NBER paper on economics of college sports
A new paper from the National Bureau of Economic Research (one of the four authors is a Michigan economics faculty member) entitled "Who profits from amateurism? Rent-sharing in modern college sports" may be of interest to the board.
Here's the abstract:
Intercollegiate amateur athletics in the US largely bars student-athletes from sharing in any of the profits generated by their participation, which creates substantial economic rents for universities. These rents are primarily generated by men’s football and men’s basketball programs. We characterize these economic rents using comprehensive revenue and expenses data for college athletic departments between 2006 and 2019, and we estimate rent-sharing elasticities to measure how rents flow to women’s sports and other men’s sports and lead to increased spending on facilities, coaches’ salaries, and other athletic department personnel. Using complete roster data for every student-athlete playing sports at these schools in 2018, we find that the rent-sharing effectively transfers resources away from students who are more likely to be black and more likely to come from poor neighborhoods towards students who are more likely to be white and come from higher-income neighborhoods. To understand the magnitude of the available rents, we calculate a wage structure for college athletes using the collective bargaining agreements in professional sports leagues as a benchmark. We also discuss how our results help understand how universities have responded to recent threats to these rents arising from litigation, legislation, and the global coronavirus pandemic.
Interestingly, the wage structure that they use (effectively, modeled on the NFL and the NBA that assumes that "athletes share in roughly 50 percent of sport-specific revenue"):
- Starting QBs are worth about $2.7 million per year
- The lowest-paid players would get about $140,000 per year
- Starters on the basketball team would be making $819,000-$1.2 million per year on average
(Yes, they also discuss the effects of such compensation, especially the hit that non-revenue sports would take.)
To me it's useful that they put a $ value on college athletes (admittedly, using a fairly basic method, but one that at least has analogs in the real world).
August 31st, 2020 at 2:26 PM ^
Wow, millionaire college athletes...sign me up! I'm assuming this is only for the P5?
August 31st, 2020 at 2:31 PM ^
Seems more reasonable than the assistant women's tennis coach making six figures.
August 31st, 2020 at 3:52 PM ^
Well, the current associate women's tennis coach makes a shade under $100k this year, per this site, which I guess seems high to some but doesn't seem crazy to me if you've been somewhere for 10+ years and helped a team win 8 conference titles and generally be one of the better teams in the league during her tenure.
I think you can pay athletes and coaches reasonable amounts of money and, I don't know, cut down on an athletic department that at one time was over 300 people and had a budget of over $50M. Like, I get that some of that is staff and athletics, but if memory serves me right they were also paying a marketing guy from the Suns $250k a year to sell tickets to UM football games, a task he somehow failed to accomplish given that ticket sales were down toward the end of the Brandon era.
August 31st, 2020 at 4:10 PM ^
Well i think we both know i wasn't specifically and only talking about the assistant women's tennis coach at U of M but it does highlight a relevant point. That salary has more than doubled in the last ten years, with 5 years at more than ten percent growth. That does not occur if football and basketball players aren't bringing in millions.
August 31st, 2020 at 6:49 PM ^
I mean, I wasn't the one who picked out the assistant women's tennis coach, which sure seems pretty specific of a complaint to me. If it makes you feel any better, lots of associate coaches don't clear $100k; the average salary is a shade under $75k and the median is closer to $65k. Most associate/assistant coaches don't make a ton of money for either men's or women's sports beyond the big 2.5 at UM. I'm just pointing out that getting mad at someone maybe clearing $100k after 10 years at a place via various promotions and pay increases likely due to success (see the various conference titles and NCAA tourney runs) isn't that crazy to me. YMMV.
I mean, by your logic we shouldn't have any sports other than basketball and football, and at a lot of smaller schools that might not even be true. Which is fine if that's your position. We also should probably cut a bunch of academic disciplines because they are cash-losers for schools as well. And for the moment I'm not going to get into a discussion of "soft" value that having robust departments and successful athletic departments have on alumni donation, appeal to prospective students, etc.
Again, I'm apparently reading either too much or not enough into your statement so feel free to provide some counter-point, but there's a world in between million-dollar backup PGs in departments with 2 or 3 varsity sports and the current system but with athletes receiving some financial benefits from their services.
August 31st, 2020 at 8:27 PM ^
I have a hard time believing you're being honest here. That one coach isn't the only person this applies to. Multiple assistant coaches, not head, of sports that regularly lose money are making six figures or close to it strictly and exclusively off the backs of football and basketball players. It makes zero sense. This also applies to facilities and admin. Why don't we just take money from everyone that makes over 100,000, so everyone can make 100,000, even the fry guy at McDonald's?
August 31st, 2020 at 5:27 PM ^
It’s Loch Dogg!
August 31st, 2020 at 6:52 PM ^
I kept thinking it was Nard Dogg for some reason.
August 31st, 2020 at 9:59 PM ^
That actually does seem crazy if the sport couldn't exist without being highly subsidized by the football and basketball programs. That's great they win a lot, but no one's getting paid 100k to win D&D tourneys, especially at the cost of others.
August 31st, 2020 at 2:27 PM ^
Underpants + ? = Profit
August 31st, 2020 at 2:32 PM ^
I'm too lazy to read an in depth economics report. How does the wealth transfer to white students? Is that in the form of academic scholarships or better campus facilities?
August 31st, 2020 at 2:36 PM ^
I also didn't read the article (so grain of salt here), but took this to mean that football and basketball money was being transferred to golf, volleyball, softball, swimming, etc...
August 31st, 2020 at 3:09 PM ^
I read the paper and this answer is correct.
August 31st, 2020 at 2:40 PM ^
Interesting, I don't think I've ever seen a dollar value estimation of their value either.
They should go to a fixed stipend model that would pay each football and basketball player a certain amount for each season they play. I think if teams could offer huge contracts to recruits then the college model goes out the window and those small programs would never be able to compete. Then its just basically a pro league. Here's my plan:
Pay each football and basketball player at least $50K for each season and academic year they complete (Fresh - $50K, Soph- $55K, Jrs- $60K, Srs- $65K). They get a portion of it now - up to $10K/year - and the rest goes into a trust until they graduate. Players also get full access to their NIL rights and should get a cut of all jersey sales with their # on them.
The money for this will have to come out of administrative and coaching salaries and of course absurd facilities projects. Hopefully this will also allow for the departments to continue to fund non-revenue sports as well.
The players still wouldn't get paid on the level of their true worth but it will level the playing field a little bit and still maintain the general structure of college sports.
(Non-P5 teams would have to compensate players on a smaller scale, but most powerful programs could handle those amounts above - but the point is that the players need to get something).
August 31st, 2020 at 3:42 PM ^
i like the across the board salaries and increasing levels per year, but you lost me at the 'put it in a trust' business. Why do people feel the need to be so paternalistic about athletess money? Sure some may blow it on stupid stuff, but that's on them. These are adults we are talking about. what would you say if someone said you couldnt have the money you earned in college (either part-time or over summer) until after you graduated? Plus, wouldnt that make an athlete even more incentivized to leave school for the pros?
August 31st, 2020 at 4:12 PM ^
Yeah, I agree that it's weird to become paternalistic about how college athletes may spend their money yet I've been hearing for months how these athletes are adults and should be able to take on whatever risks they feel are necessary as it relates to COVID-19. If we're willing to let athletes take on risks inherent in playing their sport, we shouldn't try to interfere with how they use the products of those efforts.
August 31st, 2020 at 4:49 PM ^
True - I don't mean to be paternalistic necessarily. I'm not really that tied to the trust idea but it might help maintain the image of them as students, esp. compared to non-athletes. But really, I think it would appease some of the old-school cranks who want to create a stink about "amateurism". But otherwise, you're right- we probably don't need to hide it in a trust.
August 31st, 2020 at 2:42 PM ^
need to create a b league for nfl and college bball that want paid need to play in europe or otherwise. college athletics is for students....those seeking a job that pays more than a potentially 100k+ value scholarship package should be elsewhere. the best part of watching classic games is is being able to pretend the players are actually students.....
August 31st, 2020 at 2:48 PM ^
And tickets to games, which are then publicly broadcast, should be free
August 31st, 2020 at 3:38 PM ^
if the school wishea ro spemd their tv revenue from advertisimg to subsidize their venue and upkeep to allow fans to attend for free, that would be acceptable to me. why not? not sure how feasible it would be.
August 31st, 2020 at 3:26 PM ^
What you're after exists already in DIII sports.
I'd rather have D1 with players able to profit than what's left after a B league.
August 31st, 2020 at 3:32 PM ^
i think athletes attending college that are not studenta first are wasting academic resources. i think prfessoinal sports and college should be separate entities. if a university wants to have a professional football team, start an NFL franchise or equivalent...just dont waste academic resources doing it. dont make professional athletes pretend to be students
August 31st, 2020 at 3:51 PM ^
Why would you care if an athlete wants to waster their "academic resources" ? They earned the opportunity, let them do with it what they want.
August 31st, 2020 at 4:08 PM ^
odd that you feel it is a acholarship althletes earned right to negatively impact another students education. a student that would utilize the otherwise wasted resources to succeed seems like a benefit of keeping professional athleteic and student reaources separate.
August 31st, 2020 at 4:36 PM ^
But it doesn't negatively impact another student's education. That's kinda the point I'm making.
August 31st, 2020 at 4:52 PM ^
make tutoring and other resources available to other students at a lower rate or even free rather then having a free unused resource for an athlete whose focus is being an athlete and not a student.
August 31st, 2020 at 8:09 PM ^
Hell yeah it would. Just think of all of the students, tutors,and teachers it would be free up if they weren't busy completing all of Justin Field's assignments.
August 31st, 2020 at 9:00 PM ^
The big question is were those tutors keeping up with his work while he was down visiting old teammates at Georgia instead of being in Columbus after the semester started. When the cats away the mice will play....
August 31st, 2020 at 3:53 PM ^
I appreciate your point but would suggest 3 other things that might be part of a calculation.
1. Despite the stereotype—and many examples—of students blowing off classes, many football and basketball players actually study like normal students.
2. LOTS of students focus on other things than their studies, whether partying or doing extracurriculars, not just athletes. Though DI athletes are in effect working two jobs, that's true of students in theater, working on the paper, leading clubs, etc.
3. As for academic resources being wasted, history has shown that students who benefit most from a college education combine classroom experience and other activities.
August 31st, 2020 at 3:57 PM ^
im not faulting the athletes or their scholarly endeavors. Not faulting students for enjoying their youth. Athletes that find value in playing and school certainly could continue as they are. Those that fimd greater value in a professional athletic career can pursue that endeavor and use their income to further their education if they choose...just like the rest of us did/do
August 31st, 2020 at 4:30 PM ^
What, you believe every student who attends a school is hyper-focused on academics to a degree higher than your average athlete? Like, when I was at UM there were quite a few mediocre students who didn't seem to care much about studying but focused on other aspects of college life. Hell, I tutored a couple of them and at times it sure felt like they were wasting my time and the school's resources.
Michigan's APR scores for the basketball and football teams are typically quite high, and while that's obviously not a perfect indicator of academic focus it does point to programs that make sure their students attend class and stay in good academic standing. The football team had 37 members who were all-conference academically last year (which given that excludes freshmen is a decent chunk of the team), and the basketball team had 6 in 2019, including a couple starters. I don't think the assumption that most athletes don't care about school is fair is my point.
August 31st, 2020 at 4:56 PM ^
No. i an not saying anything like that. what i am saying is that athletes that dont want to play school shouldnt have too. if an athlete puts equal value in sport and education they should by all means be provided the resources to succeed. dont waste the educational resources on those who put little value in the education piece. let them be professional athletes.
August 31st, 2020 at 5:12 PM ^
One of my favorite UM experiences was going for help at the library and seeing Jimmy King waiting in front of me for help with his schoolwork.
August 31st, 2020 at 5:15 PM ^
thats pretty cool
August 31st, 2020 at 10:16 PM ^
I never put *too* much stock in APR numbers since it doesn't factor in the courses/curriculum chosen. If a student-athlete gets high GPA in a more challenging degree program, it should mean more than a student-athlete getting similar grades from a... less challenging... choice of courses.
August 31st, 2020 at 4:04 PM ^
Yes. Minor leagues.
I want to see amateur athletes playing college sports and pro athletes playing pro sports. If some of the other P5 don't want to do it.... they can be a tier above B1G for all I care.
Old school.
August 31st, 2020 at 3:14 PM ^
This is not a new discovery. People have been making this argument for many years. The major revenue sports, football and men's basketball, have a much higher proportion of minority athletes than the non-revenue sports.
So any Athletic Department which uses the revenue from football and basketball to support non-revenue programs like swimming, tennis, golf, etc. will be involved in transferring revenue generated mainly by black athletes to sports programs populated mainly by white athletes.
August 31st, 2020 at 3:34 PM ^
It's not just a black/white issue though. It is also a male/female issue which makes it more complicated. You can make the same argument that revenue generated by men's sports programs are funding women's programs, especially when you add men's ice hockey at Michigan.
August 31st, 2020 at 3:55 PM ^
You can make anything about race if you want, but it's very unhealthy, and just plain ig'nant.
Maybe we should count black dudes and white dudes and create some stoopid calculation to make sure some white girl tennis player doesn't get too much scholarship.
Just stop.
August 31st, 2020 at 9:10 PM ^
I was talking with someone the other day who noted that hockey and basketball (and tennis and golf) you can go pro out of high school or before. With football you have to wait 3 years, with basketball it was 1 year for a while, tho they're finally fixing that.
I don't think it's due to present day nefariousness, but it's interesting that in the sports with more top white athletes, you generally have more opportunity to go pro/get paid earlier. Hopefully that gets fixed by being able to make money off your image now.
August 31st, 2020 at 10:19 PM ^
I think basketball is a major outlier to your last statement there.
August 31st, 2020 at 3:59 PM ^
Fascinating stuff. Thanks, dnak438. (May I call you "8" for short?)
Like others here, I haven't ever seen an estimate of athletes' $ worth.
Most importantly, it's a great insight that not only are basketball and football players not getting paid, they're in effect paying for the education of athletes in other sports. That's amazing to consider.
August 31st, 2020 at 4:29 PM ^
They are paying for the administration of the other sports, but not education of those athletes. Football and Men's basketball are subsidizing the costs to administer and run the athletic department: coaches, facilities, training, medical, support services, equipment, travel, etc.
As Brian has covered several times, the cost of an academic scholarship to the university doesn't really cost much in real money. And many of the athletes in non-revenue sports are on partial scholarships--partially paying the university to attend, study, and play their sport.
Now if you want to have a conversation about how college athletics are used by affluent white students to gain admission into many universities, that may be a different conversation.
August 31st, 2020 at 4:55 PM ^
This is a distinction without a difference. Even if you see the scholarship costs as no more than an accounting trick that the university pays to itself, the other costs are real and the athletes could not participate in their sports without those investments. It is undeniable that money being generated primarily by black athletes is going to support programs whose primary beneficiaries are white athletes.
One can argue over the morality of this system. I can think of a few arguments justifying the use of revenue from popular sports in support of less popular ones, including the one you mentioned earlier. (Because men's sports are more popular and generate more revenue than women's, gender equality could be one such justification.)
But I do not think that a person can reasonably deny the reality of the monetary transfer or the racial disparity between the populations on each end of the transfer.
August 31st, 2020 at 5:16 PM ^
Good points, Mr. Nimble. LOTS of distinctions can be made. Better is recognizing what causes them. MUCH better than wholesale dismissal of the subject.
August 31st, 2020 at 6:08 PM ^
I am in no way advocating for the players not be paid. I am firmly on Team "Pay those kids their money." But there is a distinction with a difference when people make it sound like the revenue sports are paying for the non-revenue kids' EDUCATION, which changes the tenor of the argument. There are ways to fund non-revenue sports and fairly compensate athletes in the revenue sports without pitting them against each other using inaccurate arguments in the process.
August 31st, 2020 at 4:09 PM ^
It is interesting when you see the numbers broken down how much "value" certain athletes have for schools compared to even what would be considered a reasonable split of the revenue they generated. Like, I'm not necessarily one who believes all athletes should be paid "fair market rate" as if they were wholly professionals (because that's difficult to figure out across divisions and leagues), but if a starter on a basketball team really is worth around a million dollars, they should have some access to that money.
August 31st, 2020 at 5:15 PM ^
What if a decision were made to let the Pro Leagues subsidize their own minor leagues (The NBA appears to be taking baby steps in this direction) and Colleges did away with or greatly reduced athletic scholarships either in total numbers of scholarships, or issued part scholarships?
The schools would still field teams, still have a marching band etc and still compete with other schools. You wouldn't need multi-million dollar coaches, etc. Revenue would significantly decline, but how much? Would people still pay to attend games knowing they would not be watching some future NFL players? Would they still watch them on TV?
If everyone did it, the games would still be competitive and entertaining. It's akin to the difference between watching claiming horses at say Canterbury Downs instead of graded stakes horses at Churchill Downs. If the horses are all running slower, it is difficult to tell that much difference, a stirring come from behind win is just as exciting. Except in this example it's still at a beautiful facility in Ann Arbor, the team is still dressed in Maize and Blue and wearing winged helmets. Would networks still pay to show Michigan vs OSU, MSU, Minnesota et al? Would advertisers pay for the broadcasts?
What percentage of the fan base would lose their emotional investment in the team if they weren't watching potential future pros in action? It is some percentage, but is that 10 percent , 50 percent, 90 percent? My sense is that would be a smaller number than half and that BT Football would still do quite well. How would this Big 10 do in the ratings compared to say the Detroit Zephyrs minor league football team which might have many of the players that would have gone to Michigan under the current system?
August 31st, 2020 at 5:19 PM ^
Fascinating ideas, shoes. However it feels as if there are too many moving parts that would each need to be carefully calibrated for it to work. However, maybe I'm not reading it carefully enough. (It's quitting time but not time to quit yet.)