Chicago Gets Naming Gift, Becomes Booth School

Posted by: Phil Mintz on November 6, 2008

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The University of Chicago’s business school — one of the top-ranked schools in the country — has received a large naming gift from alumnus David Booth and renamed itself the University of Chicago Booth School of Business. The gift, announced this evening at an event on the Chicago campus, is worth $300 million, according to the school — representing the largest gift ever to a business school by an individual.

Booth, who earned his MBA from Chicago in 1971. is founder of founder and of Dimensional Fund Advisors, an investment firm based in Santa Monica, Calif. In a statement issued by the school, Booth says he built his firm on the ideas he learned from Chicago prof Eugene Fama, (shown at left in photo, along with Booth) who devised the efficient market theory, which asserts that stocks are always correctly priced since everything that is publicly known about the stock is reflected in its market price.

The firm still has close links to Chicago’s business school.

The gift, from the Booth Family Trust, represents an economic interest in a portion of the trust’s shares in Dimensional Holdings, Inc., parent company of Dimensional Fund Advisors. The business school will receive an income stream from the shares and the value of the shares if they are sold. Booth had previously given $10 million to the school.

The previous record for a gift to a business school was the $105 million Stanford Graduate School of Business received in 2006 from Nike founder Philip Knight. In 2004, developer Stephen Ross gave a $100 million gift to the University of Michigan.

The renaming of Chicago’s business school leaves only four of the top 30 U.S. business schools unnamed for a donor: Stanford, Harvard, Columbia, and Yale.

Reader Comments

TheWatcher

November 6, 2008 9:55 PM

Such large endowments only adds salt to the wound that is the U.S. educational system. With endowments such as this that equals the GDP of certain nations, graduates can barely pass a college algebra course, CEOs can hardly manage companies, competitive and innovative products and services can barely be created or sustained in the country. Perhaps in the future, graduates can re-apply for jobs in their $50 million dollar college student centers.

sean harper

November 6, 2008 11:49 PM

Yes, there are lousy colleges that don't teach their graduates basic academics and get them good jobs, but usually they aren't the ones with the endowments. Furthermore, I would argue that those schools are lousy not for lack of money but rather for lack of diligence from their students.

The elite universities of the US, such as the University of Chicago, are the envy of the world, as evidenced by the large numbers of foreign students studying at those universities.

eh?

November 7, 2008 2:17 AM

You really think a Booth graduate couldn't pass a college algebra course? The kind of people who go to a school like that are the kind of people who have aced math classes all their lives.

Memory Loss

November 7, 2008 9:57 AM

Because Stanford, Harvard, and Yale are just arbitrary string of letters that coincidentally match some donors name

Onlooker

November 7, 2008 10:14 AM

And i hope the school gets a new career services team because the current team is just not proactive enough. Just ask the unemployed graduates in the class of 2008

Agreed

November 7, 2008 11:24 AM

I couldn't agree more Onlooker

Walter

November 7, 2008 11:50 AM

So will they still call themselves GSBers or will they have to become Boothers?

tintin

November 7, 2008 12:21 PM

top schools are known for their very rigorous - these include both state schools and ivies and privates. Amongst even these top schools, Caltech, MIT, Princeton, Chicago, Yale and Harvard are considered the toughest and most difficult to get through. Of course there are some prep schools are the strings on letter strung together...so the other side exists too.

Al

November 7, 2008 2:04 PM

They've already changed the sign outside the school to read: "Chicago Booth". Amazing.

To the guy (or gal) who took a shot at endowments: What are you talking about? Large educational endowments are rare examples of wealth being invested properly, for the good of the schools in particular, and for humanity in general.

Tania

November 7, 2008 5:06 PM

Gosh
I would not like to be a booth graduate.

John

November 7, 2008 7:44 PM

I liked that we were the GSB - even though Stanford also called themselves the GSB. I thought it was nice we didn't sell our name to any individual donor, but that is all gone now. I take comfort in knowing that no other school has renamed their school for more money.

To TheWatcher: It's people like you that tend to make a mouth full of comments which are generally brainless and help spread useless info around. Your comment about not passing basic algebra is just a reflection of serious ignorance because out of all the MBA programs, Chicago's quant rigor (as it prepares many for a finance career) is most well-known. As a current student of the GSB (Booth or whatever)and a graduate of one of those top engineering universities, I can say that the depth in which we explore most subjects is well beyond the norm for a typical MBA program. I think anyone that has been through or is going through the UChi GSB/Booth will voice the same.

Disappointed GSB Alum

November 7, 2008 9:03 PM

Just think, with that $300,000,000 we could build a brand that was recognized the world over. Oh, wait a minute, we use to have that.

Watch our Business Week ratings slip because the people who rate B-schools and were swayed by the GSB's brand equity now see an unfamiliar name.

I feel like the GSB took a little bit of the brand equity out of every MBA it's awarded, bundled it up, wrapped it with a bow and sold it.

Couln't it at least have been the Booth Graduate School of Business instead of the Booth School of Business? If we'd kept the initials, at least for a while, it would not have been so jarring.

gk

November 8, 2008 4:09 AM

Al, 'The guy' is the kind of alumni that every university likes to have. I guess you dont feel any gratitude towards your college or its faculty.

Perfonomics

November 8, 2008 2:47 PM

Does this $300 mil bonus check help students in pay some of their tuition fee? may be lower interest? or some break in tuition?

NT

November 8, 2008 6:09 PM

Fortunately I graduated as GSBer and I'm not going to change my resume.

Harvard,Stanford and others never changed their name and they are all far ahead in terms of brand.

IMHO this move is another shot in the foot for the university of Nobels

Berkeley

November 10, 2008 1:40 AM

Disagree with the assertion that the $300mm gift is the largest ever donation. Haas has donated more than $500mm to Berkeley's B-School and renamed the school as Haas School of Business.
Personally, I think it's a very cheap-sell of Chicago GSB for merely $300mm. Remeber, those Wall-street CEOs got a lot more bonus than this individually.

Stork

November 10, 2008 8:02 AM


The University of Chicago is run by idiots. IDIOTS! This is the biggest branding blunder since New Coke.

PandaFu

November 10, 2008 8:06 AM

To my classmates, I'm happy that the school's naming rights have been "sold". We all talk about the power of alumni connections of a school. What better alumni connections are there than that with David Booth? This is exactly the kind of alumni relationship the school, the students and graduates should want. How many DFA cases did you guys do in class anyways? People will get used to the new name. The marketing professors at Chicago Booth I'm sure gave plenty of thought to the branding strategy. Besides, its not the first time a top school has been rebranded, Princeton was originally the College of New Jersey.

To the watcher: What school taught you sentence construction?

Steve G

November 10, 2008 12:06 PM

As a prominent Chicago GSB grad, I have to see I'm incredibly outraged by this news.

The school doesn't need a "bail out." The school doesn't need to "sell out." The school has THROWN AWAY YEARS of building a recognizable brand!!! YEARS!!! We will slip in rankings and fall off the map. I will not be surprised if I lose my job over this fiasco. RIP GSB...RIP.

Tommy Joe Walskins

November 10, 2008 1:45 PM

Steve - It seems to me that your outrage is a bit misplaced. The quality of faculty and facilities have only an upward trajectory at this point. Incoming student bodies will improve and as a result the perceived value of your education will increase. I truly believe that you will not lose your job over this.

God is love.

Tommy Joe Walksins, Mercer MBA '83

GetALife

November 10, 2008 8:55 PM

At the end of day, it's all about business impact. Chicago GSB or Chicago Booth is just a conduit to help you achieve that goal. For people thinking university change will cost them their job, either you have very low self-esteem or seriously lack any confidence to move a needle. My 2 cents, focus your energy on what you can influence and control.
Enough said .......

What Is There In A Name

November 10, 2008 9:06 PM

BW B-school rankings come out around October in even numbered year. How come we haven't seen rankings this year?

[Editor's Note: The fulltime MBA rankings will be released during an online chat on Nov. 13 at 5 p.m. EST. The publication schedule was altered slightly this year because of coverage of the presidential election.--Phil Mintz]

db

November 12, 2008 10:00 AM

Well, H,Y,S are now even more elite because they have not sold their naming rights.

It's disgusting to see schools name themselves after the highest bidder. It dilutes the Chicago brand and sends a message of how "cheap" and non-elite Chicago is.

Steve G

November 12, 2008 10:27 AM

I think it's funny that the one who posted with the name "GetALife" should follow a little bit of his/her own advice (i.e. GetALife). To think that the ranking of school has no impact on job security means two things A.) You have never worked in corporate america or B.) You have never spoken to an attorney. Although business impact is important, the reality is everything is about stats and numbers these days.

Super Lawyer goes rogue

November 12, 2008 11:51 AM

I am only a recent admit so perhaps my nescience is causing me to find the concept (that Chicago will lose its status because of its renaming) to be cognitively elusive. Did Northwestern, MIT, etc. lose their cachet when they named their respective schools? Is it true that erudite professors/deans and business professionals will suddenly lose the perspicacity to realize that Chicago GSB is also Chicago Booth with the same student body, faculty, and facilities (except now $ 300M richer)? Or am I merely missing the sarcastic tone that was intended to accompany some of the above comments?

impressed

November 12, 2008 8:29 PM

Wow. I never knew that hockey players made THAT much money!

Ryan G

November 12, 2008 9:11 PM

GSB was a brand that many recongnized as it was an unpretentious name that conveyed a sense prestige unsullied by a donor’s attempt at immortality. Sloan, Kellogg, Keenan Flegler, etc., are sad names for institutions that sold out to the highest bidder, and cause alumni to clarify where they went to school with sentences, such as: I received my MBA from the University of North Carolina Chapel Hill Keenan Flagler or the University of Chicago’s Booth School of Business, instead of UNC or GSB. It’s unfortunate, but understandable.

dailytravails

November 12, 2008 9:24 PM

Db,
I disagree with you, at least as far as H is concerned. Remember, it's actually the Harvard University Graduate School of Business Administration - George F. Baker Foundation. (Try saying that three times fast.)

-dt

GetALife

November 12, 2008 10:40 PM

Let me try one more time to help out our lost friend Steve G. First and foremost, I've no interest in engaging/speaking to an attorney (my life has not become so complicated or I intend to make it so in near future). I'm CXO executive at F500 so be assured that I don't hire my A-team based on B-school rankings in any given year. What does stats/numbers tell you or buy you in current economic environment?

BW latest rankings come out tomorrow and my assumption is that the surveys were completed prior to school name change. So Steve, get some peace and sleep.

Saskin Ordek

November 12, 2008 10:56 PM

Those who are lamenting about the re-branding are missing the larger point. U of Chicago has just been recently indicted by its role in the massive meltdown of the financial system due to its Friedmanian "anything goes, free-markets" heritage. And here comes a $300 million mega-donation from someone who in fact made his fortune in the same failed system and philosophy. It is almost like adding insult to injury. This is the real damage to the brand of U of Chicago. Once a bastion of progressive social values, U of Chicago has become the cathedral of radical capitalism and this donation couldn't have come in a worse time than now.

Paresh P

November 13, 2008 6:24 AM

Hmn... Interesting...
I still liked the plain old GSB name... I do not know... I like the school, would definitely like to be associated with it some day... For me, there was something about the sound of 'Chicago GSB' that was so much more appealing than having it named after a donor...
But then, who am I... Congrats people... :)

Watboy

November 13, 2008 9:18 AM

"The outside perception of Chicago economists is that they all believe whatever Milton Friedman believed in 1950," said Richard Thaler, an economist at the University of Chicago Booth School of Business and an adviser to Mr. Obama. "The correct perception here is: Data rules."

GetALife

November 13, 2008 5:27 PM

Chicago Booth has ranked #1 in latest BW ranking. At last my dear friend Steve G can forget about his worries or even better ask his boss for a promotion!

Go Chicago! Go Chicago Booth! Go Steve!!!

GetALife

November 13, 2008 5:44 PM

#1 Chicago Booth
#2 Harvard Business School
#3 Kellogg
#4 Wharton
#5 Ross (Michigan)

John

November 13, 2008 5:48 PM

They've sold out!

Ted

November 13, 2008 7:55 PM

Second Tier B-School...

Kurt Hoffmann

November 14, 2008 3:51 AM

Booth and and his firm DFA are the embodiement of the ivory tower theory of the Efficient Market Hypothosis developed by Harry Markowitz and evangelized by Eugene Fama. They have convinced legions of MBA students and DFA clients into believing that the stock market always efficiently prices securities, and therefore it is impossible to beat the market, unless one is lucky. In successfully convincing people of this, DFA and Booth have made a fortune by taking a small fee from an immensely large pool of assets. Warren Buffett, Joel Greenblatt, Seth Klarman, Benjamin Graham, and others however, have proved them wrong. These successful value investors have shown that risk in investing should be defined as, "The probability of a permanent loss of capital," rather than what Booth and the professors proclaim, which is that risk is defined as, "price volatility relative to the market average." Buffett and his colleagues claim that markets are innefficient in the short-term, and that to beat the market over the long-term, one needs to know how to value a business, and then buy when the market price is significantly less than that intrinsic value of the business. The instrinsic value of a business is, "the discounted value of the cash that can be taken out of a business over its remaining life," also known as, "The net present value of the future free cash flow, using an appropriate discount rate, a reasonable growth rate, and a reasonable terminal growth rate. If one learns how to 1) Value a business, and 2) Take advantage of the volatility of the market when it misprices these businesses, investors can beat the market average and show Booth and his professor colleagues that they are wrong and Buffett is right! Markets are voting machines in the short-term and weighing machines in the long-term. Just remember all the overpriced Internet stocks in 1999 and all the underpriced stocks the day after the October 1987 market crash!

Jay

November 14, 2008 4:12 AM

I am a first year at Chicago Booth so my perspective is a little biased. However I would like to add to this interesting discussion.
1. People who are outside the school right now (including alumni who graduated before Dean Snyder took office) probably do not see the rigor and commitment of the school administration towards the Chicago brand. Dean Ted Snyder and Stacy Kole are a very dedicated to making "...Chicago the best b-school in the world and to be recognized as such...". When and if, you meet such hard working people you would neither question their integrity, motives or philosophy or raise questions about "selling out". In fact, much before this generous gift, Dean Snyder had on many occasions mentioned that the he was still looking to name the school. Hence this was one of his goals and he achieved it with great success. Think of it, how many billionaires such large gifts to even their parents? Probably - none. Mr. Booth was just a common guy, like many of us here at GSB (not used to Booth yet :) ) but he is a truly remarkable success story. And personally, I think the name Booth will be a reminder and inspiration to the Chicago graduates that "If David Booth can do it, so can we".
2. The corporates that come to Chicago GSB/Booth have already accepted and adopted the name Chicago Booth. All the correspondence that I see coming from recruiters refer to the school as Chicago Booth.
3. Also when David Booth spoke during the naming ceremony, he came out as a very humble and honest guy and spoke very little. He is not the rash, bragging Phil Kinght type person.
4. Lastly, Mr. Booth just did not dump a load of cash on Dean Snyder's table and demanded the school to be renamed. The Chicago faculty has been very closely associated with DFA (Mr. Booth's fund) and many members served on the board of DFA. Mr. Booth relied a lot on the faculty for his research needs also. The endowment is partly cash - but also a stake in DFA. Mr. Booth referred to it as "Partnership Distribution". He said that Chicago has been a partner in his success and he is just giving his dues. From all this, I do not get a sense of "selling out" - just a lot of pride and inspiration.

Surender Reddy Geedipalli

November 14, 2008 9:01 AM

Congrats BSB, U of Chicago !

BoothClassof2010

November 15, 2008 4:45 PM

People are very uninformed. HBS has a name, it just don't use it. No school at Stanford University is allowed to use any name but Leland's surname: the original tribute from his family's donation. And Yale SOM, well it is part of a rich University but still far from being a Top 5 school.

And the brand equity actually comes from THE UNIVERSITY OF CHICAGO, I didn't came from GSB, actually there were 3 Top schools with GSB: Stanford, Chicago and Columbia. Columbia decided to change its strategy and started to call itself CBS, even though they are formally named Columbia GSB - and actually couple of years ago Columbia tried to find a donor to rename itself for around $100M, in vain.

Its a name change, not a change in values or goals, it will just make the UoC Bschool be better positioned in terms of endowments, just check at the ranking section at the Alumni Affairs and Careers each schools endowments in Jun/08 and add up $400M for Booth (gift plus Match program), you will see how things change. And BTW perfect timing to change a name, staying at the TOP of BW ranking, a controversial one, but still one of the oldest out there.

watboy

November 19, 2008 10:25 AM

Hoffman
That’s an incredibly simplistic and thus wrong summary of efficient market and value investing. Risk is not merely defined as price volatility relative to the market. First, get it right, its excess return volatility versus factor premia. There are also many other factors you can include in a multi factor model from liquidity premia to momentum etc. Fama says nothing about investors being unable to beat the market, but that the average investor can’t beat the market because the average investor has to hold the market. Not all investors are the same, and thus performances can differ. One clear difference in investors is a) liquidity constraints and b) investment horizon. People like Buffet do not have short term liquidity needs and have long horizons, their investment strategies are not optimal for everyone. Would you suggest a person a year from retirement to investing a large chunk of their wealth in Berkshire Hathaway? Want to sell some Berkshire CDS’s? There’s an excellent column by John Cochrane, also of Chicago Booth, on the WSJ that summarizes efficient investing you can google. You can also replicate much of value investing return by using a numerous of value factors, HML for Fama, or various price/dividend ratios.
Before you go commenting on efficient market hypothesis, learn more about what it precisely states and its proper application. As for value investing, good luck projecting cash flows, determining discount rate and terminal value. If you use CAPM in your cost of equity, you already are assuming efficient markets of some kind. If you have deep enough pockets and no pending obligations, anyone can be a value investor.

Kevin C

December 6, 2008 1:55 PM

I applied to the GSB and decided not to attend last year due to the ongoing crisis. I have to say that my only concern is the "Booth" part, making it sound like a compartment or an enclosure. A non descript name like "Anderson", "Norton" would have sounded a lot better.

I don't think the ranking would be affected because of this name change, just that there would be a lot more jokes going around near the water cooler!

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