Sportsgeekonomics

Musings on Sports Economics

Pasta Collusion

May 10, 2013

Violation: Three current student-athletes received food in excess of NCAA regulation at a graduation banquet. The three had graduated from the school but returned for an additional season of competition. The players were provided pasta in excess of the permissible amount allowed. Resolution: The three were required to donate $3.83 each (the cost of the pasta serving) to a charity of their choice in order to be reinstated. The department provided rules education to applicable athletics department staff members.

(From http://newsok.com/oklahoma-releases-list-of-self-reported-ncaa-violations/article/3934985/?page=2  h/t Stewart Mandel

Posted by
Andy Schwarz

More Iowa Astonishment (Summary: Markets are Good, Unless You’re an Athlete)

Another 3 minutes of video from the Iowa & Iowa State ADs just makes my earlier Deadspin piece even more astonishing.

In this post Gary Barta (Iowa) and Jamie Pollard (Iowa State) explain how

(a) they know perfectly well how to price differently when the market requires it.

(b) they recognize that competition allows employees to earn their full market value and that if competition were ended by NCAA-wide agreement, collusively set pay would be lower.

(c) That Iowa transfers $10 million dollars from Athletics to the University in the form of GIAs (which almost always contain a healthy dose of profit in addition to covering any costs). (See this piece for one such example)

(d) how the market rate for non-revenue volleyball coaches has been inflated by the cartel rents (i.e., money they don’t pay athletes) sloshing around college programs.  This is a form of Gold-plating and it is a classic way to take profits and turn them into accounting losses. FBS schools are awash in gold-plating of their non-revenue sports!

(e) That coaches and facilities spending is justified because it used to recruit talent they cannot recruit with direct market payments.

(f) that the indirect benefits of college sports include massive economic benefits to communities and because coaches, rather than athletes, are competing in a market economy, they capture some of that benefit.

I wonder why they don’t tell the reporter that coaches’ pay is too complex to differ by sport, to differ between Division I and Division III, to differ among Division III athletes, to explain that the University can’t afford to pay market rates for coaches and so they have to collude, that after they pay their male coaches there is no money left for women’s scholarships under Title IX, etc.  No, they just deal with the market realities and fit within the rules and adjust.  Turns out $456,992 can buy a lot of market savvy when it needs to be turned on.

Posted by
Andy Schwarz

A quick follow up to my Deadspin post

Deadspin published my recent analysis of the Iowa athletic department’s differential spending on coaching pay and the contrast with the statements of Iowa A.D. Gary Barta’s comments that because figuring out how to do the same for athletes would be too “complex” he would leave his high-paying job rather than undertake that task.  You can read it here: http://regressing.deadspin.com/iowa-ad-paying-players-is-too-complicated-for-me-and-m-1524540190

As a follow up, I wanted to add two things.

First, I just wanted to point out how much of a straw-man some of the Barta logic is.  His first question is whether Division III would have to play be the same rules as Division I. (“Do you pay the Division III football player as an employee?”)

But as I hope would be clear, Iowa’s A.D. doesn’t need to decide D-III questions to act on his own regarding his own students.  In a world where Iowa faced a choice as to whether and how much to pay its recruited athletes to choose Iowa over, say, Missouri, the choices that Division III schools make wouldn’t matter and certainly don’t need to be decided before Iowa can make its own best business judgment.

And second, and more pleasantly, Andrew Batt of Iowa Press Tv was kind enough to email me a link to the video in which Barta and Jamie Pollard, his Iowa State counterpart, made their comments.  It’s here: http://www.youtube.com/watch?v=M0Z3y7npkro&list=PLvrLtntb03x9pW2N1NFAZhj1wVDSjJAxL&index=3

Posted by
Andy Schwarz

Irony: Arizona Athletics pays students to watch football games played by athletes they agree not to pay under the guise that it makes them more like students

From a piece on student attendance by Darren Rovell:

Since taking the job in 2010, Arizona’s athletic director Greg Byrne says he actively has to push students to not only get to the game, but also stay there once they arrive. After he saw defections at halftime, the message on the back of shirts given to the students called the Zona Zoo this year was as blatant as he could make it: “Zona Zoo STAYS the entire game.”

He moved the band closer to the student section, brought in a group of people called the Zona Zoo Crew to keep people at the game and then actually decided to give away cash prizes, which students could only claim their prize after the game ended.

For its first two home games, the school gave away a total of $5,000 that was to be equally split among 10 student fans. Even that wasn’t a complete success, as three of the $500 prizes went unclaimed.

Posted by
Andy Schwarz

"No One Put a Gun to Their Heads" continued

Ex-Diamond Electric Execs Get Prison Time For Parts Cartel

Two former top executives at Japan’s Diamond Electric Mfg. Co. Ltd. have agreed to plead guilty and serve more than a year in prison for their roles in a global plot to hike the price of ignition coils, the U.S. Department of Justice said Friday.

The idea that you can always choose not to deal with a price-fixer, and thus it’s ok to price fix just isn’t consistent with the law.  No one put a gun to anyone’s head and made them buy ignition coils from Diamond Electric Mfg. Co. Ltd., but now two people are going to jail for price fixing.

Posted by
Andy Schwarz

Slightly More Complex Title IX analysis: Is football associated with more or less spending on women’s athletics

Previously,  I put out a simple chart showing that in 2011-12, D1 with football averaged 75 more women playing sports, showed $500,000 more in the list price of scholarships for women, and listed $2.7mm more in expenses for women’s sports, in total, than schools without football.

That chart looked like this:image

I also took a look at the same figures on a  per-participant basis, which showed the following:

image

Being a curious person, I wondered whether FCS schools, the portion of Division 1 with football but outside of the top (FBS) tier, acted more like their football peers in FBS, or like their non-football peers in Division 1.  I kind of suspected that the answer was that FCS looks more like the non-football schools, biut here is the data-driven answer, where I’ve added four sub-categories capture the distinctions within FBS and between FBS and FCS:

image

and for the sake of completeness, here is the same analysis on a per-participant basis:

image

With this breakdown, it’s pretty clear to see that FCS schools tend to fall mid-way between FBS and no-football schools in terms of participants, but fund those women’s scholarships far less generously than FBS or even schools without football.  The result thus stands out when you look on a per-participant basis.  Within FBS, as you’d expect, the schools in the (then) six power conferences have substantially more female athletes, provide a higher nominal value of scholarships, and spend far more in total on women’s sports.

Questions for the reader:

  • Does having a football team *cause* a school to have more slots open for women to participate in intercollegiate sports?
  • Does having a football team have any bearing on the amount of scholarship aid given to female athletes?
  • Which drives overall funding of women’s sports, football or revenue?  How would you extend this analysis to test this proposition empirically?

(Thanks to @LehighFootballNation for suggesting that the spending per participant would also be an interesting way to think about these data.)

Posted by
Andy Schwarz

Simple Title IX analysis: Is football associated with more or less spending on women’s athletics

(Please see my improved and extended version of this analysis at http://sportsgeekonomics.tumblr.com/post/74316513867/slightly-more-complex-title-ix-analysis-is-football)

Using 2012 EADA data, I divided D1 into schools with and without football.  This is what I found:

image

Without making any statements about causation, this shows that schools with football average 75 more women playing sports, show $500,000 more in the list price of scholarships for women, and list $2.7mm more in expenses for women’s sports, in total, than schools without football.


UPDATE: I got a good comment from @LehighFootballNation who suggested that the spending per participant would also be an interesting fact, and so here it is — you’ll see that the amount the schools list for scholarships (which isn’t the same as what it actually costs) is higher per participant for schools without football, but total expenses are lower.

image

Posted by
Andy Schwarz

Title IX in its own words

I get asked about Title IX a lot, and I also see people making claims that I think are false.  I also wrote about Title IX in my recent Slate piece, where I made clear that I’m not a lawyer or an expert on Title IX and that much of what I write about is not the law itself, but the empirical data as to how the world where Title IX holds sway actually works.

In this post, I thought it would be helpful to list the key legal points from the Department of Education (DoE) re: Title IX that I use as a framework when thinking about the economics of Title IX.  These aren’t my opinions — these are more-or-less verbatim statements by the DoE or a Federal Court.  I’ve sourced each one to the DoE policy letter or court case that is the basis for my assertions of how the law has been interpreted in the past.

Title IX (as applied to college sports) is primarily about equality of opportunity for athletic participation. 

The Title IX regulation provides that if an institution sponsors an athletic program it must provide equal athletic opportunities for members of both sexes. Among other factors, the regulation requires that an institution must effectively accommodate the athletic interests and abilities of students of both sexes to the extent necessary to provide equal athletic opportunity.

The DOE has made a three-prong test to determine whether a school is compliant.  The first prong is the simplest — is the male/female (M/F) ratio of the athletic department “substantially proportionate” to the M/F ratio of the undergraduate population? (as show below, the DoE interprets “substantially proportionate” to be within one percentage point of a comparison ratio).

Alternatively, two other prongs exist to show compliance.  One is that all of the demand for sports of the under-represented gender have been met.  This usually requires a survey to show that basically there is no member of the under-represented gender (typically a woman) on campus who wants to play intercollegiate sports but is not able to find a space.  And the other is a  “progress” standard, which basically seems to amount to a requirement that the number of women participating has been increasing (at least increasing monotonically, i.e., either flat or up) each year.

Anyway to see the original source material on the three-prong standard, head to http://www2.ed.gov/about/offices/list/ocr/docs/clarific.html#two which states:

The 1979 Policy Interpretation provides that as part of this determination OCR will apply the following three-part test to assess whether an institution is providing nondiscriminatory participation opportunities for individuals of both sexes:

  1. Whether intercollegiate level participation opportunities for male and female students are provided in numbers substantially proportionate to their respective enrollments; or
  2. Where the members of one sex have been and are underrepresented among intercollegiate athletes, whether the institution can show a history and continuing practice of program expansion which is demonstrably responsive to the developing interests and abilities of the members of that sex; or
  3. Where the members of one sex are underrepresented among intercollegiate athletes, and the institution cannot show a history and continuing practice of program expansion, as described above, whether it can be demonstrated that the interests and abilities of the members of that sex have been fully and effectively accommodated by the present program.

44 Fed. Reg. at 71418.

Thus, the three-part test furnishes an institution with three individual avenues to choose from when determining how it will provide individuals of each sex with nondiscriminatory opportunities to participate in intercollegiate athletics. If an institution has met any part of the three-part test, OCR will determine that the institution is meeting this requirement.

To relate this to my own summary above, (1) is the idea that participation must be proportional to the undergraduate population.  DoE expanded on this, saying:

Part One: Are Participation Opportunities Substantially Proportionate to Enrollment?

Under part one of the three-part test (part one), where an institution provides intercollegiate level athletic participation opportunities for male and female students in numbers substantially proportionate to their respective full-time undergraduate enrollments, OCR will find that the institution is providing nondiscriminatory participation opportunities for individuals of both sexes.

But the DoE makes it clear that proportionality of participation is just one way to comply with the laws requirement of nondiscriminatory participation opportunities:

institutions need to comply only with any one part of the three-part test in order to provide nondiscriminatory participation opportunities for individuals of both sexes. The first part of the test—substantial proportionality—focuses on the participation rates of men and women at an institution and affords an institution a “safe harbor” for establishing that it provides nondiscriminatory participation opportunities. An institution that does not provide substantially proportional participation opportunities for men and women may comply with Title IX by satisfying either part two or part three of the test.

(2) is the idea that opportunities have been generally expanding rather than contracting.  Per DoE:

OCR will review the entire history of the athletic program, focusing on the participation opportunities provided for the underrepresented sex. First, OCR will assess whether past actions of the institution have expanded participation opportunities for the underrepresented sex in a manner that was demonstrably responsive to their developing interests and abilities…. There are no fixed intervals of time within which an institution must have added participation opportunities. Neither is a particular number of sports dispositive. Rather, the focus is on whether the program expansion was responsive to developing interests and abilities of the underrepresented sex. In addition, the institution must demonstrate a continuing (i.e., present) practice of program expansion as warranted by developing interests and abilities.

(3) is the idea of meeting all demand.  According to DoE:

Under part three of the three-part test (part three) OCR determines whether an institution is fully and effectively accommodating the interests and abilities of its students who are members of the underrepresented sex — including students who are admitted to the institution though not yet enrolled. … OCR will determine whether there is sufficient unmet interest among the institution’s students who are members of the underrepresented sex to sustain an intercollegiate team. OCR will look for interest by the underrepresented sex as expressed through the following indicators, among others:

  • requests by students and admitted students that a particular sport be added;
  • requests that an existing club sport be elevated to intercollegiate team status;
  • participation in particular club or intramural sports;
  • interviews with students, admitted students, coaches, administrators and others regarding interest in particular sports;
  • results of questionnaires of students and admitted students regarding interests in particular sports; and
  • participation in particular in interscholastic sports by admitted students.

… An institution may evaluate its athletic program to assess the athletic interest of its students of the underrepresented sex using nondiscriminatory methods of its choosing. Accordingly, institutions have flexibility in choosing a nondiscriminatory method of determining athletic interests and abilities provided they meet certain requirements. See 44 Fed. Reg. at 71417. These assessments may use straightforward and inexpensive techniques, such as a student questionnaire or an open forum, to identify students’ interests and abilities. Thus, while OCR expects that an institution’s assessment should reach a wide audience of students and should be open-ended regarding the sports students can express interest in, OCR does not require elaborate scientific validation of assessments.

So that is how the DoE tests whether a school is providing equality of opportunity with respect to athletic participation.  Then, separately, there is a question of proportionate funding.  This is not part of the three-part test; rather it takes participation levels as a given (regardless of which prong was used to pass the equality of participation opportunity test) and then asks whether scholarship aid is being provided proportionally to those levels of participation. 

In 1998 Bowling Green State University (of Ohio) asked for clarification as to how the financial piece works.  The DoE responded that  regardless of how you manage to comply with the participation rules, whether by proportionality, progress, or meeting all demand from the underrepresented gender, you also have to ensure that your “scholarship aid” is “substantially proportionate” to your participation.   The specific DoE language was put into a letter available at http://www2.ed.gov/about/offices/list/ocr/docs/bowlgrn.html:

This is in response to your letter requesting guidance in meeting the requirements of Title IX, specifically as it relates to the equitable apportionment of athletic financial aid.,

The Policy Interpretation does not require colleges to grant the same number of scholarships to men and women, nor does it require that individual scholarships be of equal value. What it does require is that, at a particular college or university, “the total amount of scholarship aid made available to men and women must be substantially proportionate to their [overall] participation rates” at that institution. Id. at 71415. It is important to note that the Policy Interpretation only applies to teams that regularly compete in varsity competition. Id. at 71413 and n. 1.

Note also two items I often mention.  Title IX “does not require colleges to grant the same number of scholarships to men and women, nor does it require that individual scholarships be of equal value."  People make this mistake all the time.  But it doesn’t take a law degree to read the DoE’s own policy language and see that the claim that every man and every woman must receive a scholarship of equal value is simply not true.  (As I always mention to people, the moment you realize that all football players are on a “full scholarship” and most women athletes are on a “partial scholarship,” you know that isn’t a requirement)

When the DoE says “substantially proportionate” they mean a ratio within 1 percentage point of the other ratio:

In order to ensure equity for athletes of both sexes, the test for determining whether the two scholarship budgets are “substantially proportionate” to the respective participation rates of athletes of each sex necessarily has a high threshold. The Policy Interpretation does not, however, require colleges to achieve exact proportionality down to the last dollar. The “substantially proportionate” test permits a small variance from exact proportionality. OCR recognizes that, in practice, some leeway is necessary to avoid requiring colleges to unreasonably fine-tune their scholarship budgets.

When evaluating each scholarship program on a case-by-case basis, OCR’s first step will be to adjust any disparity to take into account all the legitimate nondiscriminatory reasons provided by the college, such as the extra costs for out-of-state tuition discussed earlier. If any unexplained disparity in the scholarship budget for athletes of either gender is 1% or less for the entire budget for athletic scholarships, there will be a strong presumption that such a disparity is reasonable and based on legitimate and nondiscriminatory factors. Conversely, there will be a strong presumption that an unexplained disparity of more than 1% is in violation of the “substantially proportionate” requirement.

The other item embedded in this interpretation is that the policy of financial proportionality talks specifically about “scholarships” and “scholarship aid.”  Because the issue has never been addressed, there is no specific language (at least that I am aware of — if you know if, by all means, let me know!!) that says anything about payments to athletes outside of “scholarship aid.”  So, for example, if athletes were hired as employees and paid a salary, I do not believe Title IX would necessarily require financial proportionality there.  Indeed, when Marianne Stanley sued USC because her salary as the women’s basketball coach was lower than the salary of her men’s basketball coaching counterpart, George Raveling, a Federal Court said that as long as the duties of a male coach differ from those of a female coach, unequal pay is ok.  Included in this logic was the idea that different levels of revenue-generation can create different pay scales:

We agree with the district court in Jacobs that revenue generation is an important factor that may be considered in justifying greater pay. We are also of the view that the relative amount of revenue generated should be considered in determining whether responsibilities and working conditions are substantially equal. The fact that the men’s basketball team at USC generates 90 times the revenue than that produced by the women’s team adequately demonstrates that Coach Raveling was under greater pressure to win and to promote his team than Coach Stanley was subject to as head coach of the women’s team….

In the instant matter, the uncontradicted evidence shows that Coach Raveling’s responsibilities, as head coach of the men’s basketball team, differed substantially from the duties imposed upon Coach Stanley.

Coach Stanley contends that the failure to allocate funds in the promotion of women’s basketball team demonstrated gender discrimination. She appears to argue that USC’s failure to pay her a salary equal to that of Coach Raveling was the result of USC’s “failure to market and promote the women’s basketball team.” The only evidence Coach Stanley presented in support of this argument is that USC failed to provide the women’s team with a poster containing the schedule of games, but had done so for the men’s team. This single bit of evidence does not demonstrate that Coach Stanley was denied equal pay for equal work. Instead, it demonstrates, at best, a business decision to allocate USC resources to the team that generates the most revenue.3

Other DoE policy statements also focus specifically on “Financial Assistance” and specifically say this only applies “To the extent that a college or university provided athletic scholarships.”  

FINANCIAL ASSISTANCE

To the extent that a college or university provided athletic scholarships, it is required to provide reasonable opportunities for such awards to members of each sex in proportion to the participation rate of each sex in intercollegiate athletics. This does not require the same number of scholarships for men and women or individual scholarships of equal value.

However, the total amount of assistance awarded to men and women must be substantially proportionate to their participation rates in athletic programs. In other words, if 60 percent of an institution’s intercollegiate athletes are male, the total amount of aid going to male athletes should be approximately 60 percent of the financial aid dollars the institution awards.

Similarly, there is no language discussing the payment of royalties, such as for (say) the use of players’ photographs on trading cards.  This doesn’t mean Title IX could be interpreted to mandate equality of royalties (or as two Title IX experts have suggested, perhaps equality of royalty RATES), but it also means that there might be no Title IX implications at all.  It is, as they say, an open question.

In any event, to summarize,

  • Title IX offers three ways to comply with respect to participation,
    • Substantial proportionality with the male/female ration on campus;
    • Continued progress in offering opportunities to women;
    • Meeting the demand for opportunities of all interested women on campus.
  • Title IX does not require that individual men’s and women’s scholarships be equal.
  • Title IX does not require equal overall funding to men and women’s sports.
  • Title IX does require that scholarships/financial aid be substantially proportional to participation.
  • Title IX is silent with respect to issues of athlete royalty.
  • Title IX has been ruled not to require equality of pay, esp. when the payment involves different duties or “a business decision to allocate… resources to the team that generates the most revenue.”

So, on the internet, people sometimes say “Correct me if I’m wrong,” but they don’t really mean it.  But I really do.  If you know a lot about Title IX, and you can point to legal precedent or DoE policy statements or even the policy as implemented by specific schools to contradict or improve any of this, please correct me if I am wrong.  I really, really would welcome it.  If I am wrong on any of this, help me fix it.  With that said, as I am pointing to specific and fairly clearly DoE policy statements and legal precedents, I don’t think I am wrong.  But I truly welcome help in refining and improving my understanding, and I will welcome it even more if it can point me to the specific source language on which your interpretation is based.  If there is a court decision or DoE policy letter to back up your view, get in touch and I will make an update to this post and give you public thanks and credit.

Update:

Welch Suggs, Professor of Journalism at University of Georgia, and expert on college sports issues, pointed out (down in the comments) that while I’ve addressed the participation and financial aid portions of Title IX as it related to college sports, I did not address what he calls the “catchall of ‘treatment.’”

In Professor Suggs’ words:

Treatment covers a wide variety of topics, but the reg basically states (I’m too lazy to look up the exact language) that male and female teams must be treated equitably. This is measured on what’s called the “laundry list” of issues, including access to facilities, practice times, uniforms and equipment, coaching (including coaching salaries), access to tutors, etc.

Prof. Suggs is right, and this is the so-called laundry list from the Title IX regulations:

(2) Provision and maintenance of equipment and supplies;

(3) Scheduling of games and practice times;

(4) Travel and per diem expenses;

(5) Opportunity to receive coaching and academic tutoring;

(6) Assignment and compensation of coaches and tutors;

(7) Provision of locker rooms, practice and competitive facilities;

(8) Provision of medical and training services and facilities;

(9) Provision of housing and dining services and facilities; and

(10) Publicity

(I don’t know why, but point (1) is blank in the original)

Now, those of you out there who have seen the waterfall locker room at Alabama, or know that in 2009-10, men’s sports coaches at Alabama earned an average of $1.1 million while the average salary for coaches of women’s sports was a bit less, $153,181, might wonder exactly how the actual practice in the world matches these regulations.  Or, for example how “publicity” is the same between the Kentucky men’s basketball and women’s basketball teams.  But  Welch is correct to point out these regulations exist and may be important to any future analysis.

Prof. Suggs then added:

Participation has always been the major issue in Title IX complaints and litigation at the college level, although there have been cases brought that involved treatment issues (the LSU case comes to mind). Treatment, however, has been a major issue in high school cases. A number of complaints have been brought over disparities between baseball and softball fields, for example.

If you need a resource on Title IX, at the risk of tooting my own horn I’d suggest my book A Place on the Team: The Triumph and Tragedy of Title IX. It came out in 2005, but there haven’t been many changes in Title IX policy and practice since then.

I just ordered Welch’s book from amazon (http://www.amazon.com/Place-Team-Triumph-Princeton-paperbacks/dp/0691128855/ref=sr_1_1_bnp_2_pap?ie=UTF8&qid=1389500626&sr=8-1&keywords=A+Place+on+the+Team%3A+The+Triumph+and+Tragedy+of+Title+IX  ) and  I plan to read it next week!

Posted by
Andy Schwarz