Saban is Worth Every Penny

There's an interesting piece over on AL.com today about the Crimson Tide Foundation purchasing Nick Saban's 8,759 square foot house from him for $3.1 million shortly after Alabama beat Notre Dame for the national championship in January 2013. It's probably not a coincidence that happened around the same time Saban was rumored to be speaking with Texas about its head coaching position.

Saban is currently banking $6.9 million annually under a new contract he signed earlier this year with Alabama that attempts to keep him as head coach through at least 2022, and now he has a house he can live in for the rest of his life rent free.

He's worth every penny - and I say that as a Florida grad.

In addition to football revenue increasing by 68 percent from the season preceding Saban's hiring to the 2012 season, the University of Alabama as a whole has seen enormous growth, both in size and revenue. Certainly all of that growth at the university level cannot be attributed solely to Saban, or the football program, but numerous studies suggest a correlation is there.

In my book, Saturday Millionaires, I spend an entire chapter on this topic - which I call the intersection between athletics and academics - but here are a few key findings from a recent study that directly pertain to Alabama's situation:

On average, winning the national championship in football results in a 7-8 percent increase in applications, according to a study by economists (and brothers) Devin Pope and Jaren Pope.

The Popes also found a football national champion enrolled, on average, 10.1 percent more students the following year.

Let's look at the numbers:

3: The number of football national championships Alabama has won under Nick Saban.

2,879: The number of additional out-of-state students in Alabama's Fall 2013 freshman class compared to Fall 2007.

9,996: The number of additional undergraduates enrolled at Alabama in 2013 versus 2006. This was a conscious choice by Alabama. In 2003, the president of the university set a goal of 28,000 students by 2013. Certainly, winning a few football championships didn't hurt the cause.

Not every school has the desire or the infrastructure to support such growth, so it's not fair to compare. However, it's also tough to understand the growth without putting it into some sort of perspective, so here's how other SEC schools fared over the same time period:

$15,124: The additional amount an out-of-state student pays per two semesters compared to an in-state student.

18,325: The number of out-of-state students enrolled at Alabama this fall. Out-of-state students now officially outnumber in-state students (17,830) at Alabama, a rarity for a state flagship university. Remember, each of those out-of-state residents equals $15,124 more in tuition than an in-state student per two semesters enrolled - a grand total of $277.1 million.

18,453: The number of additional applications Alabama received for 2013-2014 compared to 2006-2007. The average SEC schools saw its applications increase by 78 percent - Alabama's increased by 147 percent. In educational terms, the SEC schools wouldn't all consider each other peer institutions given that Vanderbilt is a private school and enrollments vary greatly. However, this gives you some perspective on Alabama's enormous growth.

$35,477,633: Additional revenue generated by Alabama football in 2012-2013 compared to 2006-2007, per data reported to the Department of Education. Of course, every team in the SEC has seen an increase, thanks to larger television contracts. However, Alabama's 68 percent increase outpaces the SEC's 59 percent average (if you disregard Texas A&M and Missouri - who joined the conference during that time period - the average is 57 percent).

$185,972,360: Additional revenue generated from tuition and fees in 2011-2012 ($348.5 million) compared to 2006-2007 ($162.6 million). That's a 114 percent increase.

According to AL.com, Alabama generated $386.9 million in 2012-2013, an additional $38.4 million for a grand total increase of approximately 138 percent.

Check virtually any school that's seen football or basketball success on the national level in the past few years, and you'll see application increases. For me, it really hit home when I was asked to travel to Chicago last fall to speak to a group comprised largely of parents whose children all attended the same private high school. The person who organized my speech pointed out that historically students from their school had never gone on to attend the University of Alabama. However, over the past couple of years, several students had enrolled at Alabama or were currently applying, and their parents were concerned their children were choosing their college based solely on football.

The Popes' study concludes, "While a sports victory for a given school may not change the awareness of in-state students regarding its existence, the sports victory may present a significant shock in attention/awareness for out-of-state students."

It's called the "advertising effect." Numerous studies have attempted to peg an exact value on the advertising effect, but the truth is, like anything else, it depends. An estimate I got from Malcolm Turner of Wasserman Media Group for my book, Saturday Millionaires was "tens of millions" for a team competing for a national championship.

Saban's done that three times - and won all three times. Combine that with the impact those wins have had on the university at large, and it makes a $3.1 million house purchase look like a pretty economical decision, doesn't it?

Note: Unless otherwise indicated, data is from the National Center for Education Statistics.