Productivity, Rents, and the Salaries of Group of Five Football Coaches

Abstract

Standard labor market theory says that workers are paid their marginal revenue product (MRP). However, firm revenue is sometimes independent of the productivity of individual workers. This often occurs in professional sports, as the bulk of a team’s revenue comes from league-wide TV contracts negotiated years in advance. This is also true for head coaches at “Group of Five” schools, which form the second tier of college football programs. We show that a coach’s performance affects both his MRP and his bargaining power over the division of exogenous rents that accrue to his program.

A Comparison of NCAA FBS Head Coaches Salary Determination From New and Modified Contracts

“…Berri et al (2015) have argued that teams pay NBA players from fixed revenues. Leeds et al (2018) for "Power 5" head football coaches, and Leeds and Pham (2020) for "Group of 5" head football coaches have argued that universities pay NCAA head coaches from fixed revenues. This study continues this line of inquiry.…”

“…Lastly, Leeds et al (2018) examine “Power Five or Six” conference new head coach’s salaries from 2006 to 2016 and Leeds and Pham (2020) examine “Group of Five” conference head coaches over the same time period to determine if head coaches are able to extract rents. The authors use aggregate athletic department ticket sales revenue as opposed to only football ticket sales revenue as their only variable revenue and aggregate athletic department broadcasting and licensing revenue as their only fixed revenue instead of those revenues generated by the football program.…”

The role of football win percentage on college applications for Power Five and Group of Five schools

“…The highest paid Group of Five coach was paid $2.1 million, which is the same as the lowest paid Power Five head coach. The median salary for a Group of Five head coach was $800,000, less than one‐fourth the median among Power Five coaches (Leeds & Pham, 2020).…”

What is the Impact of Post-Season Bowl Participation on a Football Program's On-Field Success, Recruiting and Revenues?

“…If college athletic programs have substantial fixed revenues, then using this data results in an overestimated effect. Leeds et al (2018) and Leeds and Pham (2020) use aggregate athletic department ticket sales revenue and aggregate athletic department broadcasting and licensing revenue from the USA Today athletics department finance database. The advantage of the USA Today data is that the revenue can be split 4 into variable and fixed revenues.…”