Who Profits from Amateurism? Rent-Sharing in Modern College Sports

71 Pages Posted: 4 Sep 2020 Last revised: 1 Oct 2020

Multiple version iconThere are 2 versions of this paper

Date Written: August 31, 2020

Abstract

Intercollegiate amateur athletics in the US largely bars student-athletes from sharing in any of the profits generated by their participation, which creates substantial economic rents for universities. These rents are primarily generated by men’s football and men’s basketball programs. We characterize these economic rents using comprehensive revenue and expenses data for college athletic departments between 2006 and 2019, and we estimate rent-sharing elasticities to measure how rents flow to women’s sports and other men’s sports and lead to increased spending on facilities, coaches’ salaries, and other athletic department personnel. Using complete roster data for every student-athlete playing sports at these schools in 2018, we find that the rent-sharing effectively transfers resources away from students who are more likely to be black and more likely to come from poor neighborhoods towards students who are more likely to be white and come from higher-income neighborhoods. To understand the magnitude of the available rents, we calculate a wage structure for college athletes using the collective bargaining agreements in professional sports leagues as a benchmark. We also discuss how our results help understand how universities have responded to recent threats to these rents arising from litigation, legislation, and the global coronavirus pandemic.

JEL Classification: J3,Z2

Suggested Citation

Garthwaite, Craig and Keener, Jordan and Notowidigdo, Matthew and Ozminkowski, Nicole, Who Profits from Amateurism? Rent-Sharing in Modern College Sports (August 31, 2020). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2020-117, Available at SSRN: https://ssrn.com/abstract=3683895 or http://dx.doi.org/10.2139/ssrn.3683895

Craig Garthwaite

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Jordan Keener

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Matthew Notowidigdo (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Nicole Ozminkowski

Northwestern University

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