An analysis by Forbes' Chris Smith values the University of Michigan's football program at $117 million - behind Notre Dame ($122 million) and the Texas Longhorns ($131 million).
Football teams are school entities, so they can't be bought or sold. Smith calculates the value of the program on four things:
- money that goes toward "academic programming"
- money that goes toward other sports at the university
- money generated by playing on bowl games
- the local economic impact from home football games
So there are your "valuation" parameters. You can take it up with Mr. Smith if you don't agree with them.
On the spreadsheet for this season, Forbes reports that Michigan made a profit of $65 million this year. One more home game on the schedule this year helped increase the team's revenue by $10 million compared to the year before.
So despite having a dismal year on the field, the team still generates money - a lot of it. But Smith points out this could change:
Fans are less likely to travel to see a team that’s struggling to win, and locals won’t stay long at area bars and restaurants after a losing effort. That’s the case even for a major program like Michigan. As early as September the businesses of Ann Arbor were worrying about how the Wolverines’ struggles were drying up the consumer base.
That's why a coach who doesn't stack up the wins is dispatched post haste.
In another analysis on college athletics done earlier this year, ESPN found that the University of Michigan was 4th in overall revenue for college sports (basketball and the category "other" included). Their analysis showed that U of M took in $143.5 million for the 2012-13 seasons.
So THAT's how they can offer Jim Harbaugh $8 million a year to come to Ann Arbor. If that is the true offer, as multiple reports indicate, analysts say the university could make up that money in one year.
*This post has been updated.