Review of Industrial Organization
13: 347–369, 1998.
1998 Kluwer Academic Publishers. Printed in the Netherlands.
The NCAA Cartel and Competitive Balance
in College Football
E. WOODROW ECKARD
College of Business, CB 165, University of Colorado at Denver, P.O. Box 173364, Denver, CO
Abstract. The NCAA regulates college football player recruiting, eligibility, and compensation. The
economic theory of cartels suggests that one consequence may be reduced competitive balance. The
enforced restrictions inhibit weak teams from improving, and protect strong teams from competition.
A “stratiﬁcation” is implied which should be evident over time as less “churning” in national rankings
and conference standings, and fewer schools achieving national prominence. I test this general
hypothesis by comparing various competitive balance measures for about 25 years before and after
NCAA enforcement began in 1952. The hypothesis is supported by all measures at both the national
and conference levels.
Key words: Cartel, NCAA, football, competition
The National Collegiate Athletic Association (NCAA) is the principal regula-
tor of intercollegiate athletics, including football. Its perhaps most important and
controversial activity involves enforced restrictions on player recruiting, eligibil-
ity, and compensation. Because of these regulations, many economists view the
NCAA as a cartel through which members “collude” to exercise joint monopsony
power over football’s main input (e.g., see Becker, 1987; and Fleisher, Goff, and
Tollison, 1992). Players are paid less than their marginal revenue products, and
rents generated by player talents are appropriated by institutions and their athletic
departments. As with any cartel, incentives exist for members to cheat; colleges
competing for players are tempted to break NCAA rules. This has led to formal
policing and enforcement activities, and an on-going stream of violations. Because
its economic regulations are (apparently) legal and its operations transparent, the
NCAA provides a unique opportunity to study cartel behavior.
An important unexamined aspect of the cartel is its impact on playing-ﬁeld
competition. The NCAA justiﬁes its regulations in part by arguing that they are
necessary to promote competitive balance. Cartel theory, however, suggests the
opposite. The regulations and their enforcement inhibit weak teams from improv-
I acknowledge valuable comments received from two anonymous referees and seminar partici-
pants at CU-Denver and the Western Economics Association meetings.