Estimating the market value of collegiate football players from professional factor shares

Although the level and growth of revenue in college football has drawn increasing public attention, reliable estimates of the value of college and associated rents remain elusive. Many players do not have easily observable performance statistics and there are significant complementarities. Using a simple estimation strategy based on professional factor shares and rooted in economic theory, we generate estimates of market value for college players across seven National Collegiate Athletic Association conferences using professional football and basketball salaries from 2011 to 2013 as shadow prices. With this method, market value of an average starting football player in a Bowl Championship Series (BCS) conference ranges from $120,000 to $1.7 million per year. The value of superstar players may exceed $4 million per year. We find that rents can flow from the institutions to players in some cases at relatively low-revenue institutions outside the BCS.     

Point shaving: Corruption in NCAA college football?

Several recent studies suggest the presence of point shaving in NCAA college basketball. While similar asymmetric incentives between athletes and gamblers exist, evidence for point shaving in college football does not appear to exist.     

DOES ATHLETIC SUCCESS INFLUENCE PERSISTENCE AT HIGHER EDUCATION INSTITUTIONS? NEW EVIDENCE USING PANEL DATA

This study examines the relationship between athletic success and student persistence toward a degree. We build an updated panel of National Collegiate Athletic Association (NCAA) Division I institutions and utilize within‐institution variation to identify the effects of athletic success. Using a ranking of all institutions, we find that having more successful men's basketball and football teams has a significant positive effect on first‐year retention rates. We also find some evidence that improved basketball rankings increase graduation rates, and that success in the NCAA tournament may have a sizable impact on retention. Although the estimated effects are generally modest in scale, we find rather limited evidence of other institutional factors affecting persistence, suggesting that athletics can be one avenue for institutions of higher education to engage and retain students. (JEL I23, Z20, L83)     

A college athletics recruiting game to teach the economics of rent-seeking

The authors of this article describe an adaptation of the rent-seeking game by Goeree and Holt (1999) to the recruiting of athletes by NCAA Division I football and basketball teams. Students engage in an effort-based lottery, i.e., recruiting to sign a blue-chip prospect. The winner gets the prize—the player's marginal revenue product in excess of his grant in aid. Students recruit in three scenarios: by recruiting legally, by recruiting legally or with illegal bribes, and by offering wages to athletes in an auction. The authors demonstrate the game's use in a principles course, but it is easily adaptable to other courses. To aid instructors unfamiliar with sports and NCAA recruiting, they include a comprehensive lesson plan with suggested readings and multimedia.     

Football players’ career and wage profiles

The objective of this article is to look over football players’ career path, from lower leagues to the first league, and the associated wage profile. The information comes from a Portuguese longitudinal matched employer–employee data set defining several career events according to players’ movement across football clubs and across professional and semi-professional leagues. Our identifying strategy relies on coach changes to reduce the potential bias resulting from players’ moves between clubs. The estimated first-difference wage equations indicate that players can expect a wage premium when they get transferred to new clubs in higher leagues or a wage penalty when moving to lower leagues. Players who stay in the same club after the club being relegated can also expect a wage penalty.     

Value-maximizing football clubs

In this paper, football clubs are modeled as value-maximizing enterprises. With a long-term perspective in this framework, players are not only factors of production, but also assets of the club. It is shown that talent investment is higher with value-maximization than with profit maximization for homogeneous football clubs. Club heterogeneity is then modeled by different time-horizons regarding future profits, which leads to asymmetric levels of talent investment. Teams with longer time-horizons demand more talent and tilt the competition to their favor. Increases in transfer prices for players worsen the competitive balance, while higher player wages improve it.     

The determinants of NCAA basketball recruiting outcomes

Using recruiting rankings from Rivals.com, the authors examine the determinants of recruiting success among D1 NCAA men’s basketball programmes. After controlling for a host of potentially relevant variables, the authors find that recruiting outcomes are correlated with recent on-court success, historical on-court success, stadium size and playing in a ‘power’ conference. Additionally, teams with a history of sending players to the NBA receive heightened recruiting outcomes. A team with a new coach can expect difficulties with recruiting, while head coaches with national championships receive a recruiting boost. Finally, the authors show that recruiting strategies for guards may differ from recruiting strategies for other players.     

The impact of skilled immigrants on their local teammates’ performance

We use the Bosman ruling, which invalidated restrictions on the maximum number of foreign players allowed on professional football teams, to identify a causal positive impact of foreign players in German Bundesliga clubs on the individual performance of their domestic teammates.     

The negative effect of NCAA football bowl bans on university enrolment and applications

Universities provide consumption amenities to students in addition to their educational services. Collegiate sports programs have been characterized as one of these consumption amenities. Previous research has shown that athletic success has a positive impact on both the quantity and quality of students attending a university. Alternatively, we analyse if athletic malfeasance, as measured by NCAA postseason bans of football programs, negatively affects either the quantity or quality of student applications or enrolment. Our findings suggest that athletic malfeasance that results in a postseason football bowl ban lowers the quantity of applications, admittances and enrolment to a university. In addition, we find that universities respond to decreased application numbers by increasing their admission rates, while students who are admitted to the school enrol at the same rate as before the ban. Thus, the reduced enrolment is the result of a smaller applicant pool and not the result of a lower rate of enrolment. Lastly, we do not detect any reduction in student quality at the sanctioned university. Our results demonstrate that impropriety by an athletics program directly impacts a university’s non-athlete student enrolment by influencing the amenity mix provided by the university.     

Optimal seedings in elimination tournaments

We study an elimination tournament with heterogenous contestants whose ability is common-knowledge. Each pair-wise match is modeled as an all-pay auction. Equilibrium efforts are in mixed strategies, yielding complex dynamics: endogenous win probabilities in each match depend on other matches’ outcome through the identity of the expected opponent in the next round. The designer seeds competitors according to their ranks. For tournaments with four players we find optimal seedings for three different criteria: (1) maximization of total tournament effort; (2) maximization of the probability of a final among the two top ranked teams; (3) maximization of the win probability for the top player. We also find the seedings ensuring that higher ranked players have a higher winning probability. We compare our predictions with data from NCAA basketball tournaments.     

Are you hiring Johnny Football or Johnny Doe? Uncertain labour quality and the measurement of monopsony in college football

I assess monopsony in the college football labour market as it relates to both typical and elite performers, while also accounting for the uncertain performance quality of prospective players who are in this labour market. Existing studies suggest that the marginal revenue product (MRP) of elite collegiate players later drafted into the National Football League (NFL), significantly exceeds their compensation. These comparisons overstate monopsony rents because schools don’t know ex ante which prospects will become these elite performers. Using financial data spanning 2004–2011 from 114 major schools, I estimate the MRP of players sorted into three ex post quality tiers, and find that while eventual NFL draftees generate revenue that significantly exceeds their compensation, a majority of scholarship players do not. Then, using Rivals.com talent ratings of 6,604 prospective players recruited from 2002–2008, I estimate the probability that prospects will reach each ex post quality tier given their ex ante ratings. MRP estimates are adjusted by these conditional probability estimates to reflect the expected MRP of prospects, which allows more appropriate assessment of monopsony rents. I find that schools possess substantially less monopsony power than unadjusted MRP estimates suggest.     

Crime or punishment?: Enforcement of the NCAA football cartel

This paper presents theoretical and empirical evidence on the methods that the National Collegiate Athletic Association (NCAA) and its member schools use to detect violations of its cartel agreement. Because it is difficult to find direct evidence of cheating we suggest that the volatility of a school's winning percentage is used as a proxy by the NCAA rules has a detect violations. Empirical evidence also suggests that the enforcement of the NCAA rules has a redistributive effect that benefits consistent winners at the expense of up-and-coming schools.     

Let's Get Messi? Top‐Scorer Productivity in the European Champions League

Getting a player like Lionel Messi in the squad would seem like a dream come true for a professional football manager, but is it always best to have top‐quality players? We study the determinants of top goal‐scorers’ productivity in the UEFA Champions League. We find evidence of a concave relationship between age and productivity and uncover an inverted‐U relationship between performance and minutes played. Finally, we find a positive effect on height, being left footed and being a striker on the probability of scoring a goal. The results have important implications for managers both in looking to sign on new players and to maximise their potential during a competitive match.     

The Labour Market in Association Football: Who Gets Transferred and for How Much?

This paper employs data for the 1993–94 season to estimate a hedonic equation representing the determination of the price structure in the transfer market for professional players in the English football leagues. Player transfer proneness is modelled, and the Heckman two-step procedure is employed to take account of selection bias. The paper identifies those player attributes which affect either the probability of transfer or the transfer fee and evaluates the relative influence of such variables.     

Bargaining in the transfer market: theory and evidence

This paper examines the transfer market for association football players as operated in the English Football League using transfer data for the 1990–91 season. After describing the purposes and procedures involved in the transfer system together with the motives of the participants, we apply two-person bargaining theory to analyse the determination of transfer fees. The data and estimation procedures are explained and the results reported and interpreted. Our analysis suggests that the Nash bargaining theory captures the salient features of the bargaining process in the footballer's transfer market.     

Who gets promoted? Personality factors leading to promotion in highly structured work environments: evidence from a German professional football club

Much of the research on how human capabilities contribute to labour market success focuses on traditional human capital predictors. However, researchers are becoming increasingly aware of the important role of personality traits in determining individual labour market outcomes, both positive and negative. Using data from young professional football players in Germany, this study investigates the relationship between individual personality traits and cognitive abilities on career success. Our results suggest that individuals who score low on the tendency to be principled but high on cognitive processing speed are significantly more likely to enjoy career success through job promotion.     

Returns to education in professional football

After three years in college, football players face a trade-off between spending more time in college and pursuing a career in the National Football League (NFL). We analyze the salaries for rookies in the NFL and instrument the endogenous decision to enter the professional market with the month of birth (relative age effect). A player enjoys a 6 percent higher starting salary in the NFL for each additional year with the college team. The returns to education in professional sports are sizable and similar to returns to formal education.     

Detecting Failures of Backward Induction: Monitoring Information Search in Sequential Bargaining

We did experiments in a three-round bargaining game where the (perfect) equilibrium offer was $1.25 and an equal split was $2.50. The average offer was $2.11. Patterns of information search (measured with a computerized information display) show limited lookahead rather than backward induction. Equilibrium theories which adjust for social utilities (reflecting inequality-aversion or reciprocity) cannot explain the results because they predict subjects will make equilibrium offers to “robot” players, but offers to robots are only a little lower. When trained subjects (who quickly learned to do backward induction) bargained with untrained subjects, offers ended up halfway between equilibrium and $2.11. Journal of Economic Literature Classification Numbers: C7, C9.     

Perceived trade-off between education and sports career: evidence from professional football

To explore the attitudes towards risky career choices of young people in highly competitive environments, we surveyed almost 1000 football players in the youth academies of German professional clubs (Bundesliga), who must generally decide early in their careers whether or not to risk quitting school to focus solely on a professional football career. Based on the survey responses, we empirically analysed which factors influence these youths’ tendencies to choose a high-risk career option over a lower risk one. Our results seem to indicate that such risk taking in competitive environments can be explained by potential benefits expected from this decision, as well as judgments about the likelihood of achieving the desired career. Risk attitudes towards career choices vary by differences in individuals’ estimates of the potential benefits and in particular, in their own assessments of the likelihood of success, which is an important driver of risk acceptance. We also found that opportunity cost considerations influence risk acceptance: the better the low-risk option, the less willing the individual to give it up for a high-risk alternative. In addition, both national origin and level of cultural integration play a role in attitudes towards risky career choices, with reductions in the latter increasing the risk premium of quitting school.     

Are there too few trades during the NFL draft?

College football players are initially assigned to teams in the National Football League (NFL) through the league’s draft selection process. At each team’s turn to pick, the team has the option of exercising the pick itself or trading it to another team. If gains from trade are exhausted, draft picks should be exercised by the team with the highest expected value. That is, the expected player contribution garnered from a given pick should not be dependent on whether the pick was traded or retained. Regression results, however, indicate that controlling for a player’s draft position, when a team trades up to acquire a player, that player is more likely to have greater on-field success. This suggests that there are too few draft day trades. Plausible reasons are high transaction costs or the fear of media scrutiny that draft trades can engender.