January 06, 2010
Marginal Revenue Product

Some snips from a USA Today story on Alabama football coach Nick Saban:

Hired three years ago for a then-unheard-of $4 million a year peeving rivals and higher education watchdogs who complained of misplaced priorities Nick Saban has coached the Crimson Tide football team to an undefeated record, No. 1 ranking and shot at the school's first national championship in 17 years. Alabama meets No. 2 Texas in Thursday's Bowl Championship Series title game in Pasadena, Calif. (8 p.m. ET, ABC)

Saban took over a storied program that had fallen on hard times, delivered a first-year record of 7-6 and since has led Alabama to 25 victories in 27 games. But it's not just the Crimson Tide's winning percentage that has soared.

The demand for tickets to Alabama's home games is so great that Bryant-Denny Stadium is adding about 9,000 seats, which will make it the sixth college facility with a capacity of more than 100,000. Donations to the athletic program are up. So is marketing revenue. And overall athletic profits have more than doubled at a time when barely a fifth of all major-college programs are generating enough overall revenue to turn a profit.

[snip]

The waiting list for priority-seating tickets requiring a donation atop the price of the seat has jumped from about 1,200 four summers ago to 15,000.

The school launched its first capital campaign for athletics in 2002, with a goal of $50 million in five years. By the 2007 spring game, it had raised $70 million. The drive ended, but the flow of money has continued, and donations total $102 million.

Alabama's take from its media and marketing rights contract with Learfield Sports and ISP Sports will jump $1.3 million this year, to $8.5 million, according to senior AD Finus Gaston, the school's chief financial officer for athletics.

Football revenue jumped 16% in Saban's first two years from nearly $56 million before he arrived to almost $65 million in 2008 and the sport turned a $38.2 million profit in 2008. Gaston conservatively projects a $39 million profit for 2009 and, with the expanded stadium and ticket demand, says he expects the climb to continue.

Posted by E. Frank Stephenson at 09:52 AM in Sports

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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