NCAA football coach compensation and non-price competition for football players

Abstract

College football coach salaries at big-time programmes have increased substantially in recent years. We investigate non-price competition for incoming athletes as a source of salary increases. The NCAA cartel ensures that athletes receive compensation limited to the cost of attending college, which prevents football programmes from competing for athlete’s services on a price (compensation) basis. Non-price competition frequently emerges under these conditions. We develop evidence that increases in head football coach salaries cause increased football recruiting success using an instrumental variables approach to control for correlation between salaries and unobservable institution-specific factors affecting recruiting success. Results from a sample of 90 FBS schools over the period 2006–2015 support the presence of non-price competition for college football players. Each $1 million increase in head coach salary increases the quality of the incoming class of football recruits by about one standard deviation.