Article

Intercollegiate Athletics: An Economic Explanation

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Abstract

Despite the NCAA's public statements about its concern for amateurism and physical fitness, its fundamental actions are readily explainable by means of conventional economic models of cartelization . This has been especially evident in the NCAA's recent activities in the area of football television and in its recent foray into the domain of women's Intercollegiate athletics. While it is likely that the NCAA will continue to undergo significant structural changes, it is unlikely that it will be destroyed by the problems that it currently faces. Intercollegiate athletics has assumed an increasingly significant role in American society in recent years. Attendance at intercollegia te athletic events continues to surge upward.^ Radio and television stations, to say nothing of television networks such as ESPN, flog our senses on a twenty-four-hour-a-day basis with broadcasts of intercol- legiate athletic contests. Numerous head football coaches now earn annual salaries that exceed those of the presidents of the universities for whom they toil (Chronicle of Higher Education. 1982a). The NCAA, the dominant organization in intercollegia te athletics, has expanded at an astonishing rate and (inter alia) claims to control the rights to a television contract whose value exceeds one-quarter of a billion dollars. The NCAA has also arrogated to itself control over women's intercol- legiate athletics and now employs the service of a detective agency to monitor the activities of its membership (Chronicle of Higher Education, 1982b). The Sturm und Drang of intercollegia te athletics provoke an econ- omist to ask, "Can we explain and predict what has been occurring in intercollegia te athletics by means of the intellectual toolbox of economic theory?" It is the aim of this paper to demonstrate that we can utilize economic analysis to separate the wheat from the chaff in intercollegiate athletics. For, as Boulding (1970:2) has noted:

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... Economists Armen Alchian and William Allen popularized the cartel argument as applied to the NCAA within the economics profession in their introductory economics text ‹rst published more than four decades ago. 2 That argument has been adopted by others and continues to lie at the heart of professional critiques of the NCAA (Fleisher, Goff, and Tollison 1992;Koch 1973Koch , 1983McCormick 1985, 27). In their book-length investigation of the NCAA as a cartel, Arthur Fleisher, Brian Goff, and Robert Tollison insist, Economists generally view the NCAA as a cartel. ...
... One might think that the courts and Congress would be predisposed to favor the critics' case, given that minorities are supposedly harmed most by the restrictions. For additional ways economists have traditionally criticized the NCAA, see also Becker 1987;Koch 1973Koch , 1983Fleisher, Goff, Shughart, and Tollison 1988. 4. See also Editorial, New York Times 1985, 22. 5. See also Yoder 1985. ...
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The National Collegiate Athletic Association (NCAA) is the organization that administers and governs athletics at colleges and universities in the United States. Economists commonly view the NCAA as a cartel. We model the cartel relationship between the member institutions and the NCAA central organization in a principal-agent setting. Our model predicts imperfect agency behavior on the part of the NCAA with corresponding overregulation relative to the level preferred by the member institutions. We empirically test the model by examining the impact of the 1984 Supreme Court decision that reassigned the television broadcast rights for intercollegiate football from the NCAA to the individual member institutions. Our empirical estimates of telecasts, attendance, and competitive balance support the prediction of imperfect agency behavior by the NCAA.
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... member school interests, also implicitly assumes perfect agency behavior on the part of the NCAA central organization. Some alternative views of the NCAA can be found in the literature. Zimbalist (1999) points out that although the NCAA operates like a cartel in some respects, this view cannot fully explain all aspects of the behavior of the NCAA. Koch (1983 Koch ( , 1986) proposed that the NCAA operates as a separate central organization that has different interests than do the member universities. He stated that the primary concern of the NCAA central organization is its own power, size and permanence (1986, p. 331). In this paper we explore the implications of the views of Zimbalist and ...
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The Determinants of Football Attendance at Illinois State University
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Zakula, David. N.d. "The Determinants of Football Attendance at Illinois State University." Unpublished manuscript.
Revenues and Expenses of intercoiiegiate Athletic Programs (Mission, Kans.: National Collegiate Athletic Association)
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Raiborn, Mitchell H. 1982. Revenues and Expenses of intercoiiegiate Athletic Programs (Mission, Kans.: National Collegiate Athletic Association).
The NCAA College Television Policy: Are the Stated Purposes for NCAA Controls Valid? Unpublished manuscript cited in trial proceedings of University of Qkiahoma et ai. v. Nationai Coilegiate Athietic Association
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Pacey, Patricia. N.d. "The NCAA College Television Policy: Are the Stated Purposes for NCAA Controls Valid?" Unpublished manuscript cited in trial proceedings of University of Qkiahoma et ai. v. Nationai Coilegiate Athietic Association, 8 June 1982.
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Fields, Cheryl M. 1982. "Women's Sports Group Plans for Possible Dissolution," Chronide of Higher Education, 20 January, p. 5.
The Economics of 'Big-Time' Intercollegiate Athletics
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Koch, James V. 1971. "The Economics of 'Big-Time' Intercollegiate Athletics," Social Science Quarteriy, 52 (September):248-60. . 1973. "A Troubled Cartel: The NCAA," Law and Contemporary Problems, 38 (Winter/Spring):135-50.
The NCAA: A Socioeconomic Analysis
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A Sad Day Arrives for the AIAW
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Levine, Ronn. "A Sad Day Arrives for the AIAW," Washington Post, 1 July, section D, p. 2.
Top Twenty Football Ooaches All Earn More Than $100,000
Chronide of Higher Education. 1979. 10 December, pp. 13ft. . 1982a. Top Twenty Football Ooaches All Earn More Than $100,000," 2 June, p. 13. . 1982b. "Detective Agency to Aid NCAA in Investigations," 16 June, p. 11.
Unpublished manuscript cited in trial proceedings of University of Qkiahoma et ai. v. Nationai Coilegiate Athietic Association
  • Patricia N Pacey
Pacey, Patricia. N.d. "The NCAA College Television Policy: Are the Stated Purposes for NCAA Controls Valid?" Unpublished manuscript cited in trial proceedings of University of Qkiahoma et ai. v. Nationai Coilegiate Athietic Association, 8 June 1982.