Revenue per Quality of College Football Recruit

Abstract

There is significant debate about compensation of college athletes in revenue generating sports. In college football, the potential heterogeneity in player value has received little attention in the discussion. The relationship between player quality, team performance, and sport-specific revenue should inform any compensation scheme for college football players. In this article, we provide estimates of player monetary value in college football. This is the first study to exploit player-specific ex ante recruit ratings, team performance, and football-specific revenue and profit (revenue net of expenditures) to infer player valuations. This allows us to estimate value for players whose performance can be difficult to measure given traditional sport metrics. We use a unique data set which records individual recruits by ex ante star rating annually for every Football Bowl Subdivision (FBS) school and combine that data with data on team performance, bowl appearances by type, and football-specific revenue. Using a valuation approach which links player-specific quality to team performance and subsequently to revenue, we infer the value of recruits by their ex ante recruit rating. We estimate that five-star recruits increase annual revenue by US$650,000, four-star recruits increase revenue by roughly US$350,000, and three-star recruits increase revenue by US$150,000. Two-star recruits, however, are negatively related to revenue and profit, with two-star athletes reducing annual revenue by US$13,000. Overall, our results imply that player valuations are heterogeneous and that ex ante ratings of player quality are strongly related to school-specific football revenue and profit and may be predictive measures in a compensation scheme.