Jay Bilas asked me for a reading list of economic literature on the NCAA as a cartel. This is from a growing list I keep for whenever I get asked that question. if you have any additional recommendations, let me know and I’ll add them:
Arnold, Roger A., “Microeconomics,” 9th Edition. 2008.
“Many universities and colleges have banded together to buy the services of college-bound athletes. In other words, they have entered into a cartel agreement to reduce the monetary competition among themselves for college-bound athletes. The National Collegiate Athletic Association (NCAA) is the cartel or monopsony enforcer…
Barro, Robert J., “The Best Little Monopoly in America,” BusinessWeek, December 9, 2002.
“Finally, we come to the NCAA, which has successfully suppressed financial competition in college sports. The NCAA is impressive partly because its limitations on scholarships and other payments to athletes boost the profitability of college sports programs. But even more impressive is the NCAA’s ability to maintain the moral high ground… So given this great balancing act, the NCAA is the clear choice for best monopoly in America.”
Becker, Gary, “The NCAA as a Powerful Cartel,” The Becker-Posner Blog, April 3, 2011.
“It is impossible for an outsider to look at these rules without concluding that their main aim is to make the NCAA an effective cartel that severely constrains competition among schools for players.”
Becker, Gary “The NCAA: A Cartel in Sheepskin Clothing,” Business Week, September 14, 1987.
“Economists disagree about many things, but they strongly agree that cartels raise prices, lower outputs, and are bad for society. The effect on prices and output of explicit cartels like OPEC are direct and obvious. The harmful effects of cartels that hide behind the smokescreen of good intentions are more difficult to detect, especially when nonprofit institutions are involved. The NCAA is a prime example of such a cartel. It is time that all the NCAA’s restrictions on competition for athletes and sports revenues be declared an unlawful conspiracy in violation of the antitrust laws.”
Blair, Roger D. and Jeffrey L. Harrison, “Monopsony in Law and Economics,” 2010.
“The NCAA behaves like a collusive monopsony in acquiring two crucial inputs: student-athletes and coaches. As a result, it faces the usual problems confronted by all buyer cartels: deciding on payments, imposing hiring quotas, limiting nonprice competition, sharing the resulting profits, coordinating activities, and deterring cheating. The structure of the NCAA is designed to deal with all of these problems. The NCAA’s durability, resilience, and enormous success is proof of its ability to adjust as necessary to cope with the changing needs of its member institutors.” (pp. 190-191)
Brown, Robert W., “Measuring the Cartel Rents in the College Basketball Player Recruitment Market.” Applied Economics, Vol. 26, 1994, pp. 27-34.
“Economists view the National Collegiate Athletic Association (NCAA) as a cartel in college athletics.” (p. 27)
Byers, Walter and Charles Hammer, “Unsportsmanlike Conduct – Exploiting College Athletes,” 1995, p. 376.
“Collegiate amateurism is not a moral issue; it is an economic camouflage for monopoly practice.”
Farmer, Amy and Paul Pecorino. “Is the Coach Paid Too Much?: Coaching Salaries and the NCAA Cartel,” Journal of Economics & Management Strategy, Volume 19, Number 3, Fall 2010, pp. 841–862.
“That the NCAA functions as a cartel is widely accepted and several authors have written about the organization in this context.” (p. 845)
“Our model…captures important elements of the NCAA cartel. One of our key results concerns the effects of the cartel agreement to restrict player salaries on the salary of the coach. In particular, we find that this restriction will raise the coach’s salary, and if the recruiting ability of the coach is sufficiently high, the reduction in player salaries may be more than offset by the increase in the coach’s salary. Although the cartel would not persist in this extreme case, it raises the possibility that a significant portion of the cartel rents are dissipated via higher coaching salaries. Because the teams cannot compete openly via salary offers to the players, they compete indirectly via competition for talented coaches.” (p. 860)
Fizel, John, Elizabeth Gustafson, and Lawrence Hadley, “Sports Economics – Current Research,” 1999
“Koch (1971, 1973, 1978, 1983) offered the earliest, definitive, cartel interpretation. A compelling list of reasons why the NCAA is a cartel, rather than a franchise ‘joint venture,’ is given by Fleisher, Goff, and Tollison (1992) and we do not repeat it here. The idea seems so well-entrenched that economists in the popular press simply take it for granted (Becker, 1985, 1987; McCormick and Meiners, 1987; Barro, 1991) and Noll (1991) does not even pause to discuss it on his way to a full characterization of NCAA cartel behavior. Given all of this, plus the fact that a major argument against the monopsony power of colleges simply holds no water (detailed later), we go with the cartel view” (p.12)
Fizel, John and Rodney Fort, “Economics of College Sports,” 2004
“The majority of analysis of the NCAA discloses monopoly effects in relevant input and output markets affected. Though the results clearly demonstrate a powerful cartel, the organization itself is an anomaly. To date, analysis of the evolution of NCAA’s internal structure that effectively maintains this odd but very effective monopoly is limited” (p. 32).
Fleisher, Arthur A. III, Brian L. Goff & Robert D. Tollison, “The National Collegiate Athletic Association: A Study in Cartel Behavior,” 1992.
Grant, Randy R., John Leadley, and Zenon Zygmont, “The Economics of Intercollegiate Sports,” 2008
“Is there significant evidence of a cartel in college sports? For most economists, the answer is a clear yes” (p. 91).
Grant, Randy R., John C. Leadley, and Zenon X. Zygmont, “Just Win Baby? Determinants of NCAA Football Bowl Subdivision Coaching Compensation,” International Journal of Sport Finance, 2013, 8, pp. 61-67.
“[S]ports economists are particularly aware that marginal revenue product is influenced by the cartel-like market structure of the NCAA. Fleisher, Goff, and Tollison (1992), Zimbalist (1999), and Kahn (2006) provide empirical, historical, and theoretical support for the cartel perspective. One outcome of the NCAA cartel is that it creates rents for its member institutions. Some of these rents come from the monopsonistic labor market created by the cartel. There is no legal price competition for college athletes and the NCAA mandates and enforces price controls in the form of athletics scholarships. Since premier college athletes are not paid their marginal revenue product, there are significant rents left over and coaches may be adept at capturing a porfion of them (Humphreys, 2000).” (p. 67)
Humphreys, Brad R. and Jane E. Ruseski, “Monitoring Cartel Behavior and Stability: Evidence from NCAA Football,” Southern Economic Journal, Volume 75, Number 3, 2001, pp. 1-20.
“Most economists view the National Collegiate Athletic Association (NCAA) as a cartel operating as a monoposonist in the market for athletic recruits.” (p. 1)
Kahn, Lawrence M., “Markets: Cartel Behavior and Amateurism in College Sports,” Journal of Economic Perspectives, Vol. 21, 2007, pp. 209-226.
“Most economists who have studied the NCAA view it as a cartel that attempts to produce rents, both by limiting payments for inputs such as player compensation and by limiting output (for example, Alchian and Allen, 1972; Becker, 1987; Barro, 2002).” (p. 210)
“Computations such as these offer evidence that the NCAA does indeed use its cartel power to pay top athletes less than their market value (Fleisher, Goff, and Tollison, 1992; Zimbalist, 1999).” (p. 212)
Koch, James V., “A Troubled Cartel: The NCAA,” Law and Contemporary Problems, Vol. 38 (Winter/Spring), 1973, pp. 135-147.
“Despite the claims of the National Collegiate Athletic Association (NCAA) that it is a champion of amateur athletics and physical fitness in colleges and universities, the NCAA is in fact a business cartel composed of university-firms which have varying desires to restrict competition and maximize profits in the area of intercollegiate athletics.” (p. 135)
Koch, James V., “Intercollegiate Athletics: An Economic Explanation,” Social Science Quarterly, Vol. 64, No. 2, June 1983, pp. 360-374.
“The Foundation Argument: The NCAA as a Cartel:
… The NCAA is a cartel because it: (a) sets the maximum price that can be paid for intercollegiate athletes; (b) regulates the quantity of athletes that can be purchased in a given time period; (c) regulates the duration and intensity of usage of those athletes; (d) on occasion fixes the price at which sports outputs can be sold; (e) purports to control the property rights to activities such as the televising of intercollegiate football; (f) periodically informs cartel members about transactions, costs, market conditions, and sales techniques (Raiborn, 1982); (g) occasionally pools and distributes portions of the cartel’s profits; and (h) polices the behavior of its members and levies penalties against those members of the cartel who are deemed to be in violation of cartel rules and regulations.” (p. 361)
Lazaroff, Daniel E., “The NCAA in Its Second Century: Defender of Amateurism or Antitrust Recidivist?” Oregon Law Review, Vol. 86, No. 2, 2007, pp. 329-371.
“Commentators have explained that while the ‘original mission’ of the NCAA ‘focused on providing public goods’ by reducing violence and standardizing play, the NCAA ‘quickly turned its attention from standardizing rules to instituting the outlines of a cartel.’” (p. 331)
Monks, James, “Revenue Shares and Monopsonistic Behavior in Intercollegiate Athletics,” University of Richmond, September 2013, pp. 1-21.
“Despite the obvious popularity of college athletics and the huge revenues generated by the sales of tickets, television rights, and merchandise involved in college athletics, the NCAA and the universities involved have managed to operate college athletics as a tightly controlled and highly organized cartel. While sports leagues require a level of cooperation and coordination that is usually anathema to other competitive industries (see Symanski (2010) for a thorough analysis of exempting sports leagues from anti-trust legislation), due to the need to have other teams to play against and the perceived fan interest in team parity, the NCAA has also managed to restrain trade in the name of maintaining amateurism in college athletics.” (p. 1)
Peach, Jim, “College athletics, universities, and the NCAA,” The Social Science Journal 44, 2007, pp. 11-22.
“If there were no NCAA restrictions on financial aid or academic eligibility standards, several things would probably occur. First, alumni would probably donate more to college level athletics programs without the NCAA restrictions. That is, they could donate freely either to the athletes or to the institutions of higher learning with an expectation that the money would be spent to improve their favorite team.
Second, student athletes would probably be paid more than they are paid under the current system. Indeed it is likely that if the NCAA financial restrictions were not in place, colleges and universities would need to compete openly with financial incentives for the services of prospective student athletes.
Third, there is little evidence that the NCAA rules and regulations have promoted competitive balance in college athletics and no a priori reason to think that eliminating the rules would change the competitive balance situation.”
Pindyck, Robert S. and Daniel L. Rubinfeld, “Microeconomics,” Eighth Edition, 2013, pp. 480-481.
“The profitability [of intercollegiate athletics] is the result of monopoly power, obtained via cartelization. The cartel organization is the National Collegiate Athletic Association (NCAA). The NCAA restricts competition in a number of important ways. To reduce bargaining power by student athletes, the NCAA creates and enforces rules regarding eligibility and terms of compensation. To reduce competition by universities, it limits the number of games that can be played each season and the number of teams that can participate in each division.” (p. 481).
Posner, Richard, “Monopsony in College Athletics,” The Becker-Posner Blog, April 3, 2011.
“The National Collegiate Athletic Association behaves monopsonistically in forbidding its member colleges and universities to pay its athletes. Although cartels, including monopsonistic ones, are generally deemed to be illegal per se under American antitrust law, the NCAA’s monopsonistic behavior has thus far not been successfully challenged.”
Rascher, Daniel A. and Andrew D. Schwarz, “Neither Reasonable nor Necessary: ‘Amateurism’ in Big-Time College Sports,” Antitrust, Spring 2000, pp. 51-56.
“Each conference, then, could choose a common wage regime, and within that conference, the necessary balance for the creation of a team sport would be maintained, without the need for an overarching super-cartel to control the entire market for college-age athletes”
Rosner, Scott R. and Kenneth L. Shropshire, “The Business of Sports,” 2004.
(p. 472) “The NCAA is a reasonably effective, though somewhat unstable, cartel because it:
(1) sets that maximum price that can be paid for intercollegiate athletes;
(2) regulates the quantity of athletes that can be purchased in a given time period;
(3) regulates the duration and intensity of usage of those athletes;
(4) occasionally fixes the price at which sports output can be sold;
(5) periodically informs its members about transactions, costs, market conditions, and sales techniques;
(6) occasionally pools and distributes portions of the organization’s profits; and
(7) policies the behavior of its members and assesses penalties upon those deemed to have broken the organization’s rules.”
Sherman, Geoffre Neil, “The NCAA as a Cartel: Ensuring Its Existence. A Revisionist History,” Indiana University, 2008
"The focus of this study is on the historical record and evolution of the intercollegiate athletic cartel… With that framework developed, the focus shifts to specific events that strengthened and weakened the cartel and the legal challenges the NCAA has faced. … Finally, analysis of the relevant case law and judicial opinions concerning the NCAA and its function as a cartel will establish the fundamental support for the NCAA cartel at the highest judicial levels.”
Sperber, Murray, “Onward to Victory – The Crises that Shaped College Sports,” 1998.
“In spite of the postwar popularity of intercollegiate athletics, almost every participating school was losing money, leading one economist to conclude that the main motivation for the July 1946 meeting was ‘to cut costs’ by reducing ‘competition for student-athletes among schools,’ i.e., to establish a set of rules on college sports, notably on recruiting expenses and remuneration to athletes; empower a national organization—the NCAA—to enforce the rules; and, by means of this ‘economic cartel,’ manage to ‘control costs’ and achieve profitability” (p. 172).
“One economic historian saw this subtext as the associations’ real agenda in the ‘Purity Code,’ terming it ‘the NCAA’s strongest effort to date to eliminate the cut throat [money] competition among its members for student-athletes’ and a crucial step toward establishing the NCAA as ‘an economic cartel’” (p. 177).
Tollison, Robert D., “To Be or Not to Be: The NCAA as a Cartel,” pp. 339-348 in “The Oxford Handbook of Sports Economics, Volume 1: The Economics of Sports,” 2012, (ed. Kahane, Leo H. and Stephen Shmanske), here: pp.341-342.
“[A] convincing prima facie case that the NCAA is a cartel can be derived from the explicit behavior of the NCAA. The open collusion among schools extends far beyond rules standardization, scheduling, and the like.” (p. 341)
“The available evidence of price fixing, output controls, compensation of athletes below their MRPs, the absence of regulation of brand-name and capital assets, and so on, taken together, indicate cartel behavior.” (p. 342)
Tollison, Robert D., “Understanding the Antitrust Economics of Sports Leagues,” Antitrust, Spring 2000, pp. 21 – 24.
“Commonly, the NCAA is viewed as a benign administrator of the rules of college athletics. This perspective recognizes many of the problems and perverse outcomes that result from NCAA rules and actions; yet these outcomes are usually attributed to the short-sightedness, ignorance, or greed of certain elements within the organization. In contrast, economists generally view the NCAA as a cartel. They hold this view because the NCAA has historically devised rules to restrict output (the number of games televised) and to restrict competition for inputs (student-athletes). Economists have focused primarily on the input market, where monopsonistic aspects of NCAA behavior are evident. NCAA rules concerning recruiting and financial aid are seen as transferring rewards from players to schools and coaches, and the rules are seen as an expression of an agreement among buyers to restrict competition for inputs. These points are well established in the literature, and indeed, it could be observed that the NCAA has obtained much more durable returns on its cartel behavior than other, more notable cartels such as OPEC.” (p 22)
Yost, Mark “Varsity Green: A Behind the Scenes Look at Culture and Corruption in College,” Stanford University Press, Dec 3, 2009
“The NCAA’s front business is amateurism… They have an academic term to describe the NCAA that implies its predatory behavior: it’s called a cartel. And for the remainder of this chapter, that’s how we’ll refer to the NCAA.” (p. 159-160)
Zimbalist, Andrew, “Unpaid Professionals – Commercialism and Conflict in Big-time College Sports,” 2001.
“Big-time intercollegiate athletics is a unique industry. No other industry in the United States manages not to pay its principal producers a wage or salary. Rather than having many competing firms, big-time college sports is organized as a cartel, like OPEC, through the NCAA” (p. 6).
A Contrary View
McKenzie, Richard B. and E. Thomas Sullivan, “Does the NCAA exploit college athletes? An economics and legal reinterpretation” 32 Antitrust Bull. 373, 1987, pp. 373-399.
“This cartel theory relies on the uncritical acceptance of an unfounded presumption that 850 or more colleges can form through the NCAA an effective, workable cartel that can be maintained even without legal restrictions barring entry into the athletic labor markets by other sports associations that permit competitive wage payments to athletes.” (p. 376)
“In other words, the proponents of the cartel theory fail to explain how any effective, exploitive sports cartel can be maintained in the long run in the absence of forced membership or barriers to exit from the NCAA by member colleges and barriers to entry into the sports market by alternative sports associations.” (p. 385)
“There is nothing in our argument that suggests that the NCAA member colleges should not make payments over and above tuition, room and board. Our thesis is simply that market forces can be expected to determine the extent of payment. (As this article was being completed, the NCAA was preparing to consider at their scheduled January 1986 meeting a proposal to allow Division 1-A colleges to make modest payments of $50 to $100 a month to their athletes to cover laundry and similar expenses.) A requirement that the NCAA be forced to allow payments of any particular amount, or through the abolition of rules against bidding for athletes, is misguided.” (p. 376)