chapter  3
48 Pages

Sports Franchises as Profit-Maximizing Firms

This chapter uses the tools of economics to analyze the behavior of the National Collegiate Athletic Association (NCAA), its member schools, and the athletes who participate in collegiate sports. Amateurism lies at the heart of intercollegiate athletics. After all, colleges and the NCAA spend considerable time, money, and energy reminding the public that intercollegiate athletics is an amateur undertaking. British attitudes toward education and athletics took root in American universities. The athletics arms race might also be expressed through expenditure on facilities. A study commissioned by the NCAA finds that the average annual expenditure on physical plant by an FBS university is $27 million, which actually exceeds the average operational expenditures. One can model it as a regulatory agency, as a club, and as a cartel that exercises monopoly and monopsony power. No one framework is always superior to the others, and which framework we choose can determine how we interpret a given action by the NCAA.