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Who Profits From Amateurism? Rent-Sharing in Modern College Sports (WP-20-42)

Craig Garthwaite, Jordan Keener, Matthew Notowidigdo, and Nicole Ozminkowski

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. The researchers characterize these economic rents using comprehensive revenue and expenses data for college athletic departments between 2006 and 2019, and they 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, they 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, the researchers calculate a wage structure for college athletes using the collective bargaining agreements in professional sports leagues as a benchmark. They also discuss how their results help understand how universities have responded to recent threats to these rents arising from litigation, legislation, and the global coronavirus pandemic.

Craig Garthwaite, Associate Professor of Strategy and IPR Associate, Northwestern University

Jordan Keener, Department of Economics, University of Michigan

Matthew Notowidigdo, Professor of Economics, University of Chicago

Nicole Ozminkowski, Department of Economics, Northwestern University

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