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What is a Blue Chip Recruit Worth? Estimating the Marginal Revenue Product of College Football Quarterbacks

Author

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  • Peter K. Hunsberger

    (Johns Hopkins University)

  • Seth R. Gitter

    (Department of Economics, Towson University)

Abstract

A recent National Labor Relations Board ruling declared Northwestern football players employees and gave them the right to unionize. This ruling is part of ongoing scrutiny of The National Collegiate Athletic Association (NCAA's) model which labels college athletes as amateurs and limits player compensation to grant-in-aid (scholarships). Our paper estimates the marginal revenue product (MRP) of an elite college quarterback using revenue and game level playing data from eight and nine seasons, respectively. Similar to previous studies we show that MRP for elite quarterbacks far exceeds the average value of a scholarship. Our paper also provides two contributions by using a new quarterback rating system and creating an estimate of the expected value of a blue chip college quarterback recruit. The new system is the Total Quarterback Rating (QBR), a metric developed by the Stats & Information Group of ESPN. The measure has a strong win predictive ability and makes important adjustments to identify the quarterback's contribution. We find a one standard deviation increase in QBR adds about 3 wins per season, and each additional win increases a school's football revenue roughly $740,000 compared to the average quarterback, holding a variety of other determining factors constant, including school fixed effects. This suggests a superior quarterback to be worth millions of dollars a season. Teams recruit quarterbacks, however, ex-ante of the player revealing their college ability. Therefore, to estimate the value of a college recruit, we test for differences between quarterbacks rated as blue chip high school prospects and other QBs. We estimate that signing a blue chip quarterback is expected to produce roughly $429,000 dollars in total additional revenue for a college team compared to signing a non-blue chip quarterback. The results show that ex-post estimates of college player value may differ from ex-ante estimates due to the difficulty of predicting which high school players will excel in college.

Suggested Citation

  • Peter K. Hunsberger & Seth R. Gitter, 2014. "What is a Blue Chip Recruit Worth? Estimating the Marginal Revenue Product of College Football Quarterbacks," Working Papers 2014-03, Towson University, Department of Economics, revised Apr 2014.
  • Handle: RePEc:tow:wpaper:2014-03
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    References listed on IDEAS

    as
    1. Krautmann, Anthony C, 1999. "What's Wrong with Scully-Estimates of a Player's Marginal Revenue Product," Economic Inquiry, Western Economic Association International, vol. 37(2), pages 369-381, April.
    2. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-930, December.
    3. Lawrence M. Kahn, 2007. "Markets: Cartel Behavior and Amateurism in College Sports," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 209-226, Winter.
    4. Anthony C. Krautmann, 2013. "What Is Right With Scully Estimates of a Player’s Marginal Revenue Product," Journal of Sports Economics, , vol. 14(1), pages 97-105, February.
    5. Robert Brown, 2012. "Do NFL Player Earnings Compensate for Monopsony Exploitation in College?," Journal of Sports Economics, , vol. 13(4), pages 393-405, August.
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    Cited by:

    1. Brian Mills & Jason Winfree, 2018. "Athlete Pay and Competitive Balance in College Athletics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(2), pages 211-229, March.
    2. Stacey L. Brook, 2021. "A Comparison of NCAA FBS Head Coaches Salary Determination From New and Modified Contracts," Journal of Sports Economics, , vol. 22(5), pages 491-513, June.
    3. Roger D. Blair & Wenche Wang, 2018. "The NCAA Cartel and Antitrust Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(2), pages 351-368, March.

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    More about this item

    Keywords

    College Football; College Sports Revenue; Quarterback.;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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