Most Football Players Make More Money For Their Colleges Than They Earn Playing in the NFL
August 23, 2012 1 Comment
The most coherent argument made by those who support the college football status quo is that players don’t need to be compensated for helping fill university coffers because college football allows them to earn loads of money in the NFL. It’s hard to settle this argument empirically due to the difficulties in finding the “true” value a player extracts from his time in college, but there are some simpler questions whose answers can be quite revealing. For example, do college football players earn more money in the NFL than they make for their schools? If they don’t, it would certainly support the case that there is some kind of exploitation going on.
In a new paper, Robert Brown, an economist at Cal-State San Marcos, attempts to answer this question by examining data from the 2004-05 college football season. After a variety of statistical tricks aimed at controlling for the different types of college football programs, Brown concluded that nearly two-thirds of players drafted by an NFL team don’t earn enough money to compensate for what their universities made off of them.
First, this paper uses a quantile regression method to account for differences in player marginal revenue products across college teams with different revenue- generating capabilities; for instance, players at high-revenue college teams produce higher marginal revenue products and thereby experience greater degrees of monopsony exploitation to overcome at the professional level. Next, it approximates professional players’ earning profiles using NFL salary data, and then weighs these earnings against a player’s foregone college compensation resulting from monopsony- induced restrictions in college football. The results indicate that between 33 and 38 percent of this sample of players (active and inactive) will earn NFL incomes sufficient to offset their monopsony-lost college earnings: A handful of these NFL players earn huge net surpluses but most can expect more modest net earnings.
According to Brown’s model, a future NFL draftee at a football program in the 90th percentile in terms of revenue can earn the program $2.5 million. These players would have to have a fairly successful NFL career to earn more than these “monopsony-lost” college earnings. If you’re thinking “so what?”, imagine that before starting a business aspiring entrepreneurs had to have unpaid internships in which they occasionally made their employers large sums of money that dwarfed whatever monetary benefits they received through the increased training and experience. Would people be outraged?
It’s also worth pointing out that Brown’s analysis is a fairly conservative estimate of the “exploitation” that’s going on. For example, when most people make money for their company, they’re compensated with money. If you’re not getting paid for your work, it’s unfair — it doesn’t matter that your new training and experience will lead to an increase in future earnings that surpasses what the company is making off of you. Yet Brown’s analysis assumes this lack of monetary compensation and merely looks at the value of the “training.”
In the end, this is just another wonky economics paper that won’t change anything, but the fact that the majority of drafted players earn less in the NFL than they make for their colleges is fairly jarring (and let’s not forget about the players who aren’t drafted.)
Brown, R. (2012). Do NFL Player Earnings Compensate for Monopsony Exploitation in College? Journal of Sports Economics DOI: 10.1177/1527002512450266