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c 1998 Kluwer Academic Publishers. Printed in the Netherlands. Review of Industrial Organization 13: 347–369, 1998.

The NCAA Cartel and Competitive Balance in College Football E. WOODROW ECKARD College of Business, CB 165, University of Colorado at Denver, P.O. Box 173364, Denver, CO 80217-3364, U.S.A.

Abstract. The NCAA regulates college football player recruiting, eligibility, and compensation. The economic theory of cartels suggests that one consequence may be reduced competitive balance. The enforced restrictions inhibit weak teams from improving, and protect strong teams from competition. A “stratification” is implied which should be evident over time as less “churning” in national rankings and conference standings, and fewer schools achieving national prominence. I test this general hypothesis by comparing various competitive balance measures for about 25 years before and after NCAA enforcement began in 1952. The hypothesis is supported by all measures at both the national and conference levels. Key words: Cartel, NCAA, football, competition

I. Introduction The National Collegiate Athletic Association (NCAA) is the principal regulator of intercollegiate athletics, including football. Its perhaps most important and controversial activity involves enforced restrictions on player recruiting, eligibility, and compensation. Because of these regulations, many economists view the NCAA as a cartel through which members “collude” to exercise joint monopsony power over football’s main input (e.g., see Becker, 1987; and Fleisher, Goff, and Tollison, 1992). Players are paid less than their marginal revenue products, and rents generated by player talents are appropriated by institutions and their athletic departments. As with any cartel, incentives exist for members to cheat; colleges competing for players are tempted to break NCAA rules. This has led to formal policing and enforcement activities, and an on-going stream of violations. Because its economic regulations are (apparently) legal and its operations transparent, the NCAA provides a unique opportunity to study cartel behavior. An important unexamined aspect of the cartel is its impact on playing-field competition. The NCAA justifies its regulations in part by arguing that they are necessary to promote competitive balance. Cartel theory, however, suggests the opposite. The regulations and their enforcement inhibit weak teams from improv I acknowledge valuable comments received from two anonymous referees and seminar partici-

pants at CU-Denver and the Western Economics Association meetings.

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ing, and protect strong teams from competition. A “stratification” is implied that should be evident as less “churning” from year to year in national rankings and conference standings. I test this hypothesis by comparing various competitivebalance measures for extended periods before and after 1952, when effective NCAA enforcement began. Competitive balance declined after 1952 by all measures, supporting the prediction of cartel theory. In ancillary tests I also find that balance did not decline after early 1980s court decisions created open competition for football game telecasts, suggesting that the advent of TV circa 1950 is not an alternative explanation for our main results. The paper is organized as follows. The next section outlines the structure of NCAA regulation. Section III develops the basic hypotheses linking regulation and competitive balance, followed by a description of the empirical tests. Section V discusses the data and the next section explains the competitive-balance measures derived therefrom. Section VII presents the statistical results and the last section concludes. II. NCAA Regulatory Structure The NCAA was founded in 1906 “in response to public outcry about the increasing violence, injury, and professionalism in college football” (NCAA, 1983, p. 2).1 Its main activities prior to the late 1940s were keeping records, promulgating uniform playing rules, and conducting national championship tournaments in various sports. The first guidelines regarding player eligibility, recruiting, and financial aid were adopted in the early 1920’s, followed intermittently by others over the next two decades. But the NCAA’s role remained “advisory, at best” (Falla, 1981, p. 130).2 Enforcement was left to individual conferences and schools, and there is little evidence of systematic policing. Punitive action was rare, with penalties trivial by modern standards.3 This changed in January 1948 when the so-called Sanity Code was adopted granting enforcement authority to the NCAA (Falla, 1981, p. 32ff). As noted by K. L. Wilson, then Secretary-Treasurer of the NCAA, “the January [1948] convention for the first time in NCAA history proposes to give real force to its enactments : : : in the form of an agreement by which institutions observing the [Code] would boycott non-conforming institutions in their athletic schedules” (NCAA Football 1

For histories of the NCAA’s regulatory activities, see Falla (1981), Fleisher, Goff, and Tollison (1992, Chapter 3), and Shea and Wieman (1967, Chapter 1). The NCAA (U.S. House of Representatives, 1978, pp. 1082–90) provides a history of the enforcement program since 1952. 2 In fact, member institutions specifically forbade NCAA enforcement. The initial constitution contained the following language: “The acceptance of a definite statement of eligibility rules shallnot be a requirement of membership in this Association. The constituted authorities of each institution shall decide on methods of preventing the violation of the principles laid down : : : ” (Falla, 1981, p. 22, emphasis added). 3 A perusal of annual NCAA Guides (back to 1920) and conference record books for the Big Ten, Big Eight, Southeastern, Southwest, and Pacific Ten conferences reveals but three instances of apparent sanctions prior to 1948, all minor.

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Guide, 1947, p. 13). The specific enforcement mechanism, however, proved ineffective. The only penalty was the schedule boycott (a “death penalty” in modern parlance) and could only be levied by a two-thirds vote of all members at the annual convention. The Sanity Code was repealed in January 1951 without a single sanction having been imposed. The foundation of the present regulatory structure was created shortly thereafter, effectively transforming the NCAA into an economic cartel. In January 1952 a new code regulating player eligibility, recruiting, and financial aid was adopted that featured a workable enforcement mechanism. Committees investigate possible violations and are authorized to levy a range of penalties at any time. These include non-public actions (presumably very minor), public reprimands, probation, bans on TV and bowl appearances, reductions in the number of allowable scholarships, and ultimately the schedule boycott or “death penalty”. The first penalties against major football programs were levied in August and September of 1953 against Notre Dame (public reprimand) and Arizona State (two year probation and one year bowl ban) (NCAA Enforcement Summary, p. 4). The regulations essentially limit the compensation of athletes (financial aid) to tuition, room and board, and books, to promote the NCAA’s guiding “Principle of Amateurism” (NCAA Manual, 1993, p. 4).4 Academic standards for admission and eligibility are specified to assure that athletes are bona fide students, on par academically with other students at their institutions. In particular, the NCAA’s “Principle of Sound Academic Standards” states that “the admission, academic standing and academic progress of student-athletes shall be consistent with the policies and standards adopted by the institution for the student body in general” (NCAA Manual, p. 3). Eligibility regulations also include restrictions on the number of seasons a player can play.5 Recruiting efforts are carefully circumscribed, and must not include improper inducements, entertainment, and transportation involving the recruit or his family and friends. In addition, advertising to attract recruits is prohibited.6 4

A more pragmatic motivation may be cost control. But this is simply another way of describing rent appropriation and redistribution. While open competition for players would no doubt increase player costs, substitution among inputs would likely occur, reducing other costs. Also, as nonprofit operations, college football programs must convert “profits” into expenses. One consequence is transfer prices for resources purchased from their universities that often exceed marginal costs (Borland, Goff, and Pulsinelli, 1992). The associated rents could be reduced with little quantity impact. 5 Since the early 1950’s the limit has alternated between three and four years, depending on freshman eligibility, and includes a one year deferral via “redshirting”. Before NCAA regulation similar limits existed as guidelines, but were seldom enforced. Players extended their college careers by migrating among schools, with or without graduating, or enrolling as graduate students. 6 For example, the NCAA Guide to Recruiting (1993) states “Advertising or promotional materials for recruiting purposes are not permitted : : : ” (p. 97, emphasis in original) and “Your institution may not buy space for or arrange the placement of an athletics recruiting advertisement : : : in any publication” (p. 100). This is interesting because ads involve no compensation to recruits, and therefore do not violate the Principle of Amateurism. Advertising restrictions are often used by cartels to control one important form of competition.

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As Falla (1981, p. 213) notes, “the 1960s and 1970s lead to the expansion and strengthening of the NCAA’s regulatory function and enforcement procedures”. Loopholes were closed in existing regulations and new ones added. The official publications describing the rules and associated procedures now encompass over nine hundred pages.7 The enforcement staff has increased significantly since it began with a single person hired in 1955 (Falla, 1981, p. 137). By 1978 thirteen NCAA staff members had been assigned to “policing intercollegiate athletics” (U.S. House of Representatives, 1978, p. 1374). The 1993 NCAA Manual lists 37 employees at the NCAA national office that have the word “enforcement”, “compliance” or “eligibility” in their job titles (pp. 445–46). Through 1991, a total of 145 public sanctions had been imposed on major football programs.8 Since the 1950s, “there have been periodic increases in the severity of penalties” (NCAA Enforcement Summary, p. 2). The first football schedule boycott or “death penalty” was applied to Southern Methodist during the 1987 and 1988 seasons. In addition, the penalty rate has increased over time. During 1952–60, an average of 2.9 major football schools were penalized per year. This increased to 3.4 per year in 1961–70, 3.5 in 1971–80, and 4.8 in 1981–91.9 The mere existence of the elaborate enforcement mechanism and numerous violations indicates that the regulations are binding. Some schools are cheating in order to improve their football programs, and many players are paid less than their marginal revenue products.10 The NCAA also restricts output. For example, since the mid-1950’s the number of regular season football games and post-season bowl games has been limited. This may deter new entry into big time football, since aspiring schools cannot help finance growth by scheduling extra (low marginal cost) games. Game telecasts were restricted as well. Starting in 1952, the NCAA contracted with TV networks to broadcast a limited number of games each season. Individual schools and conferences were prohibited from independently contracting for additional games. The NCAA argued that the limits were necessary to protect stadium ticket sales and promote competitive balance. In August 1982 a U.S. district court decision, upheld by the Supreme Court in 1984, voided the contracts on the grounds that they violated antitrust law.11 Since then individual schools and conferences have 7 The main publication is the 478 page NCAA Manual (1993). As supplements to the Manual the NCAA also publishes the Guide to Financial Aid, the Guide to Eligibility, and the Guide to Recruiting, each with more than 150 pages. 8 See NCAA Enforcement Summary (undated) covering all publicly sanctioned infractions between October 16,1952, and May 1, 1991. 9 The OLS time trend for 1952–90 (annual infractions regressed on years) is positive and statistically significant at the one percent level. 10 Brown (1993, p. 671) estimates that “a premium college [football] player generates over $500,000 in annual revenues for his team”. 11 For discussions of these cases, see Greenspan (1988) and Meyers and Horowitz (1995). The suits grew out the independent College Football Association formed by most major football schools in the late 1970’s. While its purpose was to negotiate its own TV contracts, it never actually did so prior to 1984, apparently because of threatened sanctions by the NCAA.


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been completely free to contract on their own, and the number of televised games has increased substantially.12 III. Cartel Enforcement and Competitive Balance Stigler (1964) observes that successful cartels must be able to detect and punish cheaters. In a seller’s cartel, when firms agree to collude they agree to stop attracting customers from each other by whatever means. In effect, a main objective is to increase market share stability. Stigler therefore hypothesizes a detection mechanism based on market share variation. After firms agree on price and other important terms of trade, shares should be constant except for minor random variations. Cheating on the agreement by (say) secret price cuts means attracting more customers and increasing market share. Accordingly, if one firm’s share suddenly increases significantly, other cartel members may infer that the agreement has been violated, and the firm becomes an enforcement target. This prospect in turn deters efforts to increase share. Market share stability is therefore a measure of cartel success, and has been often used to measure the degree of competition in other contexts.13 In a buyer’s cartel, the same enforcement mechanism applies. Breaking the cartel agreement means obtaining better inputs to improve output market performance (e.g., increase market share). The best football analogue to output market performance, as measured by share, is playing-field performance, as measured by team winning percentage. Schools seek better players precisely to win more games, and thereby increase revenues from ticket sales, TV appearances, and bowl games, among other possible benefits.14 Sudden increases in winning percentage may therefore attract enforcement attention. Suspicions may also be raised if traditionally weak schools sign top prospects, a frequently publicized event, even before this shows up as more wins.15 Sanctions are credible and enforcement easy because football games are highly visible (secret sales are impossible), the “production” of a season requires the cooperation of several other cartel members (which can be easily withdrawn), and the NCAA’s enforcement activities are apparently legal. In effect, NCAA regulations act as barriers preventing (increasing the cost of) football program improvement via higher player compensation, lower academic standards, or more aggressive recruiting. An advantage is created for already successful programs that can offer players greater “legal” non-pecuniary benefits. These include the prospect of bowl games and greater TV and other media expo12

For example, see Landes (1982), Greenspan (1988), and Meyers and Horowitz (1995). Examples of empirical studies using market share stability as a measure of competition are Telser (1964), Caves and Porter (1978), and Eckard (1987). Lanzillotti (1996) identifies share stability as a main characteristic of the 1980’s school milk cartels. 14 Universities may also benefit from football success through expanded pools of student applicants (Borland, Goff, and Pulsinelli, 1992) and alumni donations (McCormick and Tinsley, 1990). 15 The NCAA’s “letter of intent” program requires that new recruits publicly reveal the school of their choice months before initial enrollment. 13

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sure particularly important to star players with professional aspirations.16 For other schools with football ambitions, recruiting success is less likely in any given year and program improvements happen more slowly. The cartel view therefore implies less change in team performance over time, e.g., more stable won-lost records. Fleisher, Goff, and Tollison (1992) report evidence that NCAA enforcement efforts are directed toward programs showing recent improvement, consistent with a Stiglerian cartel enforcement mechanism. Analyzing a sample of 85 Division IA football teams from 1953 to 1983, they find that “higher variability in a team’s winning percentage leads to a greater probability of the NCAA taking action against that school” (p. 110). They also examine the records of penalized teams for five years prior to the penalty date, finding that “the change in winning percentage over this interval is significant at the 1 percent level and represents an approximately 26 percent increase in the winning percentage of the teams put on probation” (p. 114). They do not test for effects on competitive balance. In contrast to the cartel view, the NCAA apparently believes that its economic regulations promote competitive balance. A main goal of all its activity is competitive equity among schools, as spelled out in the fourteen “Principles for Conduct of Intercollegiate Athletics”. One is “The Principle of Competitive Equity" that states “the Association : : : shall promote opportunity for equity in competition” (NCAA Manual, 1993, p. 4). Two other principles on recruiting and eligibility state that related regulations should “promote equity among member institutions” (p. 4) and “promote competitive equity among institutions” (p. 4). In addition, the NCAA (1983) states that “competitive, balanced games are the product the NCAA and its members furnish” (p. 21). The apparent concern is that without oversight a few schools would dominate by outbidding others for top athletes. Taken at face value these statements imply that competitive balance should have improved after NCAA regulation began, the opposite of the cartel prediction. IV. The Tests The hypothesis that NCAA regulations reduce competitive balance is examined using data on national rankings and standings of major football conferences (leagues) from the 1920’s to 1995 (see Section V). The analysis of national rankings covers competition for the mythical national championship, including leading “independents”, i.e., schools without conference affiliation. The focus on conference standings “holds constant” the playing level of sample schools and their opposition. Schools in the same conference have similar athletic philosophies and are supposed to be competitive on the field in the sense that over several years any The NCAA (1983) states that “spreading TV exposures : : : helps more schools attract good players” (p. 9), a view shared by most college football coaches and administrators. For example, while commenting favorably on the current absence of telecast restrictions, ACC Commissioner Gene Corrigan observed: “One reason why our football was down for all those years when the NCAA controlled college football television, we were never on” (Rocky Mountain News, July 25 1995, p. B2). 16


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team should have a shot at the conference championship. Non-conference opponents are excluded because their playing levels can vary greatly across conference members in a single season, and across seasons for a single school. Including (say) only such opponents classified by the NCAA as Division IA is inadequate because there are higher and lower tiers within this classification. For example, Ball State and Eastern Michigan of the Mid-American Conference are in Division IA but play at a level below neighboring Big Ten schools Purdue and Michigan. In any event, such classifications are unavailable for the early years covered by this study (i.e., prior to 1946). The main test compares performance stability measures (see Section VI) for extended periods before and after effective enforcement began in 1952. Multiple measures are used because the theory does not suggest a “best” one, and because a consistent pattern across several measures indicates robust results. The test measures the aggregate impact of the regulations, and presumes that in total the new enforcement mechanism constrained college behavior in affected areas. A second hypothesis is implied by the trend noted above toward more extensive rules, tighter enforcement, and stiffer penalties. This suggests a corresponding trend toward less competitive balance after 1952. The theory outlined above also implies that the pre1952 football establishment should have benefited from cartel formation, which presumably involved their support.17 While a full-scale study of the associated political economy is beyond the scope of the present paper, we can nevertheless determine whether the leading conferences and the leading teams within those conferences improved their football fortunes after 1952. A fourth hypothesis concerns the NCAA’s enforcement of academic standards for football players that are “consistent with” those applied to other students at the same school. Schools with high academic standards are particularly disadvantaged, implying that their relative competitive position should decline. A drawback to our “before/after” comparisons is that we don’t know how competitive balance might have changed without NCAA regulation. One possible counterfactual scenario was suggested implicitly by the NCAA in the TV contract antitrust case. Specifically, the advent of television circa 1950 might have caused less balance, allegedly because only a few top teams would get TV exposure, thereby attracting the best players and maintaining or increasing their dominance over time. The court decisions banning the TV contracts allow us to test this. We hypothesize, therefore, that the open competition for TV football games after the ban did not reduce competitive balance. Another possible counterfactual is suggested by the significant expansion in the number and size of four year colleges in the decades following World War II. 17 There is evidence that the process which led to the 1948 Sanity Code and ultimately to the 1952 resolutions was initiated by four of our sample conferences (Fleisher, Goff, and Tollison, 1992, p. 47). The Big Ten, Pacific Ten (i.e., its predecessor the Pacific Coast Conference), the SEC, and the SWC held a special meeting in 1946 where they adoqted a set of “Principles” which evolved directly into the Sanity Code.

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One might have expected the number of major football schools also to increase, resulting in more teams competing for national prominence and a greater variety of schools appearing in the national rankings.18 In short, competitive balance at the national level should have improved without NCAA action.19 But cartel theory views NCAA regulations as entry barriers increasing costs to any school wishing to offer a nationally competitive football team as one of its product attributes; i.e., fewer schools would select such a marketing strategy. This suggests the testable hypothesis that fewer schools enter or return to the Top 10/20 lists after NCAA enforcement began. A factor that might have affected competitive balance for which we cannot account is changes in rules on player substitution during games. These rules had been enforced by referees on the field prior to 1952, and not newly enforced under the NCAA’s economic regulation. Major changes have occurred over the years that coincide roughly with our pre- and post-enforcement periods. Before the 1940s, substitution was limited, with individuals usually playing both offense and defense. So-called “two platoon” football was introduced in 1941, dropped in 1953, and then reintroduced for good in the early sixties (NCAA Football Guide, 1964, p. 5). One consequence is that teams now require more players; i.e., fielding a team is more costly. This higher cost might in turn deter entry. The added player cost, however, should not be large if teams adhere at least approximately to recruiting and financial aid restrictions. In any event, the established teams in our sample conferences should be equally able to adjust; i.e., the differential effects of the rule changes should be minimized within conferences. Since our analysis goes back to the 1920’s, it is important to note that college football had by then established itself as a major spectator sport; i.e., the derived demand for football players was significant. While pre-World War II attendance records are sparse, the first game attracting over 100,000 fans was in 1926, with three other 100,000-plus games in the next three years (NCAA Football Guide, 1993, p. 610). Savage (1929) notes that “fifty thousand people [is] not an unusual attendance” (p. xvi) at football games in the late 1920’s. By 1948, the first year the NCAA collected and reported football attendance data, the total for all colleges, including non-majors, was over 19 million (NCAA Football Guide, 1993, p. 608), close to major league baseball’s 1948 (then record) attendance of 21 million.

18 In fact, the number of schools opting for “major” status is about the same in the 1990’s as in the 1950’s. NCAA “major college” classification lists are available since 1946, where “major” means University Division prior to 1973, Division I for 1973 to 1977, and Division IA since 1978. The total number hovered around 120 in the late 1940’s and then dropped to 103 in 1954, shortly after enforcement began. The number increased gradually to 118 in 1970, then jumped to an all-time high of 144 in 1977. After the creation of Division IAA in 1978 and the reassignment of many second tier Division IA schools, the number had dropped to 105 by 1982 and was still only 108 in 1995. 19 A reinforcing factor is the increased mobility of the population since World War II, coupled with declining transportation and communication costs, which facilitate a wider geographic distribution of playing talent.


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The public’s willingness to pay for football games apparently created in colleges a corresponding willingness to pay for football players. As stated earlier, the NCAA identified “professionalism” as a main reason for its founding in 1906. Shea and Wieman (1967, p. 12) note that observers circa 1906 had expressed specific concerns regarding “pecuniary inducements” in recruiting, “regular pay for playing”, and “special courses” to maintain athletes’ academic standing. Savage (1929, Chapter X) indicates that by the 1920’s such practices were widespread. Colleges were competing for football talent by ignoring then existing informal norms regarding recruiting, financial aid, and eligibility. V. The Data National rankings are mainly from the annual Associated Press (AP) or “sportswriters” poll that started in 1936.20 The AP surveys a large group of football reporters each week during and at the end of the season. Individual reporters’ rankings are aggregated and published with (usually) the Top 20 schools in rank order. Rankings are presumably based on won-lost records and strength of opposition. The Top 10 is extended back another dozen years to 1924 using the non-poll Dickinson rankings of the top eleven football teams published from 1924 to 1940.21 Five major football conferences have existed since at least the early 1930’s with essentially stable membership. These are the Big Ten, Big Eight, Southeastern (SEC), Southwest (SWC), and Pacific Ten. In addition, the Atlantic Coast Conference (ACC) has been in operation since 1953 and the Western Athletic Conference (WAC) since 1962.22 Although the east had no major college conference during most of the study period, the Lambert Trophy has been awarded annually to the top eastern football team since 1936.23 I treat the Lambert Trophy winner as an “eastern conference” champion. Conference schedules usually approximate a single round20 I use the AP because its coverage is longer than that of the United Press International (UPI) or “coaches” poll that began in 1950. During 1962–67 the AP reports only the Top 10 schools in rank order. For these years the Top 20 is filled out using the UPI poll. Final AP and UPI polls are available in the 1996 NCAA Football Guide (pp. 67–73). In 1943 and 1944 the AP rankings include military service teams. However, enough information was published in contemporary newspaper reports to construct a college-only Top 20. 21 The system was devised by a University of Illinois economics professor named Dickinson and was based on a numerical algorithm that computed a ranking index for major colleges using each school’s own won-lost record and the won-lost records of its opponents. As the 1993 NCAA Football Guide notes, “The annual Dickinson ratings were emblematic of the national championship” (p. 89); i.e., the school rated number one at the end of each season received a trophy that was widely recognized as signifying the national collegiate football champion. The annual rankings are available in Dickinson (1941, pp. 4–5), an eight page pamphlet available from the author upon request. 22 The Big West Conference (founded 1969) and Mid-American Conference (founded 1946) are also classified as Division IA but are considered second tier. 23 The Big East Conference began football competition in 1991. The Ivy League began formal football competition in 1956, but was considered second tier until its reclassification as Division IAA in 1982. Lambert Trophy winners over the years include Army, Boston College, Carnegie Tech, Cornell, Dartmouth, Fordham, Navy, Penn State, Pittsburgh, Princeton, Syracuse, Virginia Tech, West Virginia, and Yale. Teams eligible for the Lambert include most major national independents, since

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Table I. Conference members appearing in at least one study perioda Atlantic Coast: Big Eight: Big Ten: Pacific Ten: Southeastern:

Southwest: Western Athletic:

Clemson, Duke, Georgia Tech, Maryland, North Carolina, North Carolina State, Virginia, Wake Forest Colorado, Iowa State, Kansas, Kansas State, Missouri, Nebraska, Oklahoma, Oklahoma State Chicago, Illinois, Indiana, Iowa, Michigan, Michigan State, Minnesota, Northwestern, Ohio State, Purdue, Wisconsin Arizona, Arizona State, California, Oregon, Oregon State, Southern California, Stanford, U.C.L.A., Washington, Washington State Alabama, Auburn, Florida, Georgia, Georgia Tech, Kentucky, Louisiana State, Mississippi, Mississippi State, Tennessee, Tulane, Vanderbilt Arkansas, Baylor, Houston, Rice, Southern Methodist, Texas, Texas A&M, Texas Christian, Texas Tech Air Force, Arizona, Arizona State, Brigham Young, Colorado State, Hawaii, New Mexico, San Diego State, Texas-El Paso, Utah, Wyoming

a

A detailed sample description, including conference membership history, is contained in an Appendix available upon request.

robin in which each school plays each other school once and only once. The ACC, Big Eight, and SWC play a full round-robin in most sample years. In the other conferences, teams play most but usually not all other members in any given year. Standings are available from conference record books and annual NCAA Football Guides. Schools are excluded from the sample if they are conference members for less than half the period. Schools included in at least one study period are summarized in Table I. A detailed sample description, including conference membership history, is contained in an Appendix available upon request. The competitive-balance measures (see next section) are compared for equal periods before and after our two events to avoid any “regression-to-the-mean” effects that might cause longer periods to show more balance than shorter periods. Because effective NCAA enforcement began in 1952, the pre-enforcement period ends in 1951. The post-enforcement period begins in 1957, eliminating a five year transition period (1952–56) during which the NCAA and its members were learning about and adjusting to the new enforcement procedures. A key aspect of this learning was the demonstration that the new enforcement mechanism worked; recall that the Sanity Code failed for this reason. In fact, by 1957 21 major football programs had been penalized (NCAA Enforcement Summary). Also, by 1957 virtually all players would have been recruited under the new rules; i.e., “holdover” seniors who might have substantially influenced their team’s performance would have used up their eligibility. elsewhere in the country only a few top-tier programs existed outside major conferences (e.g. Notre Dame). Historical Lambert data are from Ours (1994, pp. 221–22).


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Where possible, conference measures are compared for the 25-year periods 1927–51 and 1957–81.24 The Top 10 has 28 pre-enforcement years (1924–51), and so the post-enforcement period is 1957–84, also 28 years. The Top 20 has 16 pre-enforcement years (1936–51), implying a 1957–72 post-enforcement period. The NCAA TV contracts were voided in August 1982. Assuming a similar five year transition period (1982–86) for recruiting effects to manifest themselves leaves a nine year post-ban period (1987–95).25 The pre-ban period therefore is 1973–81, also nine years. VI. Competitive-Balance Measures 1. CONFERENCE LEVEL The key element of the expected impact of cartel enforcement on competitive balance is dynamic: team positions in league standings should be more stable from year to year. This effect cannot be captured by the conventional measure of competitive balance in sports leagues, i.e., the single season standard deviation of team winning percentages (e.g., see Scully, 1989; and Fort and Quirk, 1995). It is therefore necessary to develop new, albeit related, measures. Less balance within a conference means that schools with good, middling or poor records tend to repeat them year after year. Over a given number of seasons it implies less variation in individual school won-lost percentages, and more variation among schools in cumulative won-lost percentages. These notions can be formalized as follows. Assume a conference with the same S schools over Y years in which members play each other once and only once every year. Each game produces one win and one loss, or two ties. Since all conference schools play the same number of games (S 1) each year, the mean winning percentage across all schools in a given year, or over a number of years, is necessarily 0.500.26 Therefore, a distribution of winning percentages (P C T ) exists over all S schools and Y years with a mean of 0.500 and a variance of: VAR = [(P C Tsy

0:500)2]=S Y

(1)

24 There are three exceptions. First, the Pacific Ten (then the Pacific Coast Conference) held no competition during 1943 and 1944. It’s pre-enforcement period is therefore 1925–51. Second, the SEC began conference play in 1933 and held no competition in 1943. All SEC teams, however, were members of the Southern Conference since the early 1920’s, whose additional membership at that time consisted mainly of present ACC teams. SEC school records in the SC from 1926 to 1932 are used to extend the SEC data to 25 years. Third, the Lambert Trophy was first awarded in 1936. Eastern champions for the missing 1927–35 period are obtained as Dickinson’s top-ranked eastern school. 25 The period stops in 1995 because 1996 saw significant conference membership realignments involving the demise of the SWC and Big Eight, the creation of the Big 12, and a major expansion of the WAC. 26 Following convention, I use the term “percentage” although the numbers reported are three-digit decimal fractions. Ties count as a half game won and a half game lost.

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This can be partitioned into two components by first defining each school’s mean or cumulative winning percentage over the Y -year period as follows: P C Ts

= (

)

(2)

P C Tsy =Y

where the summation is over all Y . Note that if schools play the same number of games each year, mean and cumulative winning percentages are identical. Adding and subtracting P C Ts to the term inside the parentheses of Equation (1) yields: VAR = f[(P C Tsy

P C Ts

)+(

P C Ts

0:500)]2 g=SY:

(3)

The first term inside the brackets is the deviation of each school’s yearly won-lost percentage from its own cumulative (mean) percentage for the period, and the second is the deviation of its cumulative (mean) percentage from the overall mean of 0.500. Equation (3) can be simplified to the following: VAR = VARtime + VARcum

(4)

where VARtime = VARs =S , and VARs is the variance of each school’s annual wonlost percentage about its period mean. VARtime , the “time variance”, is therefore the mean of these variances across schools. VARcum , the “cumulative variance”, is the variance of cumulative won-lost percentages across conference members. Per the above discussion, a simultaneous decrease (increase) in the time variance and increase (decrease) in the cumulative variance indicates that competitive balance has declined (increased).27 However, if both RHS terms of Equation (4) move in the same direction, then the interpretation is more complex. For example, the ultimate in competitive balance is each conference member having a 0.500 winning percentage. If this occurs during every season in a given period, then both sides of Equation (4) collapse to zero. As we shall see below, however, the issue generally is moot in the present context; the two measures seldom move in the same direction. While cartel theory implies that the conference time variance should decline, it also implies that time series of individual school won-lost percentages should show greater autocorrelation. As the cost of improving football programs increases with 27

Cartel theory does not make a clear prediction regarding the conventional single season variance (standard deviation) balance measure. The difference between it and my measures can be illustrated with an example. Assume an eight school conference playing a full round-robin schedule and that, for an eight-year period, individual team records in each year are 7-0, 6-1, 5-2,: : : , 1-6, and 0-7. The total variance is 0.107. At one extreme, the record for each school could be the same every year, implying that the time variance is zero and the cumulative variance is 0.107. At the other extreme, all teams could rotate through all eight different won-lost records during the eight-year period. This implies a cumulative variance of zero (each team has a cumulative winning percentage of 0.500) and a time variance of 0.107. One would conclude that over the period competitive balance is greater in the latter case. But note that the conventional single season variance (standard deviation) is the same in every season (by construction) in both cases; i.e., the difference in competitive balance over the period cannot be detected.


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regulation, schools will not only be less likely to have large changes in their win percentages, but such changes as occur should happen more slowly. This in turn suggests that PCT time trend residuals should show an increasing tendency toward runs of positive or negative values. We can test this by computing autocorrelations for the subset of schools in our sample with uninterrupted conference records for the full pre- and post-enforcement periods. This is similar to Scully’s (1992) test for “momentum” in professional sports. My last measure of conference competitive balance is the concentration of title winners, relative to the concentration expected if all members have an equal chance of winning. I compute relative Hirfindahl-Hirschman Indexes (HHI) based on school “shares” of conference titles. For example, a school winning two titles in a twenty-year period has a 10% share. The relative HHI measure is the sum of squared title shares over all conference members, less the hypothetical HHI corresponding to equal shares.28 Greater relative concentration suggests less balance.

2. NATIONAL LEVEL The cartel view implies that fewer average or below schools are able to make the jump to national prominence. Therefore, fewer schools appear in the Top 10 or 20 lists, more schools make multiple appearances, and there is less entry. The first balance measure is a simple count of the number of different schools making appearances in a given period. The second measure is the concentration (HHI) of teams, with greater concentration implying less balance. The HHI is based on the fact that in any period the lists contain a fixed number of “slots”. For example, over ten years the Top 10 list contains 100 slots that might be occupied by (say) 50 different schools. At one extreme appearances are evenly distributed at two each (a two percent share), implying an HHI of 200. An alternative distribution might be 40 teams appearing once each (a one percent share) and the remaining ten appearing six times each (a six percent share), implying an HHI of 400. In the latter case appearances are concentrated among fewer teams, suggesting less balance despite the same total number. The third national rankings measure addresses “entry/reentry”. Cartel theory views the player recruiting, compensation, and eligibility restrictions as barriers inhibiting teams wishing to enter or return to national prominence. A count is made of the number of schools each year in the Top 10 and Top 20 not ranked 28 The equal-share expectation HHI for a conference with six teams is 1667, with eight teams is 1250, with ten is 1000, and with twelve is 833. The adjustments account for changes in the number of conference members between periods, which in our sample never exceeds two. Conference champions are schools with the highest winning percentage based on actual results in all conference games. Individual game forfeits, team ineligibility, and vacated titles are ignored. Therefore, in a few cases official champions differ. Ties for conference championships are handled via “fractional” titles; e.g., if two schools tie for the championship each earns one-half of a title.

360

E. WOODROW ECKARD

during the previous five years, and means are calculated for the sample periods.29 Since five prior years of data are required, the Top 10 series starts in 1929 and the Top 20 in 1941. Higher (lower) mean counts during a period indicate more (less) entry/reentry. VII. Results The main results concern the central hypothesis that competitive balance declined after cartel enforcement began in 1952. Comparisons of balance levels for the full pre- and post-enforcement periods are followed by analyses of the timing of effects and trends using shorter periods. Last, the results regarding TV’s impact are reported. 1. ENFORCEMENT EFFECTS: BALANCE LEVELS Table II shows the national rankings concentration and entry/reentry measures in the full pre- and post-enforcement periods. The analysis includes “independents” as well as conference schools. The number of schools (N) appearing in the Top 10 drops from 65 in 1924–51 to 55 in 1957–84 and the HHI increases from 286 to 354. Similarly, the number of schools appearing in the Top 20 drops from 83 in 1936–51 to 76 in 1957-72 and the HHI increases from 186 to 230. Appearances in national rankings are more concentrated among fewer teams after enforcement began. The last two columns of Table II address entry/reentry. They show for each period the mean (standard error) of the number of schools appearing each year that were absent during the previous five years. Top 10 entry/reentry declines from 3.13 teams per year during 1929–51 to 1.96 during 1957–81, a difference that is statistically significant at the one percent level.30 Similarly, Top 20 entry/reentry declines from 5.55 in the pre-enforcement period to 3.48 in the post-enforcement period, a difference that is also statistically significant at the one percent level. In sum, competitive balance declines at the national level by all measures, supporting the cartel view. Table III presents the pre- and post-enforcement conference measures. First, the two RHS terms of Equation (4) are calculated for the Big Eight, Big Ten, Pacific Ten, SEC, and SWC. Recall that the time variance is the mean of individual team won-lost percentage variances during the period, and the cumulative variance is the variance of cumulative won-lost percentages across teams (see Section VI). All five 29 De novo entry is not reported since one might argue that the decline in such entry that in fact occurs (the results are available upon request) may simply be an artifact of a more or less stable population of major football schools; i.e., as time passes, fewer schools can “qualify” as de novo entrants. 30 The pre-1952 OLS time trend is positive for both Top 10 and Top 20 entry/reentry, albeit statistically insignificant. A random assignment of schools from a pool of, say, 100 (120) majors would yield an expectation of about 5.9 (6.5) entrants for the Top 10 and about 6.6 (8.0) for the Top 20.


361

Table II. National rankings competitive balance, pre- and post-enforcement

Top 10

Top 20

Concentration Period N

HHI

Entry/Reentry Period Meana

1957–84

55

354

1957–81

1924–51

65

286

1929–51

1957–72

76

230

1957–81

1936–51

83

186

1941–51

1.96 (0.23) 3.13 (0.25) 3.48 (0.34) 5.55 (0.61)

a

Standard errors are in parentheses. The difference between period means is statistically significant at the one percent level for both the Top 10 (t = 3.39) and the Top 20 (t = 3.19).

conference time variances decline after 1952. The mean difference between pre-and post-enforcement values is 0.0124 with a statistical significance of one percent. Similarly, all five cumulative variances increase in the post-enforcement period. The mean difference is +0.0102, also with a one percent statistical significance.31 Note that all ten signs on the variance term differences in Table III are consistent with the cartel hypothesis. The probability of no inconsistent sign occurring by chance is 0.001.32 The last column of Table 3 compares conference champion concentration for 1927–51 and 1957–81. The relative HHI increases in all six cases, including now the Lambert Trophy winners. The mean increase is +1171, statistically significant 31 The mean single season variance is the sum of the time and cumulative variances in each period (see note 32) reported in Table III. It is lower in three conferences in 1957–81 and higher in two. The mean change is 0.0021, statistically insignificant (t = 0.70). There is no evidence of a time trend in either period in any of the conferences. 32 An ideal state of competitive balance in a sports league can be defined as each team having an equal chance of winning every game in a season. The corresponding won-lost percentage variance is 0.25/m, where m is the number of games scheduled for each team (e.g., see Fort and Quirk, 1996, p. 1267). It can be compared to our multi-season measures by noting that our total variance VAR is the mean of individual season won-lost percentage variances over the period for which it is specified (see text Equation (1)). With (say) a seven game annual schedule, the ideal VAR = 0.0357 regardless of period length. A rough comparison can be made to the data in Table III by adding the time and cumulative variances for each conference and period (see text Equation (4)). None of the conferences conforms to the ideal in either period. The discrepancy may arise in part because the underlying assumption of a 50 percent chance of winning every game is unrealistic. For example even if colleges select high school players randomly, a team that is “lucky” for a few years running will accumulate a stock of above average quality players, and so will have a greater than 50 percent chance of winning its games. For other teams a run of bad luck could cause the reverse to occur. Accordingly, it is unlikely that in any given year all conference schools would have an equal probability of winning, and the expected variance of won-lost percentages would be greater than 0.25/m. This is an example of the “momentum” that Scully (1992) suggests is an explanation for similar differences between actual and ideal annual win percentage variances In professional sports.

362

E. WOODROW ECKARD

Table III. Conference competitive balance, pre- and postenforcement Cumulative Variance

Champ HHI

0.0446 0.0605 0.0159

0.0347 0.0257 +0.0090

2591 1133 +1458

1957–81 1927–51 diff 1957–81 1927–51 diff.

0.0464 0.0552 0.0088

0.0260 0.0212 +0.0048

1368 816 +552 2528 552 +1976

Pacific Ten

1957–81 1925–51 diff.

0.0511 0.0707 0.0196

0.0198 0.0095 +0.0103

1659 738 +921

SEC

1957–81 1926–51 diff.

0.0509 0.0589 0.0080

0.0315 0.0208 +0.0107

1808 571 +1237

SWC

1957–81 1927–51 diff.

0.0526 0.0621 0.0095

0.0228 0.0064 +0.0164

1231 347 +884

Mean Difference t-statistic

0.0124 5.42a

+0.0102 5.48a

+1171 5.71a

Conference

Period

Big Eight

1957–81 1927–51 diff.

Big Ten

Lambert Trophy

a

Time Variance

N/A

N/A

One percent significance level.

at the one percent level. Competitive balance at the conference level declined by all measures after NCAA enforcement began.33 As noted earlier, the decrease in conference time variances should be accompanied by an increase in the autocorrelation of individual school win percentages. I test this with a subsample of 21 schools from the three conferences with uninterrupted standings for both the full pre- and post-enforcement periods.34 Separate OLS time trends for each school’s annual PCTs are computed for both periods, and autocorrelation coefficients are calculated from the resulting Durbin-Watson 33 Might competitive balance have been affected by racial integration in southern schools during our post-enforcement period? While a connection is not clear on a priori grounds, note that the drop in competitive balance occurred both in conferences that underwent desegregation (SEC and SWC) and in those already integrated (Big Ten, Big Eight, Pacific Ten, and Lambert Trophy). 34 The conferences are the Big Eight, Big Ten, and Southwest (see note 24). The schools are listed in Table 1, excluding Colorado, Oklahoma State, Chicago, Michigan State, Houston, and Texas Tech which were not members of their conferences for the full pre- and post-enforcement periods, and Baylor which dropped football during 1943 and 1944.


363

statistics. The mean change in the coefficient for the 21 schools is +0.113, statistically significant at the 10 percent level (t = 1.91). The evidence supports, albeit weakly, an increase in the autocorrelation of individual school win percentages in the post-enforcement period. Did established football powers benefit from cartel formation? We can test this by looking at the Top 10 and Top 20 representation for our five sample conferences, which were the major football conferences prior to 1952 as well as after. In total, their teams made 215 appearances in the Top 10 during 1957–84, compared to 182 during 1924–51. Similarly, they had 223 appearances in the Top 20 during 1957– 72, compared to 177 during 1936–51. We can also examine the performance of the leading schools within these conferences. Fourteen schools had cumulative win percentages greater than 0.500 during the pre-enforcement study period, excluding six private schools (see below). Ten of the 14 increased their win percentages in the post-enforcement period, and only one fell below 0.500.35 In sum, teams from the leading conferences appeared more frequently in the national polls after 1952, and their top teams generally improved their records. We hypothesized earlier that NCAA regulation should particularly disadvantage schools with high academic standards because they have a greater need for “flexibility” on this dimension. Data on official academic standards (e.g., admission requirements and “good standing” criteria) are not available for our sample time periods. Separate standards that may have applied to football players were no doubt never made public, even before NCAA enforcement began. We may proceed, however, by making the crude assumption that private schools (an objective criterion) generally have higher academic standards than public schools. The hypothesis, then, is that the relative performance of private schools declines after 1952. At the conference level, I compare the cumulative won-lost percentages for the nine private schools in the five conferences analyzed above, for the same preand post-enforcement periods. Eight of these nine schools have lower PCTs after enforcement began.36 The mean decline is 0.166, significantly different from zero at the one percent level (t = 3.25). At the national level, I count the total appearances of private schools in the Top 10 and Top 20 polls, and the number of different schools appearing. For the Top 10 the total appearances (number of schools) dropped from 128 (33) during 1924–51 to 49 (14) during 1957–84. Similarly, the numbers for the Top 20 dropped from 145 (66) to 39 (19). While our proxy here is crude, the 35 The ten schools are Alabama, Georgia, Louisiana State, Michigan, Missouri, Nebraska, Ohio State, Oklahoma, Purdue, and Texas. Why do non-dominant conference schools accept being “relegated” to the middle or lower ranks? The answer may be side-payments, i.e., a complex system of revenue sharing in which perennial football powers distribute proceeds among other schools. This includes bowl game revenues shared among all conference members; TV contract revenue sharing; and visiting team shares of individual game ticket sales receipts unrelated to the visitor’s drawing power. 36 The schools are Northwestern in the Big Ten; Stanford and Southern California in the Pacific Ten; Tulane and Vanderbilt in the SEC; and Baylor, Rice, Southern Methodist, and Texas Christian in the SWC. The Big Eight had no private schools. Only Southern California improved its won-lost percentage.

364

E. WOODROW ECKARD

results are consistent with a relative decline in the football fortunes for schools with higher academic standards. 2. ENFORCEMENT EFFECTS: BALANCE TRENDS We expect that the trend toward more stringent regulation since the 1950’s should produce a corresponding trend toward declining balance. To analyze trends and the timing of impacts, the pre- and post-enforcement periods are each split into three eight-year periods. For each “short period,” competitive balance measures are calculated as above at both national and conference levels. Next, indexes are constructed for each measure by dividing individual period values by the preenforcement three-period mean. Index values greater than unity indicate a value greater than the pre-enforcement mean. The three conference indexes are computed by averaging across conferences in each period to conserve space. The results are reported in Table IV. First, note that in the initial post-enforcement period (1957–64) seven of the nine indexes indicate less balance, while the other two (conference champion HHI and number, N, of Top 20 teams) remain at the preenforcement mean. Second, note that for all measures the post-enforcement trend is toward less competitive balance. For seven of the nine measures, the decline is monotonic. An OLS time trend fitted to the individual conference indexes underlying the means reported in Table IV is significant at the five percent level for HHI and at the 10 percent level for the time variance.37 This is consistent with the previously noted trend toward more extensive regulation, tighter enforcement, and more severe penalties.38 Also, note that there is generally no evidence of a prior (linear OLS) trend toward less competitive balance. Six of the nine variables show either no trend or a movement toward more balance over the three pre-enforcement periods. In the three remaining cases (Top 10 HHI, Top 20 entry, and conference time variance), the pre-enforcement trend toward less balance is slight compared to the post-enforcement trend.39 Finally, the post-enforcement index means in all cases indicate less balance. For the conference measures, the difference between pre- and post-enforcement means is statistically significant at the one percent level or better for all three measures. For the Top 10, the differences for the number of teams appearing (N ) and entry/reentry are significant at the five percent level, while that for the HHI is significant at the 10 percent level. For the Top 20, the differences for entry/reentry The cumulative variance trend is not quite significant at the 10 percent level (t = 1.50). There are 15 observations for the conference variance measures and 18 for the HHI measure, which includes the Lambert Trophy winners. None of the post-enforcement trends are statistically significant for the six Top 10 and Top 20 measures where there is but a single degree of freedom for each. 38 The Top 10/20 trends occur despite a substantial concurrent increase in the number of officially classified major programs (see note 18). 39 For the conference cumulative variance and HHI, a Chow test rejects a common pre- and postenforcement time trend coefficient at the 10 percent level of significance. The time variance test is insignificant. 37


365

Table IV. Indexes comparing variables by short periods to preenforcement means National Rankings Top 10 HHI N Entry

Top 20 HHI

N

Entry

1973–80 1965–72 1957–64 Mean

1.65 1.22 1.17 1.35

0.65 0.76 0.86 0.76

0.52 0.60 0.77 0.63

1.36 1.34 1.09 1.26

0.79 0.78 1.00 0.86

0.58 0.49 0.83 0.63

1944–51 1936–43 1928–35 Mean

1.08 0.91 1.01 1.00

0.97 1.07 0.97 1.00

0.96 1.16 0.87 1.00

0.98 1.03 – 1.00

1.02 0.98 – 1.00

0.98 1.01 – 1.00

1973–80 1965–72 1957–64 Mean

Conferences Time Cum Var Var 0.64 1.92 0.80 1.51 0.83 1.30 0.76 1.58

Champ HHI 2.07 1.77 1.00 1.61

1944–51 1936–43 1928–35 Mean

0.91 1.08 1.01 1.00

1.06 0.77 1.18 1.00

0.93 0.74 1.32 1.00

and HHI are significant at the 10 percent level, while that for N is not significant. These results are consistent with those reported in Tables II and III for the “long periods”. 3. UNRESTRICTED TV EFFECT The last hypothesis compares our competitive balance measures before and after the 1982 court decision voiding the NCAA’s restrictive TV contracts. As noted earlier, the NCAA argued that unrestricted telecasts would reduce playing-field balance, implying a counterfactual in which the above observed drop in balance after 1952 might have been even greater without NCAA regulation because of the introduction of television. The “before” period is 1973–81 and the “after” is 1987-95, each nine years long. Table V summarizes the results for national rankings. The number of schools appearing in the Top 10 increases from 27 in 1973–81 to 37 in 1987–95, and the HHI falls from 560 to 449. Similarly, the number of schools in the Top 20 increases from 51 in 1973–81 to 56 in 1987–95 and the Top 20 HHI decreases from 301

366

E. WOODROW ECKARD

Table V. National rankings competitive balance, pre- and post-TV contract ban

Top 10

Top 20

Concentration Period N

HHI

Entry/Reentry Period Meana

1987–95

37

449

1987–95

1973–81

27

560

1957–81

1987–95

56

288

1987–95

1973–81

51

301

1957–81

2.78 (0.40) 1.96 (0.23) 3.44 (0.41) 3.48 (0.34)

a

Standard errors are in parentheses. The difference between period means is statistically significant for the Top 10 (five percent level, t = 2.05) but not for the Top 20 (t = 0.01).

to 288. The last two columns of Table V present entry/reentry data analogous to those in Table II. Top 10 entry/reentry increases from 1.96 teams per year in the pre-ban period to 2.78 post-ban, a difference that is statistically significant at the five percent level. Top 20 entry/reentry is essentially unchanged.40 Competitive balance at the national level did not decline after open TV competition began. Instead it may have increased. Table VI summarizes the parallel analysis for the conference measures, adding the Atlantic Coast (ACC) and the Western Athletic (WAC) to those included in Table III.41 The time variance increases in four of the seven conferences. The mean change is +0.0035 but is not statistically significant at conventional levels. The cumulative variance decreases in five cases, and increases in two. The mean change is 0.0109, significant at the 10 percent level.42 The last column of Table VI shows conference champion concentration comparisons. For seven of the eight cases, including the Lambert Trophy winners, the relative HHI declines after the TV contract ban. The mean difference is 994, but is not statistically significant. The last results are substantially affected by the SWC, which experienced a major increase in HHI due to the dominance of Texas A&M. Without the SWC, the mean is 1421, significant at the one percent level. Again, if any change occurred at 40

The Top 10/20 trends occur despite a substantial concurrent reduction in the number of officially classified majors (see note 18). 41 The SWC standings are reconstructed to exclude Southern Methodist during 1987–95 because of the NCAA-imposed “death penalty” (no football during 1987–88) and subsequent serious penalties. The resulting dramatic decline in SMU’s football fortunes cannot be attributed to the TV contract decisions. 42 The mean of the single season variances is the sum of the time and cumulative variances in each period (see note 32) reported in Table V. It is lower in five conferences in 1987–95 and higher in two. The mean change is 0.0074, statistically insignificant (t = 1.29).


367

Table VI. Conference competitive balance, pre- and post-TV contract ban Cumulative Variance

Champ HHI

Period

ACC

1987–95 1973–81 diff.

0.0448 0.0481 0.0033

0.0248 0.0471 0.0223

910 1164 254

Big Eight

1987–95 1973–81 diff.

0.0342 0.0243 0.0099

0.0569 0.0506 0.0063

3380 4217 837

0.0316 0.0454 0.0138

1870 3074 1204 2086 4556 2470

Big Ten

Lambert Trophy

1987–95 1973–81 diff 1987–95 1973–81 diff.

+

0.0368 0.0250 0.0118

+

+

N/A

N/A

Pacific Ten

1987–95 1973–81 diff.

0.0300 0.0326 0.0026

0.0226 0.0467 0.0241

1733 3009 1276

SEC

1987–95 1973–81 diff.

0.0336 0.0407 0.0071

0.0446 0.0442 0.0004

1959 4247 2288

1987–95 1973–81 diff.

0.0437 0.0365 0.0072

0.0354 0.0413 0.0059

2763 768 1995

0.0432 0.0348 0.0084

0.0276 0.0442 0.0166

2130 3750 1620

1.13

0.0109 2.30a

994 1.87

SWC

WAC

1987–95 1973–81 diff. Mean Difference t-statistic

a

Time Variance

Conference

+

+ +0.0035

+

+

10 percent significance level.

the conference level it was toward more balance, not less. A similar conclusion is reached by Carroll (1994) and Bennett and Fizel (1995), using different measures. VIII. Conclusions The NCAA’s enforcement of player eligibility, compensation, and recruiting regulations introduced in 1952 arguably constitutes the most significant operational change in college football history. These restrictions on competition among col-

368

E. WOODROW ECKARD

leges for football players are pursuant to its “Principle of Amateurism”. Justified or not, they constitute an economic cartel complete with a mechanism for detecting and penalizing cheaters. Economic theory predicts that cartel enforcement should reduce playing-field balance over time; i.e., produce more stability (less “churning”) in conference standings and national rankings. The evidence reported herein supports this hypothesis. It is based on national rankings and major conference standings covering roughly a quarter century before and after NCAA enforcement began. Appearances in national Top 10 and Top 20 lists are more concentrated among fewer schools after the mid-1950s, and fewer “outsiders” enter or reenter. Conference cumulative won-lost records show greater variation after enforcement began; there is less year-to-year variation in individual school win percentages, and their autocorrelation may have increased; and championships are concentrated among fewer schools. Also, the leading conferences and their top teams appeared to benefit from the regulations. An analysis of shorter periods suggests that balance progressively worsened after the mid-1950s, corresponding to a trend toward more extensive regulation, tighter enforcement, and harsher penalties. In some cases trends toward more balance prior to 1952 were reversed. If regulation promotes balance, as the NCAA apparently believes, the opposite should have occurred. Finally, competitive balance did not decline after the NCAA’s restrictive TV contracts were banned in 1982, suggesting that the advent of televised football in the 1950’s is not an alternative explanation for the observed drop in balance. A fundamental conflict may therefore exist between two of the NCAA’s main objectives. Amateurism is being pursued at the cost of reduced competitive equity. The NCAA should recognize this perhaps unintended trade-off in its governance of college football. References Becker, Gary S. (1987) ‘The NCAA: A Cartel in Sheepskin Clothing’, Business Week, (September 14), p. 24. Bennett, Randall W., and John L. Fizel (1995) ‘Telecast Deregulation and Competitive Balance: Regarding NCAA Division I Football’, American Journal of Economics and Sociology, 54, 1830–99. Borland, Melvin V., Brian L. Goff, and Robert W. Pulsinelli (1992) ‘College Athletics: Financial Burden or Boon?’, in Gerald W. Scully (ed.), Advances in the Economics of Sports, Vol. I, Greenwich, CN: JAI Press Inc. Brown, Robert W. (1993) ‘An Estimate of the Rent Generated by a Premium College Football Player’, Economic Inquiry, 31, 671–84. Carroll, Kathleen A. (1994) ‘Agency Behavior in a Nonprofit Setting: Effects of the 1984 Supreme Court NCAA Decision’ (unpublished manuscript), Department of Economics, University of Maryland, Baltimore. Caves, Richard E. and Michael E. Porter (1978) ‘Market Structure, Oligopoly, and Stability of Market Shares’, Journal of Industrial Economics, 26, 289–313. Dickinson, Frank G. (1941) Dickinson’s Football Ratings, Omaha, NE: What’s What Publishing. Eckard, E. Woodrow (1987) ‘Advertising, Competition, and Market Share Instability’, Journal of Business, 60, 539–52.


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Falla, Jack (1981) NCAA: The Voice of College Sports, Mission, KS: NCAA. Fleisher, Arthur A. III, Brian L. Goff, and Robert D. Tollison (1992) The National Collegiate Athletic Association: A Study in Cartel Behavior, Chicago, IL: University of Chicago Press. Fort, Rodney, and James Quirk (1996) ‘Cross-Subsidization, Incentives and Outcomes in Professional Sports Leagues’, Journal of Economic Literature, 33, 1265–99. Greenspan, David (1988) ‘College Football’s Biggest Fumble: The Economic Impact of the Supreme Court’s Decision in NCAA v. Board of Regents of the University of Oklahoma’, The Antitrust Bulletin, 33, 1–65. Landes, William M. (1982) ‘Expert Report of Dr. William M. Landes in the Board of Regents of Oklahoma, et al., v. National Collegiate Athletic Association, et al.’, Defendant’s Exhibit ZX-1 (dated June 9). Lanzillotti, Robert F. (1996) ‘The Great School Milk Conspiracies of the 1980s’, Review of Industrial Organization, 11, 413–58. McCormick, Robert E. and Maurice Tinsley (1990) ‘Athletics and Academics: A Model of University Contributions’, in Brian L. Goff and Robert D. Tollison (eds.), Sportometrics, College Station, TX: Texas A&M University Press. Meyers, D. Kent, and Ira Horowitz (1995) ‘Private Enforcement of the Antitrust Laws Works Occasionally: Board of Regents of the University of Oklahoma v. NCAA, A Case in Point’, Oklahoma Law Review, 48, 669–709. NCAA (1983) ‘Brief for the Petitioner’, in NCAA v. Board of Regents of the University of Oklahoma, et al, 468, U.S. 85, 104 S. Ct. 2948. NCAA (1993) NCAA Manual, Overland Park, KS: NCAA. NCAA (1993) NCAA Guide to Recruiting, Overland Park, KS: NCAA. NCAA, NCAA Football Guide, various issues. NCAA, ‘NCAA Enforcement Summary’, (undated). Ours, Robert (1994) College Football Encyclopedia, Rocklin, CA: Prima Publishing. Savage, Howard J. (1929) American College Athletics, (Bulletin No. 23), New York, NY: The Carnegie Foundation for the Advancement of Teaching. Scully, Gerald W. (1989) The Business of Major League Baseball, Chicago, IL: The University of Chicago Press. Scully, Gerald W. (1992) ‘Momentum in Sports’, in Gerald W. Scully (ed.), Advances in the Economics of Sports, Vol. 1, Greenwich, CN: JAI Press. Shea, Edward J. and Elton E. Wieman (1967) Administrative Policies for Intercollegiate Athletics, Springfield, IL: Charles C. Thomas Co. Stigler, George F. (1964) ‘A Theory of Oligopoly’, Journal of Political Economy, 72, 44–61. Telser, Lester (1964) ‘Advertising and Competition’, Journal of Political Economy, 72, 537–62. U.S. House of Representatives (1978) ‘NCAA Enforcement Program’, Hearings Before the Subcommittee on Oversight and Investigations of the Committee on Interstate and Foreign Commerce, 96th Congress.