orgtheory.net

Since sports are still a hot topic for the summer orghead, I thought I’d throw up a post about the recent changes in the competitive field of college sports. Those of you who follow college athletics may have been as intrigued as I was by recent events that nearly led to the dramatic collapse of the college conference system. Every day seemed to offer new crucial details about the behind-the-scenes attempts by college presidents to gain or maintain positions in athletic conferences in their attempt to sustain competitive advantages over their peers or gain access to new sources of revenue or not move down the college athletic status hierarchy.  As Gordon Smith says, “the end game is power.” Power allows you to determine which schools can share in the revenue generation of the highest-profile sport in college sports – football.

The Bowl Championship Series, or BCS, is at the center of this power game. A number of politicians have claimed that the BCS violates anti-trust laws by precluding certain schools from gaining access to the highly prized championship games and hence excluding them from an important source of revenue generation. Nathaniel Grow, a legal scholar at the University of Georgia, has a new paper describing the anti-competitive dynamics behind the BCS. Here’s a summary from the Sports Law Blog:

First, I assert that the BCS can be attacked as an illicit group boycott, insofar as it distributes revenue unequally and without justification, to the detriment of universities in the non-BCS Conferences. For example, following the 2009-10 season, the BCS distributed at least $18 million in revenues to each of the six BCS Conferences, while the five non-BCS Conferences received a total of only $24 million, despite two non-BCS schools (Boise State and TCU) having been selected to participate in BCS bowl games. Thus, despite increased access to BCS games for the non-BCS schools, the non-BCS Conferences still face significant differential treatment with respect to the financial payouts accompanying an appearance in a BCS bowl game.

Second, and perhaps more significantly, the BCS can also be attacked as an illegal price fixing scheme, due to the fact that it enables formerly independent, competing entities (the participating BCS Conferences and bowl games) to collectively determine the amount of revenue to be distributed to BCS participants.

What Grow doesn’t focus on are the status implications of the BCS.  Membership in a BCS conference has become the de facto boundary marker of status in college athletics. If you’re in a BCS conference, you have higher status in sports, and if you’re not, you lack it.  The status distinction is even used by commentators from sports outside of football (e.g., a college baseball analyst might describe TCU as not belonging to a BCS conference when marveling that a lower status school can compete at such a high level in the college world series).  The implications are pretty severe. High status schools get more air time on television. They become the focus of the public eye. This leads to Matthew effect dynamics that reproduce their position in the status structure (e.g., high status schools expend less effort in recruiting better athletes; high status schools get more revenue due to their better television contracts which allows them to build better facilities). Initially small differences in athletic quality become much bigger over time due to these dynamics.

The field of college athletics seems like an industry ripe for analysis by organizational theorists and economic sociologists. As an example of the kinds of research that can be done see Washington and Zajac (2005) on status evolution in NCAA basketball.  If you’re interested in the implications of status differences or anti-competitive strategies, college sports is the place to be.