Some argue that TV broadcasting has made NCAA football just a profit-hungry machine that's no longer about the sport. Schools seem willing to do anything to churn a profit at the expense of players, coaches, and fans. This includes switching conferences to seek rent--the additional profit the school may receive from TV income in a superior conference. Conferences that have the most exciting rivalries, the most talent, and the highest profile games (thus, generating more TV income) have been increasing in members as schools join in search of these profits. Great examples are the SEC, the Pac 12, and the Big 10 (Hang on Sloopy anyone?). While this is happening, some of the weaker conferences (the Big 12 and the Big East) are losing members. This example of the Big 12 setting its 2012 teams at 10, including Missouri illustrates the financial incentives to seek rent, and potentially switch. Missouri has been contemplating moving to the SEC in hopes that they may rake in an extra $12 million a year in TV income. To try and stop the decline in its members, the Big 12 has set a new policy of equal revenue sharing as a means to keep their TV incomes comparable to those of the SEC and keep its remaining members.
What these teams may not be thinking of is the amount of money they are spending moving around conferences dissipates the rent. Barriers to entry and exit, such as existing TV contracts and exit fees, plus the time spent in negotiations between schools, are adding up and cutting into the rent they want--profit from TV income. If this continues, the percent of rent dissipated could exceed the actual potential TV income. So how about everyone just sits tight, stays put, and we can all get back to our football in peace.
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Not only has conference realignment been one of the consequences of the billions of dollars that college football racks in, but the question of paying student-athletes, who are the on field product, has arisen due to the billions of dollars raised. Using Stigler’s theory of regulation, we can analyze how the NCAA and the schools have maintained the scholarship system and kept the student-athletes from being paid. The NCAA is a small well-organized group and has argued that not paying college football players is for everyone’s best. The NCAA argues that all NCAA athletes, male, female, football or field hockey are able to benefit from the funds college football produces. The student-athletes have been unable to organize for the right to pay-for-play because the costs are dispersed amongst thousands of football players and because they have not formed a union. The group that would benefit this is full of small beneficiaries who are not willing to take the cost of changing the system on, which fits into Olson’s theory of large groups with small benefactors. It also fits Stigler’s theory where a small organized group is receiving concentrated benefits by imposing a regulation, while the costs as dispersed. However, unlike Stigler’s political theory the NCAA has a board, not a group of representatives that make decisions. Stigler’s theory of regulation and Olson’s theory on interest groups offer insights into the current status quo in college football wealth distribution.
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