Musings on Sports Economics

Myth 4: If we set up a system where rich schools make larger scholarship offers than poor schools, there will be no competitive balance. Only the big “Have” programs will get talent and the “Have Nots” will be left outside looking in.

(Previous Myth)

There are two problems with this argument.  The first is that it assumes that currently the “Have Not” schools somehow grab an equal share of talent.  They do not.  “Haves” recruit great players and consistently win.  Have-Nots get the leftovers and occasionally luck into hidden gems who gel as seniors and win. 


Kentucky started its 2010-2011 men’s basketball season against Eastern Tennessee State University (“ETSU”).  I would like to see evidence that Eastern Tennessee State has ever successfully recruited an athlete who was also offered a scholarship by Kentucky.  Alabama started its 2010 football season against San Jose State and will start the 2011 season against Kent State, but what top recruit would spurn an offer from Alabama to attend San Jose or Kent? 


The current collusive cap on wages has not in any way created a level playing field with respect to the distribution of talent.  We don’t need to speculate; the proof is in the numbers.  Over the last ten years, more than 99% of the Top 100 high school prospects chose BCS AQs.    



The myth then points to the successes of Cinderellas and asks “What about Butler and VCU?”  How could that happen if we let Duke and UConn buy up all the talent?  But again, we already do let Duke and UConn, and their brethren, buy up all the talent.  The amazing and wonderful thing about college sports (basketball in particular) is that despite this massive imbalance in who gets the most talented players, sometimes a bunch of athletes who were overlooked or underrated in high school can find a home at a less prestigious athletic program and turn it into a Cinderella, like the great George Mason Final Four team of 2005-06 or the back-to-back Butler Bulldog teams of 2009-10 and 2010-11.[2]   But those schools achieved greatness despite having second choice of talent.  If a player is looking at a school primarily as a place to play very high level college sports, Duke doesn’t need to offer cash to win a recruiting war with George Mason, it just has to make a scholarship offer.  It doesn’t take money for a “Have” to steal talent from a “Have Not” – it just takes interest.


On the other hand, if George Mason wants to win a recruiting war with Duke, it’s probably doomed under the current system.  Letting Have-Nots use cash is actually the best way to overcome the current unlevel playing field.  If we allowed schools to choose how much to offer a player, a current “Have Not” college could use money to steal a player or two from the “Haves” and help begin the climb to the ranks of the elite.  If the alumni of ETSU want to fund a powerhouse basketball program, currently they have no dimension on which they can outshine Kentucky.  But if they could offer Kentucky recruits $50,000 a year to come to ETSU, they might start winning those recruiting battles frequently enough to become more, not less, competitive with Kentucky. 


Finally, it’s important to note that the comparative parity of men’s basketball is achieved despite the current compensation system, not because of it.  The reason we see men’s Final Fours with VCUs and Butlers is because the U.S. produces an amazing amount of high school boys with basketball talent, so that even after all of the big schools get the all the stars they can handle, there are still plenty of almost-stars to go around.  Contrast this with women’s basketball where there is a greater disparity between the talent among the top tier of recruits and the rest, such that once UConn, then Tennessee, and then Stanford are done, and then once their big conference companions like Notre Dame and Texas A&M finish, there are basically no great women’s players left for Butler.  For the last ten years, no school from outside the BCS AQ conferences has made the Women’s Final Four.  Since women’s basketball also involves the same national collusion on athlete compensation, but does not achieve even the slightest level of nationwide competitive balance, it can’t possibly be the agreement itself that is generating men’s parity.


And let’s remember that even in men’s basketball, the parity in outcomes is somewhat illusory.  Over the period 1985-2006, 91% of the final AP Top 25[3] in football consisted of schools in the six power conferences.  83% of the teams in the men’s basketball Sweet Sixteen from 1985-2006 and 92% of the teams in the Final Four were from those same six conferences.[4]  It seems we are not getting very much competitive balance from our nationwide collusion and not much bang for the athletes’ sacrificed buck.

(Next Myth)

[1] I created this chart from based on data obtained from - 

[2] Notice that my examples of Cinderellas both come from basketball.  Basketball lends itself better to scrawny seventeen-year-olds blooming into excellent twenty-one-year-olds such that diamonds in the rough can shine at lesser schools.  Also the sport needs only five active players at a time, so one impact player can change the fortunes of a school in a way that rarely happens in football.  As our current system shows, the best teams get the best players and the best players perform the best.  There is no way for a football team to become a powerhouse without spending money to get better players, whether that’s under the current system, where the money is spent on coaches and fancy facilities, or under a market system, where some of the money would be spent on the talent.

[3] Or Top 20 for years prior to 1989 where ranks 21-25 were not officially assigned.  See Patrick L. Dunn, Past Final AP Polls, RSFC (last visited June 24, 2011),

[4] See Mark Nagel, Matt Brown, & Chad McEvoy, Exploring the Myth that a Better Seed in the NCAA Men’s Basketball Tournament results in an ex ante Higher Payout, Sport Management Association of Australia and New Zealand, November 2007.

Posted by
Andy Schwarz

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