Athlete Pay and Competitive Balance in College Athletics

In 2013, many of the football players at Northwestern University wanted to form a player’s union for college athletes. In 2014, their case went in front of the National Labor Relations Board (NLRB) and the Chicago district of the NLRB ruled that the players were employees of the university and therefore they could form a union. Northwestern appealed this ruling and in 2015 the NLRB ruled that the football players at Northwestern could not form a union. However, the NLRB did not assert jurisdiction, which means that the ruling could be overturned in the future. Since the ruling only affects Northwestern, some have interpreted this as saying that the NLRB might reverse its decision if a national union was formed, instead of just a small union of football players at one university.

A main source of payment for many college athletes are grants-in-aid (in essence, athletic scholarships), which can vary depending upon the cost of tuition at the university. Even though an athlete might not value the education similarly to the cost, the value of a college education can certainly differ across universities.

For more discussion regarding this talent function, see Salaga et al. (2014).

The size of the market is dependent upon the marginal revenue with respect to winning.

For example, competitive balance can depend on factors such as scheduling, drafts, and many other league rules.

http://​www.​forbes.​com/​nfl-valuations/​list/​ and http://​www.​forbes.​com/​nba-valuations/​list/​. Accessed February 10, 2017.

Many stadiums and arenas are publicly funded with relatively low operations and rental costs that are charged to pro teams, which allows the (subsidized) owners to pocket more money than do universities that often own their own stadiums and facilities outright.

We note that in some cases, winning percentages may not add to 1 (or average 0.5) across the entirety of NCAA football or basketball. For example, some FBS teams play Football Championship Series (FCS) teams during the regular season, therefore resulting in no losses for an FBS team in the sample. However, the impact that these games have on the measure is likely to be extremely small given the number of teams, and we therefore assume that this is ignorable in our context.