Collegiate Athletic Directors as Entrepreneurs

Abstract

One can define entrepreneurship, at its most basic level, as rent-seeking behavior. This behavior can be productive, as when firms innovate to create new or better products or when they enter a market to increase output where price exceeds marginal cost. Rent-seeking can also be unproductive, particularly when it interfaces with the public sector. In such cases, firms may try to create or preserve rents by securing monopoly power from the government. Traditionally, economists have analyzed rent-seeking behavior solely in the private and government sectors of the economy. I extend the concept to the not-for-profit sector, in particular to the sphere of higher education. Specifically, I construct a simple model of rent-seeking behavior by colleges and universities, as seen by their decisions to fund some sports and not fund others. While I associate the funding decision with the collegiate athletic directors, one can just as easily attribute the decisions I describe to the president or board of trustees of the university. The findings show why football and, to a lesser extent, men?s basketball tend to dominate intercollegiate athletics. They also demonstrate why schools sometimes differ in the sports they offer and why Title IX poses such a dilemma for college athletics. Finally, they show that appealing to “government” – in the form of the National Collegiate Athletic Association (NCAA) – may result in productive rent-seeking behavior rather than unproductive behavior. In the next section, I introduce the notion of the athletic director as entrepreneur. In Section II, I present the basic model of how athletic directors behave. In Section III, I extend the model to show how the NCAA and Title IX affect the basic model. A conclusion follows.