Things I’ve Worked On: NCAAF’s Market Failure

Football in America

The lay of the college football land is one of peaks and valleys. The peaks we know well. They’ve stood since the 19th century and show few signs of erosion: The rolling mountains of Dixie, the ice-capped range of the Rust Belt, the rose-topped plateau of the Pacific Coast–the Alabamas, Michigans, and USCs of the world. You all know their storied pasts, and you’d be forgiven for thinking that nature destined these mountains to grow taller and mightier than everyone else.

Even so, you’d be wrong. Nature doesn’t dictate the winners and losers of college football; information asymmetry does. Specifically, how do powerhouse programs continue to attract all of the top talent? It’s simple: they assure students that their school, more so than any other program out there, will equip them with the tools they need to succeed at the next level. Given that the highest paid public employees in 39 out of 50 states are college football or basketball coaches, it’s probably not difficult for students to believe that the people running these programs are certifiable geniuses.

What goes in doesn’t come out

Unfortunately, these programs are probably selling a lie, and the NCAA is letting them, either intentionally or ignorantly. Consider the top 20 recruits every year from 2004 to 2011, according to Scout.com. If we compare the future success of players who commit to top 5 recruiting schools[1] and those who commit to schools outside of the top 5, as well as those inside and outside the top 10, we get the following:

2017-04-12 (7)

2017-04-12 (17)

Using Python’s StatsModels module, I ran a logit regression[2] with Draft (1 if the player was drafted and 0 otherwise) as the dependent variable and Top5 (1 if the player played at a Top 5 school and 0 otherwise), Rank (national HS rank of the player), Defense (1 if the player plays a defensive position and 0 otherwise), Skill (1 if the player has a non-line position and 0 otherwise), and Intercept (column of 1.0s) as the independent variables.[3] The regression yields a coefficient for Top5 of  -0.8103, or odds ratio of 0.44 (CI of 0.19 – 1.04, p-value = 0.062), which means the odds of being drafted from a top 5 school arm are 56% less than the odds of being drafted from a non-top 5 schools, controlling for rank, defense vs. offense, and skill vs. line. There is, of course, the very real possibility of a confounding variable, i.e., some trait in a person that both leads them to attend a non-power school and makes them pro-ready, but the intuition behind this finding is clear: it’s the difference between vying with the best recruits from across the country for a spot in the starting lineup vs. being the centerpiece of an entire football program. So how have powerhouse schools managed to convince recruits to be a part of their overly crowded programs?

Information Asymmetry

Student-athletes are young and, in many cases, disadvantaged, and the information needed to make a decision about their education is coming from one place: the universities themselves. Colleges cannot be expected to provide harmful information about themselves (or their peers when it means self-incrimination), which means an information imbalance arises where recruits know only half of the story. Here’s where the NCAA should come in. The NCAA is the regulatory body of college football. Its job is to act in the interest of student-athletes. Instead, it is tolerating an information asymmetry, to the detriment of the student-athletes it claims to protect. Perhaps it knows market concentration pulls in better ratings, perhaps it considers NFL data beyond its purview, or perhaps it just doesn’t know. Regardless, the NCAA has a checkered past and it’s high time it made up for it, at the very least by providing adequate information to recruits.

Of course, I’m dismissing the importance of tradition and the shot at a national championship. But if athletes knew that that shot could jeopardize a chance at financial freedom, how many would take it? Furthermore, the NCAA may argue that its job isn’t to advocate for or against any university or set of universities. But if not doing so comes into direct conflict with their role of ensuring the interests of student-athletes, both present and future, then don’t they have a duty to do exactly that?

[1] “Top 5 schools” are any schools that were ranked in the top 5 for recruiting, according to Scout.com, at least once from 2004-2011. These include Florida, Alabama, Ohio State, Florida State, USC, Notre Dame, Michigan, Oklahoma, Auburn, Texas, Miami (Fl), LSU, Tennessee, Georgia, and North Carolina. The top 10 additionally includes South Carolina, Pittsburgh, Iowa, Oregon, Penn State, California, UCLA, Nebraska, and Washington.

[2] Python code:

2017-04-14 (3)

[3] Draft success depends on a number of other factors, including position played, which I simplified to linesman vs skill player and defense vs offense, and size of athlete. For the record, the following is a list of draft success by position.

Top 5 Not top 5 Top 5 Not top 5
QB 5/11 1/1 45% 100%
RB 5/17 5/8 29% 63%
WR 10/18 5/7 56% 71%
OL 9/19 2/5 47% 40%
DL 13/26 4/6 50% 67%
DB 22/36 4/6 61% 67%

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