Analysis using this framework [an empirical method to estimate wages of NCAA athletes] have been performed for college football, as well as men's and women's basketball. In constant 2005 dollars, estimates of the marginal revenue product [wage] of a draft-quality player range from about $263,000 for women's basketball (based on the 2000-2001 season) (Brown and Jewell 2006, p. 98) to $495,000 for college football (based on the 1995 season) and $1.422 million for men's college basketball (based on the 1995-1996 season) (Brown and Jewell, 2004, p. 159). These estimates of the marginal revenue product of a draft-quality athlete can be compared to the compensation of college athletes. According to NCAA rules, athletes are limited to receiving a scholarship and stipend, supplemented by up to $2,000 of earnings from a job during the school year (Zimbalist, 1999, p. 26). Since the cost of tuition, fees, room, board, and incidentals comes to roughly $40,000 at private schools (and less in most cases for public schools), compensation is far below marginal revenue produce for these revenue-producing athletes.
Lawrence also describes NCAA attempts to limit compensation of assistant coaches.
The article contains a lot of interesting history and good economics. I love their product but recognize that it is not an "amateur" product. The NCAA is a profit maximizing business.
In 1991, the NCAA set a maximum compensation level for certain assistant at $12,000 during the year and $4,000 for any summer camp earnings. Several antitrust suits were filed against the NCAA on behalf of the assistant coaches, and they were consolidated into one class action. In 1995, a federal court decided for the plaintiffs, and damages to the coaches were ruled in 1998 to be $22.3 million, which under the treble damages provision of antitrust law were multiplied to $67 million. The NCAA appealed, but the parties eventually settled for $55.5 million, to be divided among roughly 1,000 assistant coaches (Hamilton, 2003).
That federal court case was just a trade between the two sides until they finally came up with a number that both sides like. NCAA wages have only gone up still since this case.
ReplyDeletethis is Matthew Kent