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On any given Saturday afternoon in October, even at the highest level of play—where the assistant coaches earn more than top faculty and the turf is surrounded by luxury skyboxes—exactly half of the college football teams in America lose. Basketball is the same. Even in the post-season championship, where ticket prices can run to over $3,000 per seat and the television audience may exceed 20 million, half of the teams that play lose. All but one of the 68 teams in the NCAA's “March Madness” basketball tournament ends the season with a loss. In recent years, when a university may earn well over $10 million per year from fees for sports-broadcast rights, half of the teams still lose. Collegiate athletic competition is a zero sum game: The number of winners equals the number of losers.
So why do universities spend growing sums of scarce resources on an activity when the odds of winning remain no better than even? Perhaps the vast revenue streams generated by competition generate profits for universities that they can use to support other missions—say, educating students.
Malcolm Getz is an associate professor of economics at Vanderbilt University, where he has also been director of the Jean and Alexander Heard Library (1984–94) and associate provost for information services and technology (1985–94). His most recent book is Investing in College: A Guide for the Perplexed.
John Siegfried is professor of economics emeritus at Vanderbilt University, a research fellow at the University of Adelaide, South Australia, and secretary-treasurer of the American Economic Association. He has also been president of the Southern and Midwest Economics Associations. His research concerns antitrust economics, the economics of sports, and the economics of higher education. This is a condensed version of an essay by the same authors published in The Oxford Handbook of Sports Economics, edited by Leo Kahane and Stephen Schmanske (Oxford University Press, 2012). Documentation and references can be found in the original. The authors thank Charles Clotfelter, Brad Humphreys, Leo Kahane, Kevin Quinn, Stephen Schmanske, Peter Sloane, and Andrew Zimbalist for helpful comments on an early draft.
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