Abstract
I recommend Big-Time Sports in American Universities by Charles T. Clotfelter, Professor of Economics and Public Policy at Duke University, without reservation. This is a book about higher education not sports. However, the book earns him special bragging rights in the sports economics literature and deserves careful attention by anybody thinking seriously, and economically, about the enigma of big-time college sports.
As I just mentioned, his is a book about higher education, not sports. I agree that is the proper place to start. College sports happen at. . . well. . . colleges. Consequently, understanding how that organization works is the key to understanding college sports outcomes. So Clotfelter earns the specific bragging right of starting in the right place when so many other works on college sports fail from the very outset in this regard. He poses a big-time hypothesis (p. 16), “Is there any reason to believe that the decisions made by intelligently run institutions like universities result in a situation that is not in their best interest, or society’s?” He “tests” the hypothesis by analyzing two questions about college sports.
His first question is why do universities operate commercial sports programs while hardly acknowledging that they do so? The key for Clotfelter follows from his solid starting point. The form that college sports take follows from the loose way which universities are organized, generally. Although he does not use this language, phrased in principal–agent jargon, Clotfelter’s explanation is that there simply is a lot of slack in university oversight hierarchies. This gives athletic directors the same sort of leeway enjoyed by, say, the deans of academic departments. This leads him to immediately throw out the usual “tail wagging the dog” and “big-time sports big mistake” explanations that dominate other discussions.
Instead, Clotfelter suggests that this oversight with substantial slack allows (relative to the academic side) unusual constituencies to dominate sports. Boosters (including some that are alumni) have power over university decisions about the governance of college sports. This portrays rational university decision makers choosing purposefully in the face of their perceived self-interest. He demonstrates this self-interest by providing new evidence on the political affiliation of boosters. In addition, the thorough collection of data on who sits in the university president’s box at football games is to be cherished. I have not read about this level of bulldog determination to get at the actual way that nonmarket decision makers behave since Paul Joskow sat through public utility commission hearings to determine how regulation really worked. The result was rejection of the then academically beloved “rate of return” regulation in favor of price regulation.
The added perspective offered by his starting point leads Clotfelter to consider a full accounting of the benefits, as well as the costs, of big-time college sports from the perspective of university decision makers. Some readers will be familiar with some of the analysis of benefits. However, there also is some original work on the benefits. Even though I have edited a book on college sports and the subject comprises the largest chapter in my textbook, I learned much here. The work on student outcomes (their scheduling choices, the types of students drawn to different universities, their time allocation, and behavior toward alcohol) is worth the price of admission by itself.
Clotfelter also examines the ills of college sports. Much of this wanders beyond the realm of strict economics in my opinion. But on the economics in particular, Clotfelter suggests that subsidies to the vast majority of athletic departments result from the power of their unusual constituency in the presence of the zero-sum nature of athletic competition. For every winner, there is a loser and Clotfelter says (without naming it) that it is really all some sort of prisoners’ dilemma in the form of an arms race. He echoes Robert Frank in his work for the Knight Commission that sports spending is in an out of control spiral. He also suggests a reason why those not currently trapped in the dilemma willingly enter anyway (no spoiler here, read it).
In addition, Clotfelter claims that the idea that athletics help the general fund is mythical, and for reasons that I do not quite understand, he also dwells on the tax-free status of sports revenues and contributions to the athletic department. I was particularly intrigued by his demonstration of the lack of a relationship between revenue and the number of nonrevenue sports. I knew that generally there is little spillover, and at very few institutions, but his is a broad treatment that adds to our understanding.
Clotfelter’s second question concerns whether these commercial sports programs pose a threat to higher education. He answers in the affirmative. The costs to the academic mission are in terms of negative perceptions that come from college sports. In addition, for Clotfelter there is unavoidable compromise in key university academic values—especially evident is the lower overall academic credentials of athletes compared to the general student body. Athletic departments are also not bastions of free speech—athletes sign those rights away with their acceptance letters in the form of granting the university the right to their images and in having to wear logo merchandise of their university sponsor. And is it not just a fine contradiction inviting cynicism about the values of the university when it keeps the revenues generated by students under the guise of the “amateur requirement”? Finally, there is the occasional complicity of a few sports fans on the faculty. The culture of compromise, including cheating, Clotfelter suggests, may expand to the rest of the students who are not athletes.
As nearly all economists interested in policy outcomes end up, Clotfelter is pessimistic about reform. Many of us who work on policy issues will sympathize with his finding that reform is difficult. Essentially, somehow, the economic margins facing those in control must be changed but those in control are also in control of any change! Clotfelter defines this as the intersection of the forces of commercialism and the relatively loose form of oversight that reigns in university processes. Despite stating bluntly that prospects for reform are slim, he is intrigued by the possibility of two reforms (well known to those following college sports): changes in federal tax policy and spinning off athletics.
While I applaud that somebody has finally brought straightforward economic thinking to college sports, the book is not without its “issues.” Partly this is because of Professor Clotfelter’s generalist aims; he does not take his ideas far enough. But there also are a few operating principles that Clotfelter takes as given but has not really developed. This leaves them contentious.
While he starts with the organizational setting of higher education and clings tenaciously to that intellectual high ground, he really never covers the separate incentives that generate conflict between university administrators and college athletic directors. He jumps to the observation about administrative slack without groundwork and runs smack into a paradox observed decades ago by Barry Weingast and Mark Moran in their work on the oversight of bureaucracy. Sometimes things look the way they do because it simply is in the best interest of those in charge. For Weingast and Moran, the apparent lack of oversight actually masked a fully functioning system that served its congressional masters quite well. Turning that lens on college sports, is it really oversight with substantial slack or is it oversight that actually serves university masters well? Without full development of objective functions, there is no separating hypothesis between slack and effectiveness. In short, that leaves the oversight slack in the administration of college sports, an idea lacking support.
Clotfelter also observes the distinction between academics and big-time entertainment. But this is artificial since athletics clearly falls under the university “service” mission readily enough. Some clientele groups like other forms of entertainment commonly offered on campus (the so-called fine arts and small-audience international entertainment) while other clientele groups like sports entertainment. I would be immensely surprised if the university administrators did not capture the value from this fine arts entertainment on campus to their best ability. For example, the university solicits patrons for this other form of entertainment and for the academic departments that might be involved in the student-produced version.
I do not mean to be unkind, but there also are a few examples of things that perhaps were not thought through completely. Clotfelter documents the dramatic increase in sports spending “caused in part by a spectacular escalation in coaches’ salaries.” The emphasis is mine. However, spending does not cause spending; he has only identified an element of spending. The question then becomes why salaries have risen so dramatically. It is clear that this is due to revenue potential rising over time in a system where the primary sources of this value, the athletes themselves, cannot be paid their marginal revenue product.
While not alone on this, he simply misunderstands budgeting and its relationship with the size of athletic departments. Those at the bottom end of the big time “must rely on mandatory student fees and institutional subsidies to pay the bills. . .” This paints the athletic department as choosing a scale of operations and then simply relying on student/institutional funds to make up the difference, probably using their external clientele to facilitate such a transfer payment. This both violates his chosen approach and taints the discussion unfairly.
On violating his approach, for Clotfelter, it is oversight slack that allows athletic directors to do this. However, if the costs get too high, then the value of better oversight climbs and there should be an administrative response. The “subsidy” argument ignores that the level of oversight varies with its net value and distracts our attention from the real decision makers, university administrators.
The tainting comes from the connotation surrounding the use of the word subsidy in this case. Actually, university spending on athletics (typically referred to as institutional support) is no different than the budget allocation to the economics department (or sports management if the reader prefers). University administrators invest in returns across all units of the university. While the returns may be small from athletics, so is the size of the investment. His attempt to make a big deal of the size of athletic budgets is unconvincing. My own work suggests it is never much more than 5% of the operating budget of typical universities and even less so (to the point of trivial) at truly large institutions. So a small investment only needs small return.
I do not want to even get into the whole idea of a spending arms race in college athletics. I have argued elsewhere that the idea is far fetched. The setting is not actually the setting that results in an arms race and there is no evidence that the predicted ruinous results of a spending arms race ever actually occur.
I found Chapter 7 to simply be preachy and laden with value judgments. For example, the chapter demonizes rum in a way that would have made Carrie Nation proud. College teaches many things outside the classroom and one is handling alcohol in an environment where you do not have to get killed doing so. There are deaths and they are tragic like all young deaths. There is also inappropriate behavior by drunken students. But nowhere does Clotfelter demonstrate that this is worse than what goes on outside the friendly confines of the ivy-covered walls, and it is not only drunken students responsible for the inappropriate behavior. Clotfelter also makes the classic double-standard graduation mistake. For an “apple to apple” comparison, college athletes most resemble students with a full-time job. Any other comparison simply ignores the reality of the athlete’s life. He also makes a big deal out of commercialism as a conflict with academics but ignores the widespread commercialism across campus, from the medical school, to other contract research, to the development imperative. This whole point seems to me to really be about how universities have changed over the years rather than about athletics per se.
Finally, many readers of this review will find that their work has gone unnoticed in Clotfelter’s economic treatment of big-time college sports. There is an acre of work on the economics of college sports that Clotfelter simply does not cite. The tragedy of this is that he misses work that would inform his basic hypotheses. Many are in my edited volume with John Fizel, entitled (obviously enough for someone looking carefully) The Economics of College Sports.
Well, enough of that. It is always easier to criticize than to create. Despite its shortcomings, Clotfelter’s Big-Time Sports in American Universities is a read worthy of careful attention because it seeks to generate understanding from the perspective of the organization generating those big-time sports. Let us follow his lead and start modeling relevant decision makers, their objectives, and deriving implications for their behavior. This has always been our path to understanding and the absence of this approach is a glaring omission in the academic treatment of college sports.