By Steve Sailer
09/22/2023
American college sports are considered pretty weird by the rest of the world. The only famous collegiate sports rivalry I can think of outside North America is the annual Oxford vs. Cambridge Boat Race in London. (There’s also an annual Oxford vs. Cambridge cricket match in London, but that faded in popularity after 1939. Both events were started by Charles Wordsworth, a sporting bishop who was the nephew of the poet.)
In America, professional baseball got started pretty quickly after the Civil War, so spectator baseball was always mostly professional, but with a not insignificant college baseball segment. (In the SEC, four teams average attendance of 10,000 per game.) But football and basketball were primarily (nominally) amateur college spectator sports until perhaps as late as the mid-1960s.
College football and, to a somewhat lesser extent, college basketball remain immensely profitable since the colleges aren’t supposed to pay the players except in scholarships and, recently, smallish stipends. A fair amount of that revenue then gets diverted to subsidize women’s sports and “non-revenue” men’s sports.
Lately, the logic of college football’s big money has torn apart traditional regional conferences that all the college’s sports teams play in. For example, USC and UCLA bailed out of the well-to-do western Pacific 12 conference to join the evener rich midwestern Big Ten along with Michigan, Ohio State, and Penn St. The rest of the Pac 12 melted down, with Cal (UC Berkeley) and Stanford joining the even more distant Atlantic Coast conference.
The implications for the cross-country travel demands for minor sports like volleyball are absurd.
A U. of Michigan regent proposes paying all athletes:
Say the Big Ten required its TV partners to share 30 percent of its revenues with its student athletes, each athlete would receive a percentage of that. At Michigan, where roughly 900 athletes compete in Ann Arbor, that would mean a wide receiver or field hockey player would get approximately $20,000 per year.
But, of course, Michigan’s (largely black) wide receivers bring in vastly more television and box office revenue than do its (largely white) lady field hockey players.
Here are excerpts from an interesting NBER paper by economists:
WHO PROFITS FROM AMATEURISM? RENT-SHARING IN MODERN COLLEGE SPORTS
Craig Garthwaite Jordan Keener Matthew J. Notowidigdo Nicole F. Ozminkowski Working Paper 27734 https://www.nber.org/papers/w27734 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 August 2020, Revised October 2020
Their model is that we know that the collective bargaining agreements for the NFL and NBA grant players about 50% of the revenue the teams generate, whereas college football and basketball players get only about 7% of their revenue. We know how much revenue big time conference college football and basketball teams generate, so we can estimate how much college players would be paid if they were professional and could collectively bargain, and it’s a whole lot more than $20,000.
Athlete compensation is strictly limited to academic scholarships that cover the cost of attendance and a modest stipend for living expenses. We estimate that less than 7 percent of football and men’s basketball revenue is paid to athletes through these two forms of compensation. To put this number in perspective, under their respective collective bargaining agreements, professional football and men’s basketball players in the US receive approximately 50 percent of the revenue generated by their athletic activities as salary. Because of the strict limits on player compensation, amateur athletes playing football and men’s basketball generate substantial economic rents for the athletic departments in FBS schools. …
Using the same rent-sharing specification, we find that the rents not reinvested in football and men’s basketball programs are instead transferred to other parts of the athletic department. We estimate cross-sport rent-sharing elasticities for all other sports, women’s sports, and other men’s sports of 0.42, 0.41, and 0.42, respectively. These results imply that for every additional dollar of football and men’s basketball revenue, $0.11, $0.07, $0.04 are spent on all other sports, women’s sports, and other men’s sports, respectively. …
Title IX regulations require (among other things) that schools provide equal opportunities for athletics across genders. This creates an effectively mechanical relationship between spending on scholarships for football and men’s basketball and spending on scholarships for women’s sports. The relationship for other types of spending on women’s sports (e.g., coaches’ salaries and facilities) is less mechanical but could also be influenced by Title IX. However, the connection between the spending on other men’s sports, coaches’ salaries overall, and total spending on athletic facilities is well outside of the scope of Title IX, and these results represent rent-sharing that we do not believe to be related to any prevailing regulations.
My guess is that while nobody pays to see, say, college golf, a certain number of big donors like bragging about their alma mater’s golf team.
… we gathered complete roster data on the high school and hometown of every athlete at the “Power Five” FBS schools in 2018, and we merge this data with neighborhood socioeconomic characteristics. We estimate that the average football and men’s basketball athlete went to a [public] high school with a median family income at the 49th percentile of all high schools, while for other sports the average athlete’s high school was at the 60th percentile. In addition, we show that football and men’s basketball players come from school districts with a higher fraction of students living in poverty and a higher fraction of students who are black. This is not surprising since roughly half of all athletes in football and men’s basketball are black, compared to only 11 percent of athletes in other sports. We thus conclude from these socioeconomic differences that rent-sharing in intercollegiate athletics effectively involves a transfer from students who are more likely to be black and more likely to be from poor neighborhoods to students who are more likely to be white and from higher income neighborhoods.
To understand the scope of available rents in modern sports, we next calculate a potential wage structure for football and men’s basketball players. As a benchmark for this analysis we use collective bargaining agreements in professional sports leagues, following the prior work of Berri (2016) and Goff, Kim, and Wilson (2016). We find that such a system would result in substantial payments to these athletes. We estimate that if football and men’s basketball players all split the 50 percent of revenue equally, each football player would receive $360,000 per year and each basketball player would earn nearly $500,000 per year.
These averages mask substantial heterogeneity since certain types of players are more valuable to the athletic success of schools than others. Therefore, we also calculate payments across positions in a manner that mirrors the average professional team for each sport. Under such a system, the two highest paid football positions (starting quarterback and wide receiver) would be paid $2.4 and $1.3 million, respectively. Similarly, starting basketball players would earn between $800,000 and $1.2 million per year.
An interesting footnote is that the typical college student (nonathlete) pays about 45% of the list price of tuition.
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