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College sports governance: “Amateurism” enforcement in big time college sports

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Abstract

A major element of college sports governance is the enforcement of “amateurism”, that is, no pay beyond the grant-in-aid. Enforcement is a joint venture by university administrators through their National Collegiate Athletic Association (NCAA) that preserves this interesting definition of amateurism and the wealth transfer it creates from athletes to those same administrators. Enforcement criticism abounds, aimed at the NCAA without any model of that process or incorporation of the motivations for enforcement. Three criticisms amenable to economic analysis are evaluated, that the level of enforcement is too low, is passive rather than active, and biased against lower-revenue programs. Basic economic modeling provides testable implications regarding these criticisms, rather than finger-pointing at the NCAA, hopefully adding to meaningful reform efforts.

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Notes

  1. “Amateurism” is in quotation marks here at this first instance because (discussed at length later) essentially it is whatever university administrators, acting through their NCAA, say it is. For example, see the Division I Manual (2020) at https://www.ncaapublications.com/productdownloads/D121.pdf.

  2. Systemic oversight failure involving, say, Title IX participation violations, inappropriate sexual behavior under Title IX, or outright sexual predation violating state and local law are beyond the scope of this paper.

  3. On the academic side, see Funk (1991), James (1993), Gerdy (1997), Zimbalist (1999), and Gurney et al. (2017). In the lay press, see Byers (1995). An informative cross-section of the legion of popular accounts includes Miller (2012), Solomon (2014), and Forde (2020). Others criticize exclusively due process and fairness that are not the point of this paper.

  4. Miller (2012) went so far as to suggest that the NCAA needs to outsource enforcement to a law firm, consulting firm, or investigative agency.

  5. In other work, portions of that complexity have been incorporated into models of conference and athletic director decision making concerning the level of talent choice and expenditure. See the bibliographies in Fort (2015, 2016, 2018a).

  6. The IAAUS became the NCAA at the fifth meeting in 1910 (Library of Congress, undated).

  7. They reviewed the literature on greater giving by alumni and other boosters to the general university fund, a larger and better pool of student applicant, favorable general budget treatment by legislators, better faculty and administrators, value added to those athletes that would not be at the university without athletics, whatever Title IX compliance UAs have achieved through athletics.

  8. Koch (1971, 1973) first identified the NCAA as an input cartel that reduced athlete compensation relative to a market outcome. That logic became so well-established that Fleisher, Goff & Tollison (1992) titled their analysis a “study in cartel behavior”. Fort and Quirk (1999) detailed the place of the input cartel in the entire “college football industry.” Even the NCAA’s own arguments in favor of amateurism rest on the impact on other sports if the subsidy is reduced. Rather than reprise references to the vast work on amateurism, the reader again is referred to the bibliographies in Fort (2015, 2016, 2018a).

  9. This is purposefully vague, avoiding terms like “competitively determined”, since the point of the paper is not to engender a long discussion of possible processes to pay athletes closer to their contribution to the value in the athletic department and/or across the university.

  10. It is unlikely that \(\alpha =1\) so that athletes receive literally zero compensation. Some level of compensation is needed to cover athlete opportunity costs outside of college sports. However, some athletes would find it worth their own investment into the returns to college sports. And the lower divisions see plenty of athletes pay their own way entirely. These cases would make college athletes much more like minor league baseball players, forced by market power circumstances to invest future earnings, or pay for the joy of participation.

  11. In a more general model of the distribution of athlete talent across a college conference, with multiple sports outputs, Fort (2018a) shows the explicit conditions under which “college sports” outcomes are “invariant” with respect to the absence or presence of the amateur requirement.

  12. The seven were Boston College, The Citadel, Maryland, Villanova, Virginia, Virginia Tech, and the Virginia Military Institute.

  13. In the next season, 1952, UAs limited broadcasts to one national game and administered the selection and sale of rights through their NCAA. This stood until the famous case, NCAA v. Board of Regents of the University of Oklahoma, 1984. Byers (1995) is informative on the original formation of NCAA enforcement.

  14. The autonomy schools, also called the “Power 5”, include members of the Atlantic Coast Conference, Big 12 Conference, Big Ten Conference, Pacific-12 Conference, and Southeastern Conference, plus independent football colleges Army, Brigham Young, Connecticut, Liberty, Massachusetts, New Mexico State, and Notre Dame. Notre Dame football joined the Atlantic Coast Conference, just for 2021, and then returned to independent status after that.

  15. Stern (1979, 1981) emphasized that the enforcement task requires oversight mechanisms for both detection and punishment. Noll (1991, p. 198) surmised that the incentives to cheat, and the resulting need for detection, grew over time with the ever-growing money incentives facing institutions and individual coaches.

  16. The caution in footnote 2 bears repeating. This paper is not about systemic oversight failures resulting in illegal, criminal scandal.

  17. DeSchriver and Stotlar (1996) estimate the size of the incentive to cheat based on March Madness earnings. Otto (2005) examines the impact of the size of penalties. Humphreys and Ruseski (2009) add a dynamic model of infraction choice. Fizel and Brown (2014) analyze a broader set of determinants, also identifying enforcement regimes, empirically. Harris (2016) devises a supply and demand for violations model and finds empirical support that penalties and detection probabilities matter as the model predicts.

  18. Fleisher, Goff & Tollison (1992), Baumer and Padilla (1994), Goff (2000), and Smith (2015) show evidence that it can pay to cheat. Grimes and Chressanthis (1994) show that donations to academics take a hit during probation periods.

  19. See https://ncaaorg.s3.amazonaws.com/ncaa/finance/2019-20NCAAFIN_FinancialStatement.pdf found March 24, 2021, at https://www.ncaa.org/about/resources/finances.

  20. The NCAA does not administer the FBS championship. It is run separately by a coalition of Football Bowl Subdivision conference commissioners, media firms, and bowl organizers through the College Football Playoff organization.

  21. Description at: http://www.ncaa.org/governance/committees/division-i-committee-infractions.

  22. The history of COIP/SVPC is in NCAA (2015) and: http://www.ncaa.org/about/resources/media-center/press-releases/ncaa-announces-latest-division-i-certification-decision. The current SVPC details are at: http://www.ncaa.org/governance/committees/division-i-committee-institutional-performance.

  23. The last certification granted under the program was in 2014. See https://www.ncaa.org/about/resources/media-center/press-releases/ncaa-announces-latest-division-i-certification-decision.

  24. See https://www.ncaa.org/about/resources/finances/ncaa-membership-financial-reporting-system.

  25. These reports also are the source of the annual NCAA Finances of Intercollegiate Athletics reports found at https://www.ncaa.org/about/resources/research/finances-intercollegiate-athletics). Reports to OPE at https://ope.ed.gov/athletics/#/are done by individual colleges, not the NCAA, based on the same data.

  26. Stern (1981, p. 16) states of the NCAA, “Common surveillance techniques rely upon written reporting requirements, inspections, and charges brought by interested parties.” Fleisher et al. (1988) note that part of enforcement is direct monitoring of members, but they are not specific and their writing pre-dates COIP. Fleisher, Goff & Tollison (1992) add the idea of alarms in a proposed framework to empirically investigate enforcement. Interesting anecdotes of ADs reporting other ADs, and even coaches reporting other coaches, are in Byers (1995, Chap. 11).

  27. Some might argue that there may be an incentive compatibility issue between enforcers and UAs. It is well-known that slack allows shirking as one explanation for observed outcomes. But the preservation of the transfer gives both UAs and critics a common goal in the face of shirking, namely, reducing it to its efficient level, given the costs of oversight.

  28. McCubbins and Schwartz (1984) contrast “police patrols” and “fire alarms” in Congressional oversight of bureaucracy, followed specifically by Lupia and McCubbins (1994), and Hopenhayn and Lohmann (1996). An overview of the work prior, and after, is in Miller (2005).

  29. Apologies for the recycling of P, the probability of detection in expression (4), and A, the unrestricted pay for athletes in expressions (1) through (3).

  30. The complete history of violations is available at the NCAA’s Legislative Services Database (LSDBi), https://web3.ncaa.org/lsdbi/search/miCaseView?id=154. To this reader, these allegations all appear to be brought to the attention of the COI by athletes, other coaches, other ADs, or through those three via boosters and/or the press. In addition, Winfree and McCluskey (2008) find empirical evidence that self-reporting/punishment reduces eventual NCAA sanctions.

  31. The quote has appeared many times through the years. This version is from Dufresne (2015).

  32. Prior to the advent of the COI, Stern (1981) showed that stronger programs were more likely to be detected and penalized than weaker programs over the first 20 years of NCAA enforcement (1952–1972). Neither Fleisher, Schugart, Tollison & Goff (1988) nor Fleisher, Goff & Tollison (1992) found any bias against smaller-revenue programs. Otto (2005, p. 5) finds that the number of investigations, the infraction rate, penalty rates, and severity rates were all higher for higher-revenue programs.

  33. Once again, apologies for recycling notation from before where L is the loss if cheating is detected in expression (4).

  34. Joskow (1974) originally employed a similar diagram of the tradeoff between price and profit, with iso-values for electricity regulators having to do with the relative power of consumers and producers in the regulatory process.

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  1. Sport Management Emeritus, University of Michigan, 208 W. Cooper St, 99111, Colfax, WA, USA

    Rodney Fort

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Fort, R. College sports governance: “Amateurism” enforcement in big time college sports. Econ Gov 23, 303–322 (2022). https://doi.org/10.1007/s10101-022-00279-w

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