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The Economics of College Sports: Cartel Behavior vs. Amateurism

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  • Kahn, Lawrence M.

    ()
    (Cornell University)

Abstract

This paper studies intercollegiate athletics in the context of the theory of cartels. Some point to explicit attempts by the National Collegiate Athletic Association (NCAA) to restrict output and payments for factors of production as evidence of cartel behavior. Others argue that such limits enhance product quality by preserving amateurism. I find that the NCAA’s compensation limits on athletes lead to high levels of rents from the entertainment revenues produced by the athletes. The athletes producing these rents are disproportionately African-American, while the beneficiaries are primarily white. The rents are typically spent on coaches’ salaries, facilities, and nonrevenue sports. Although athletic departments considered as businesses lose money on average, there is some evidence, although not unanimous, that they generate alumni contributions, state appropriations, and additional student applications.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2186.

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Length: 33 pages
Date of creation: Jun 2006
Date of revision:
Publication status: published in: Journal of Economic Perspectives, 2007, 21 (1), 209-226
Handle: RePEc:iza:izadps:dp2186

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Related research

Keywords: cartel; college athletics; monopsony;

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References

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  1. John J. Siegfried & Molly Gardner Burba, 2003. "The College Football Association Television Broadcase Cartel," Vanderbilt University Department of Economics Working Papers, Vanderbilt University Department of Economics 0320, Vanderbilt University Department of Economics.
  2. Betsey Stevenson, 2010. "Beyond the Classroom: Using Title IX to Measure the Return to High School Sports," NBER Working Papers 15728, National Bureau of Economic Research, Inc.
  3. Daniel Sutter & Stephen Winkler, 2003. "NCAA Scholarship Limits and Competitive Balance in College Football," Journal of Sports Economics, , , vol. 4(1), pages 3-18, February.
  4. Franklin G. Mixon, Jr. & Len J. Trevi�O, 2004. "How Race Affects Dismissals of College Football Coaches," Journal of Labor Research, Transaction Publishers, Transaction Publishers, vol. 25(4), pages 645-656, October.
  5. Lawrence DeBrock & Wallace Hendricks & Roger Koenker, 1994. "The Economics of Persistence: Graduation Rates of Athletes as Labor Market Choice," Working Papers, University of Illinois at Urbana-Champaign _001, University of Illinois at Urbana-Champaign, revised 1996.
  6. Hausman, Jerry A & Leonard, Gregory K, 1997. "Superstars in the National Basketball Association: Economic Value and Policy," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 15(4), pages 586-624, October.
  7. Lawrence M. Kahn, 2000. "The Sports Business as a Labor Market Laboratory," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 14(3), pages 75-94, Summer.
  8. Brown, Robert W, 1993. "An Estimate of the Rent Generated by a Premium College Football Player," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 31(4), pages 671-84, October.
  9. Carroll, Kathleen A. & Humphreys, Brad R., 2000. "Nonprofit decision making and social regulation: the intended and unintended consequences of Title IX," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 43(3), pages 359-376, November.
  10. Brad R. Humphreys, 2006. "The Relationship Between Big-Time College Football and State Appropriations for Higher Education," International Journal of Sport Finance, Fitness Information Technology, Fitness Information Technology, vol. 1(2), pages 119-128, May.
  11. Lawrence DeBrock & Wallace Hendricks & Roger Koenker, 1996. "The Economics of Persistence: Graduation Rates of Athletes as Labor Market Choice," Journal of Human Resources, University of Wisconsin Press, vol. 31(3), pages 513-539.
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