize that the U would have a huge problem justifying to its constituency the spending of millions and millions on a football coach. But let's ignore that for the moment too. For now, I'm simply interested in the financial analysis, but I'm not smart enough to figure this out. Any takers? Thanks and Go Gophers.

Don't count your chickens before they are hatched. Way too many assumptions there.

...and your also asumming that one of the very best coaches in the country would accept a major rebuilding job for the money. Not very likely, since the very best coaches are already being paid big bucks. They would have everything to lose, and not much to gain.

Hiring Kill at that time would have been great. Mason's guys may have taken to him better. Kill has the qualities that people liked in Mason and Brewster.

MaxyJR1 said:

Hiring Kill at that time would have been great. Mason's guys may have taken to him better. Kill has the qualities that people liked in Mason and Brewster.

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Huh?

Hiring Kill instead of Brewster in 2007 might have been a reasonable choice, but it would have been a hard sell to the public bring in a coach right out of the I-AA ranks.

I could do it, as I've looked at this in the past. Successful programs can have a high return on investment.

However, when Michigan and Notre Dame cannot get their first or second choices, I hold no illusions that any amount of money would get an established top-tier coach here.

We weren't at all likely to pull a big-name coach away from a big-name program. They are already getting quite a lot of money, and have pretty comfortable jobs. There are no sure things, there is a danger of hiring a has been, and getting a big name flop.

BreakTheGopherCurse said:

Help me answer the following question:

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OK, I'm a CPA and also have a Finance degree.

I can help you think through this; it's not simple enough to just analyze.

The question is impossible to answer specifically for two reasons: 1) There is no standard of reporting revenue and expenses for college programs as well as allocating cots across the U. Therefore, any there is no way to compare the U to Alabama, who did just that (Saban) or even to Iowa. Priorities differ across the country and thus so do cost allocations (overhead, inter university costs, etc). 2) One would need a lot more numbers to do the math than those offered or attainable.

The U might even make more money losing.

Common sense says one can make money only through winning.

Real life doesn’t necessary reflect common sense. Sure you may make a lot more revenue, but costs would rise and you may actually lower your profitability.

Pro sports offers some simple illustrations:

The easy example is the LA Clippers. All those years of losing and they were one of the most profitable teams in pro sports.

Another might be LA Pro football. Most fans don’t understand why they don’t have a team. However, to financial folks this is an easy one. It has long held that one would lose money on an LA football franchise if new stadium was a precursor (remember two teams failed there already in the coliseum).
California has long been against subsidizing stadiums and LA has some extreme land values. Thus, the debt service alone would chew up your return. As a result, smart money should go elsewhere (equities, real estate, debt, commodities, etc).

A local example:

The same presumption makes it laughable that the Vikings can’t profit in MN (relative to the league). They don’t pay debt service, have sweetheart rent, made money from the Twins and Gophers.
The specter of LA was always enough to use as leverage as the casual fan puts pressure on politicians. Especially considering markets like Jacksonville, New Orleans, Buffalo, Indy, Arizona, Tampa, and St Louis have teams.

Why do you think the NFL owners biggest sticking points in contract negotiations was that they were unwilling to produce 10 Years of audited financial statements? However, they agreed to let the players union inspect the records with a qualified thrid party however they pleased.

Only college football fanatics had ever heard of Bielma and Ferentz before they were hired. Many of us will be dead before Minnesota will ever be in a position to hire a big time, can't-miss football coach no matter how much money the U throws at them.

And even if the Gophers are able to hire a big time Division I coach there still are no guarantees of success. This is Steve Spurrier's SE Conference record since he starting coaching South Carolina:

2005 South Carolina 5–3
2006 South Carolina 3–5
2007 South Carolina 3–5
2008 South Carolina 4–4
2009 South Carolina 3–5
2010 South Carolina 5–3
2011 South Carolina 2–1
--------------------25-26

Many of the previous responses take the logical approach: A) We couldn't attract a top-tier coach regardless of compensation and/or B) There is no guarantee a top-tier coach would be successful at Minnesota.

However, if one were to simply answer the question as posed by the OP with the stated outcomes already predetermined it's pretty clear the answer is the Gophers would surely have achieved a solid return-on-investment.

epgopher said:

Many of the previous responses take the logical approach: A) We couldn't attract a top-tier coach regardless of compensation and/or B) There is no guarantee a top-tier coach would be successful at Minnesota.

However, if one were to simply answer the question as posed by the OP with the stated outcomes already predetermined it's pretty clear the answer is the Gophers would surely have achieved a solid return-on-investment.

Click to expand...

I did answer the OP directly. Two posts above your's.

The answer is not really a clear solid ROI.

What is clear is you have already settled upon the answer. It's not nearly that simple. These things usually don't ever approach the "common sense" solution.

A more complete answer (say one comissioned by the University) would take unfettered access to tons of records and run somewhere near a half million bucks. I'll have it for you in a mont... just as soon as my check arrives.