Is the Coach Paid Too Much? Coaching Salaries and the NCAA Cartel
University of Arkansas - Department of Economics
University of Alabama - Department of Economics, Finance and Legal Studies
March 1, 2008
U of Alabama, Economics, Finance and Legal Studies Working Paper No. 08-03-02
Recently a great deal of controversy has been generated from the salaries earned by head football coaches in the NCAA. On one level this seems odd since many figures in the world of sports and entertainment earn exceptionally high salaries. However, one important difference in the case of NCAA football is that the players themselves do not get paid. We develop a model which shows that a cartel agreement to not pay the players raises the coach's salary if some players choose where to play based on the identity of the coach. For some parameters, the gain in the coach's salary exceeds the loss in salary experienced by the player. On average, the agreement not to pay the players improves competitive balance.
Number of Pages in PDF File: 26
Keywords: NCAA Cartel, Collusion, Labor Market, Monopsony
JEL Classification: C72, D2, J42
Date posted: April 8, 2008
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