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

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. We rule out skill-upgrading of coaches as an alternative explanation of our results by focusing on head coach “stayers” using panel data on the identity of each football head coach in our sample. Using complete roster data for every student-athlete playing sports at these colleges 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. Having documented the existence of rent-sharing, we conclude with stylized calculations of 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.