I’ve been looking at college football spending data and am going to be writing a few fan pieces on some things I’ve dug up. First however, I wanted to ask a question that arose when I was thinking about my win shares.
For years we were told by FSU coaches how desperately we needed an indoor practice facility. Shortened practices. Cancelled practices. Rescheduled practices. Every time it rained Bobby Bowden brought the issue when talking to the beat. He talked about interrupted practice and prep time. Jimbo Fisher continued this talk, until finally, FSU had raised enough funds to commit to building its new practice toy. One question we all might ask is, what’s this thing worth to us on the field?
With the logic that FSU needs the IPF to get in full practices, maintain game preparation time lines, and keep players and coaches on an efficient schedule, one has to assume that such an expensive investment will show up in wins (‘cause if not, why did we build the thing?). Now, the effect of an IPF would be incredibly hard to point out in tangible events, but luckily we here at Tomahawk Nation think about seasons differently. We think in terms of win shares. So the question is how many win shares is an IPF worth per year?
I think it is obvious straight away this is as subjective as creating your own win shares in the first place, and one would need to do some pretty advanced ex post statistical analysis to tease out the effect. But it is something each of us, who have been creating win shares on this site over the years should think about. Is it worth a full win per year? Half a win? A quarter win? In other words, if your win shares would be 9.5 without an IPF, what are they now?
While each person may have a different answer, we can speculate what the IPF should be worth in order to justify its existence through a little minor statistics and some finance. The first thing we need to do is find out what the baseline cost of a win is for a FSU without the IPF. This number is different for each school, and it is affected by a lot of factors (conference, recruiting location, tradition, etc.). What we are trying to figure out here is how much historically, on average, that FSU has had to pay for a win. We do this by looking at the five year football expense numbers as reported to Equity in Athletics (2012 is not available yet).
Florida State had to pay an average of a little over $2 million during the five year period. (As an aside this is remarkably efficient. It is the 14th lowest average cost of a win of the big five (AQ) conferences. And it kind of makes sense. FSU has excellent recruiting grounds, strong tradition and it plays in the weak ACC, so wins would logically cost less. UF which is similar in the first two regards, has to play in the SEC. Their average cost of a win over this period was $2,461,632, or 22% higher than FSU. More on this in another article.)
We have translated wins into financial terms. Now we can compare the cost of the IPF, with the added value needed to justify its existence. We’ll use the reported cost of $15 million. To account for the value of time, we must discount future benefit by a discount rate. I don’t know what ever FSU fan/booster would use, but most state institutions use something around 8%. Lastly, we need to select a discount period. I’m going to go ahead and say that the useful life of this facility is 40 years. I’ll just assume that by then, it’ll need major upgrades or something. Besides, once you get that far out, it the effect starts to get small. Therefore, the equation looks like this:
$15,000,000 = χ÷(1.08)+ χ÷(1.08)^2+ χ÷(1.08)^3… χ÷(1.08)^40
Solving for χ we get $1,257,902. When we translate this yearly value back into wins for FSU, we get 0.62 wins. That means, at FSU’s current cost per win, the IPF would need to increase FSU’s win total by around 0.62 wins per year to justify the expense.
Is the lack of interrupted, shortened, rescheduled or cancelled practices worth 0.62 wins? What do you guys think?