Working Paper: NBER ID: w27734
Authors: Craig Garthwaite; Jordan Keener; Matthew J. Notowidigdo; Nicole F. Ozminkowski
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.
Keywords: Rentsharing; College Sports; Amateurism; Economic Rents; Athlete Compensation
JEL Codes: J3; Z2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increases in revenue generated by football and men's basketball (Z23) | increased spending on those sports (Z23) |
| increases in revenue generated by football and men's basketball (Z23) | allocation to all other sports (Z29) |
| increases in revenue generated by football and men's basketball (Z23) | allocation to women's sports (Z22) |
| increases in revenue generated by football and men's basketball (Z23) | allocation to other men's sports (Z29) |
| increases in economic rents (D33) | changes in spending across various sports (Z29) |
| increases in economic rents (D33) | changes in administrative salaries (M52) |
| increased revenue (H27) | no additional compensation for football and men's basketball players (Z22) |
| increased revenue (H27) | transfer of resources from predominantly black student-athletes to higher-income neighborhoods (R23) |