Saturday, May 3, 2008
Posted by D. Daniel Sokol
Amy Farmer (University of Arkansas at Fayetteville - Department of Economics) and Paul Pecorino (University of Alabama - Department of Economics, Finance and Legal Studies) ask Is the Coach Paid Too Much? Coaching Salaries and the NCAA Cartel.
ABSTRACT: Recently a great deal of controversy has been generated from the salaries earned by head football coaches in the NCAA. On one level this seems odd since many figures in the world of sports and entertainment earn exceptionally high salaries. However, one important difference in the case of NCAA football is that the players themselves do not get paid. We develop a model which shows that a cartel agreement to not pay the players raises the coach's salary if some players choose where to play based on the identity of the coach. For some parameters, the gain in the coach's salary exceeds the loss in salary experienced by the player. On average, the agreement not to pay the players improves competitive balance.