Monday, July 20, 2015

Millions for Luck and Nothing for a Star

There is growing call to pay college athletes  including among sports economists after all a star player can add millions of dollars to a schools revenues. For example, Pete Hunsberger and I wrote at 538 that a star quarterback like Andrew Luck may have been worth close to 6 million dollars over his final two years. Yet, this call often misses something important we don't know who will be the next Andrew Luck or Star Jackson. Payment to players would likely be based on what we expect a player to produce, not what they produce, since contracts in sports are usually signed before play commences.

I hadn't heard of Star Jackson, he was ranked behind Luck as the best pro style college QB coming out of highschool in 2008. He played just a few games with Alabama his freshman year and only on the second string before transferring. In short a typical sports economics model, where a players value is calculated by the wins they add to their team multiple by the value of a win, Jackson's value would small.

Pete and I wrote a full paper on comparing expected versus observed value that appears in this months Journal of Sports Economics. Though the best quarterbacks we estimate to be worth millions of dollars, the best high school quarterbacks are shown to be worth several hundred thousands to their future college.  This is because over one in four top high school recruits never plays a full game at quarterback for his team. Even the top recruits that do play are slightly better, but not substantially so (on the order of half a win a season). The value of lower ranked players is likely to be much smaller and likely for other positions too that have a smaller influence on the outcome.

If we are going to estimate what to pay college players, then the starting point would be with figuring out what we can expect from a given high school player.  I am not currently working on sports economics to focus on development economics, but if anyone wants to extend this paper for other positions or sports it could be the basis for a starting point for college recruit salaries.  

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