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Who Profits from Amateurism? Rent-Sharing in Modern College Sports

Craig Garthwaite (), Jordan Keener (), Matthew Notowidigdo () and Nicole Ozminkowski ()
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Craig Garthwaite: Northwestern University - Kellogg School of Management
Jordan Keener: Northwestern University - Kellogg School of Management
Matthew Notowidigdo: University of Chicago - Booth School of Business; NBER
Nicole Ozminkowski: Northwestern University

No 2020-117, Working Papers from Becker Friedman Institute for Research In Economics

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.

Pages: 69 pages
Date: 2020
New Economics Papers: this item is included in nep-spo
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