Friday, September 11, 2009

NCAA Men's Basketball & Competitive Balance

You don’t hear a lot about it but the NCAA is currently being sued by former college football and basketball players over caps on scholarship amounts. The immediate concern is over possible antitrust damages to athletes in many NCAA sports since 2002. But the second concern is that, in the future, some teams would not be able to compete with higher scholarship costs. "It really comes down to competitive balance," Matt Mitten, who heads Marquette's National Sports Law Institute, told USA Today.

Plenty of research has been done on competitive balance in the NCAA (see, for example, Malcolm Gladwell's summary of Jim Peach's research). So, how competitively balanced is NCAA basketball? Here are the Noll-Scully measures of competitive balance from 1999 to 2007.

1999 2.021
2000 2.082
2001 2.006
2002 2.040
2003 2.007
2004 2.059
2005 2.003
2006 2.017
2007 2.055

These numbers show two things: first that NCAA basketball is quite unbalanced (a score of 1.0 would reflect perfect competitive balance); and second, that this lack of competitive balance isn't getting any better. So, when the Collegiate Athletes Coalition maintains that the NCAA's scholarship cap is "simply a cost containment mechanism that enables the NCAA and its member institutions to preserve more of the benefits of their enterprise for themselves," the group would appear to have a point. If the NCAA were really so serious about competitive balance, shouldn't it have done something about the problem over the last nine years? More likely, the NCAA's rules on scholarships are designed to protect revenues, not competitive balance.

So don't let the analysts (or lawyers) fool you. Capping scholarship awards or restricting compensation are simply mechanisms for the NCAA to extract rents from college athletes, college students, boosters, and ultimately taxpayers.

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