Rodney Fort's Sports Economics

Rodney Fort's Sports Economics Chapter 13 College Sports

Figure 13-1Demand Functions for Men’s and Women’s Basketball Season Tickets(Typical class size = 100) Legend: (From Chapter 2) A simple classroom experiment chooses a subset of the class and asks, “How many season tickets to men’s or women’s basketball would you buy at various prices?” Plotting price against their response gives two different demand functions for the two sports. For example, 70 students are willing to buy a men’s ticket at a price of $20. But the price would have to fall to $10 before 70 students would buy a women’s ticket.

Table 13-1Revenues and Expenses of FBS Athletic Departments (2009 dollars) (slide 1 of 2)

Table 13-1Revenues and Expenses of FBS Athletic Departments (2009 dollars) (slide 2 of 2) AAverages were reported to 2001. After that medians were reported. BTotal Revenue Ratio = Maximum Total Revenue/Average Total Revenue. CTotal Expenditures Ratio = Maximum Total Expenditures/Average Total Expenditures. Note: The source lists data for 2006 that are not shown here due a suspected error in the report.Source: Author’s calculations from tables in Fulks (2003, 2008).

Table 13.2 Revenue and Expenses of Men’s and Women’s Programs in FBS Athletic Departments ($2009)(slide 1 of 2)

Table 13.2 Revenue and Expenses of Men’s and Women’s Programs in FBS Athletic Departments ($2009) (slide 2 of 2) Note: Averages were reported prior to 2004; medians after that. Only years from 1993 on are used because the data are consistent with respect to values specific to men’s and women’s programs. The data include institutional support directly from the university to its athletic department, if any.

Figure 13.2Non-BCS and BCS Average Payouts, 1981-82 to 2008-09 (2009 dollars). Legend: At the average, BCS bowl payouts have always dwarfed non-BCS bowl payouts. In addition, while non-BCS average payouts have been steady over time, average BCS bowl payouts have grown in leaps and bounds, although they have fallen a bit in the last few years.

Table 13-32006 Revenue and Expenditure Distribution Percentages by Sport for FBS College Athletics Notes: The data are for generated revenues and expenses, that is, earned by the athletic department and do not include allocated revenues (e.g., institutional support directly from the university to its athletic department, if any).

Figure 13-3The University and the Athletic Department Legend: All major elements of the university, inside the triangle, produce outputs (Research, Teaching and Service) that generate money and political support for the university. The university supports those elements best that provide money and political support the best.

Figure 13-3The Business College Org Chart Legend: At the bottom, chairs of academic departments are responsible to their Dean. The line of responsibility and oversight moves upward through the Provost, the Board of Regents and, ultimately, to the Governor.

Table 13-4Naming Rights in College Sports

Figure 13-4The Athletic Department Org Chart Legend: At the bottom, individual team coaches are responsible to their Athletic Director (the equivalent of the Dean for academic departments). The line of responsibility and oversight moves upward through the President (typically, not the Provost as in academic departments), the Board of Regents and, ultimately, to the Governor.

Table 13-5Annual Values of College Football TV Contracts (slide 1 of 3)

Table 13-5Annual Values of College Football TV Contracts (slide 2 of 3)

Table 13-5Annual Values of College Football TV Contracts (slide 3 of 3) *6 home games per year. **The newest Pac 10 contract values have not been reported. Not available is denoted “n/a.”

Table 13-62008-09 Bowl Sponsors and Payouts to Teams(slide 1 of 3)

Table 13-62008-09 Bowl Sponsors and Payouts to Teams(slide 2 of 3)

Table 13-62008-09 Bowl Sponsors and Payouts to Teams(slide 3 of 3) Notes: When a second team from a conference, in addition to the conference champion, appears in a BCS game, the payout falls to $4.5 million for that second team. Utah 's appearance in the Sugar Bowl generated nearly $18 million to be split among their own Mountain West Conference, but also with C-USA , the MAC, Sun Belt Conference, and the WAC.

Figure 13-6Disproportionate Revenue Sharing Legend: When revenues are shared disproportionately, competitive balance is harmed. If the proportion of revenues kept by larger revenue colleges is greater than that kept by smaller revenue schools, as when a > b, the result is that MRL shifts down by less than MRS. The result is an even higher winning percent for the larger revenue college in the presence of disproportionate sharing than there would be without any sharing!

Table 13-72007-2008 FBS Conference TV and Postseason Revenues Notes: Annual conference TV values and bowl payouts by conference all calculated by the author. Not available is denoted by “n/a.”

Figure 13.7The Expected Value of Cheating. New Figure. • Legend: The expected value of cheating, EV, depends on the probability of getting caught, P. For P < PBE, EV > 0. But if P > PBE, the chances of getting caught are such that EVS < 0 and cheating simply will not pay. Since monitoring is costly, it is most likely that P < PBE. If the lost value L declines, or the gaing G increases then EV shifts upward.

Table 13-8Budgets at Washington State University (slide 1 of 2)

Table 13-8Budgets at Washington State University (slide 2 of 2)

Figure 13-8The Value of Immobilizing College Talent Legend: In a competitive equilibrium, the price of college talent would be determined by P = MRS = MRL and winning percents are= 1 – . The value of immobilizing college talent comes from reducing alternatives and lowering the going price of talent to the level of college athletes’ next best alternative, N. Each college then reduces spending on talent. The reduction for the larger market college is (P – N)* while the reduction for the smaller market college is (P – N)* .

Table 13-9Operating Revenues and Expenses, Washington State University and the University of Washington, 2003-2004 (slide 1 of 2)

Table 13-9Operating Revenues and Expenses, Washington State University and the University of Washington, 2003-2004 (slide 2 of 2)

Figure 13-9Play for Pay and Coaching/Administrative Services Legend: When athletes are not paid, what would have been their payment accrues to coaches and administrators. The higher MRP represents this case since it includes extraction of value from athletes. If players were paid, that extra value no longer goes to coaches and administrators. The MRP of coaches and administrators falls to the lower function. The level of their services hired, and their wages, would follow the arrows.

Table 13-10College Games and Rights Fees

Table 13-11Standard Deviation Ration of Winning Percents and Conference Champions,Pac-10 and Big Ten, 1970-2008 (slide 1 of 4)

Rodney Fort's Sports Economics