Economics of College Sports: A Topical Reading List

In this reading list, journal articles and chapters from collected works of my acquaintance are organized under a set of college sports topic headings. Rather than the usual “economics” topics (demand, supply, market structure, labor, business and government), the aim is to inform a more general audience. There is no claim to exhaustive coverage and no detailed review of any topic that would guide future research. Instead, it is hoped that the list is helpful to those wishing to simply delve into economics offerings under topic headings that match a reader’s interest

College Athletics Spending: Principals and Agents v. Arms Race

It is widely held that collegiate athletic directors are trapped in an expenditure arms race.  But the arms race explanation completely omits the actual consideration of the university budgeting process.  In its place, the arms race logic imposes strained assumptions about the cooperative setting and the naïveté of university administrators, along with a curious distinction of one type of revenue to reach its conclusions.  And the interpretation of the data on spending and benefits from college sports has not been done particularly well in the past. This paper presents an alternative principal-agent explanation that is based on the observed actual financial (budget) relationship between university administrators and their athletic department and consistent with the entirety of the aggregate-level data on college athletics finance.  Empirically discerning between the two models is crucial since each generates decidedly different policy implications

An Economic Look at the Sustainability of FBS Athletic Departments

In this descriptive historical review, I examine indicators of economic health for FBS athletic departments over time—attendance, media revenues, postseason revenues, operating revenues and expenses of athletic departments, and competitive balance. In addition, I review these and business management responses by athletic directors during the first year of the current recession. While there is some limited evidence that the recession of 2001 impacted BCS bowl payouts and revenues of the largest athletic departments, these rebounded quickly. Essentially, FBS athletic departments have been mostly impervious to business cycles. Implications are discussed

Myles Brand’s College Sports Sustainability: “Amateurism”, Finances, and Institutional Balance

As NCAA President, Myles Brand championed three major college sports initiatives: academic integrity, diversity, and sustainability. This paper is about the last. The first step is to distill the elements of college sports that Brand identified repeatedly in his documents and speeches on sustainability. The central elements are the NCAA definition of “amateurism”, athletic department finances, and balance between athletic and academic spending as a part of the university mission. An assessment of these three suggests that NCAA amateurism has changed since his death, in ways Brand stated should raise worries about sustainability. Finances and balance within the university have changed very little over the past ten years and appear sustainable into the future

League‐Level Attendance And Outcome Uncertainty In U.S. Pro Sports Leagues

Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/101798/1/ecin.12037.pd

Competitive Balance: Time Series Lessons from the E nglish P remier L eague

Structural break points in the F irst D ivision/ E nglish P remier L eague time series of competitive balance identify an E arly P eriod, a Pre‐ W orld W ar II P eriod, a Post‐ W ar P eriod, and a M odern P eriod. The E arly P eriod corresponds to technology diffusion (defense and tactics) along with important economic structural imposition by leagues. The war periods are common to many time series. The M odern P eriod's sharp decline in balance corresponds to the newest version of the C hampions L eague in 1994/1995 and the B osman R uling of 1995. R ottenberg's invariance principle suggests that it would be the former, rather than the latter, responsible for the historical rate of decline that follows this structural break.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/91362/1/sjpe580.pd

Asymmetric Arbitage and Normal Backwardation

This paper provides a theoretical explanation for the existence of backwardation on the futures markets, based on Routhakker's work dealing with asymmetry of arbitrage on such markets. The central assumption of the paper is that cash and futures prices tend to be more highly correlated at low than at high cash prices. This assumption reflects the asymmetry in arbitrage opportunities in futures markets; in particular, at the maturity date of a futures contract, the futures price cannot exceed the cash price of any grade-location combination deliverable under the futures contract. The main result of the paper is a proposition that asserts that with identical long and short hedgers, with the same wheat commitments on both sides of the market, and with utility functions exhibiting constant or decreasing absolute risk aversion, if the probability density function over cash and futures prices is sufficiently concentrated at low cash prices, then the resulting market equilibrium will exhibit backwardation, that is, the current future price is a downward biased estimator of the future futures price as well as being a downward biased estimator of the future cash price