Thursday, January 05, 2006

Why is there a Rose Bowl?

I don’t mean in the sense of, “instead of a playoff system, as in every other NCAA sport.” The convoluted BCS system is easy enough to explain in economic terms. The bowl system has its origins in the time before the NCAA took control of college sports, when Pasadena established the Rose Bowl as an adjunct to its Tournament of Roses promotion. Over time, the gains to cities and individual schools resulting from the proliferation of bowls (almost half of Division I football teams went to one this year) means that the switching costs of going to a playoff are too great, even for a cartel like the NCAA. The big four bowls have found enough gains from trade from satisfying the fans (which are even greater with Fox Sports taking it over next year) to establish the Bowl Championship Series contraption. It will be with us for some time. This may be an example of path dependence, in which historical momentum means that an inferior standard gets locked in at the expense of an alternative that, from the point of view of year zero, is more efficient. Examples cited include the QWERTY keyboard you are using, which is allegedly inferior from the point of view of typing speed to the Dvorak layout. (Compare them here.) But people are trained on QWERTY, and so to retrain them on Dvorak is too costly. Similarly, no manufacturer wants to produce a lot of Dvorak keyboards, because not a lot of people are trained to use them. The dominance of Windows over allegedly superior operating systems is another example (although a debatable one). A playoff would be better for the fans, and would certainly provide more confidence that the winner is really the best team, but too much is at stake in the current bowl system.

But the larger mystery is why there is big-time college sports at all. The notion of huge numbers of people watching at the stadiums and arenas, and in the process generating billions of dollars in revenues for universities, is as far as I know peculiar to the United States. In other wealthy countries universities have athletic teams, and occasionally (e.g., rowing competitions in the UK) they generate interest in the broader population, but there is nothing like the frenzy over football and men’s basketball in the U.S. That universities invest so much in sports is all the more striking given the public-relations costs they must bear from athlete misbehavior, the relaxation of academic standards, the occasional point-shaving scandal and so on.

A number of economic theories have been proposed to explain this. One has it that big-time athletics is a form of what economists call signaling. The university is trying to appeal to potential students (and potential faculty too, perhaps) who have a hard time discerning university quality. When product quality is unknown but it is possible to establish its quality by spending money on a signal unrelated to that quality, doing so will allow buyers to distinguish higher- from lower-quality producers. The high-quality car sellers, for example, will invest in expensive car-loan programs, elaborate dealership facilities, and so on because it persuades the buyer that the dealer has the money to invest in high-quality cars. Similarly, universities that spend a lot on frills such as big-time sports might also have a lot to invest in the quality of instruction and research.

But this seems hard to believe. University quality is readily observable. Students generally know high- from low-quality schools, and many of the highest-quality ones (the Ivies, MIT, Cal Tech, Chicago) spend very little on big-time sports. Another theory is that it is a signaling device targeted at alumni, to persuade them that the university is continuing to invest in university quality, which means that the reputation of alumni degrees is maintained. But the farther away you get from graduation the less important your education is relative to your work experience, so this too seems strained.

Murray Sperber, a professor of English at Indiana, very provocatively contended in his book Beer and Circus: How Big-Time College Sports is Crippling Undergraduate Education that athletics is a way to distract undergraduates while resources are diverted from instruction to what the faculty value, which is research. This is a tough hypothesis to test, although some work shows that spending on all athletics and membership in a major athletic conference, after standardizing for other things that should be accounted for, is associated with higher-quality students, while the Sperber theory might predict the opposite. It is also possible that colleges offer athletics because students like it, although the exceptionalism of the U.S. relative to other rich countries would then remain to be explained – why don’t universities in Germany or France solicit students this way?

Another possibility is the vastness of the U.S. Because it is such a big country (with big travel costs), and because pro sports leagues are inherently limited by size (England, at 130,423 square km of area, has 20 Premiership soccer teams, while the U.S., with 9,161,923 square km, only has 32 NFL teams), vast areas of the country are unavoidably underserved by pro sports leagues. (Until the Colorado Rockies were born in the mid-1990s there was not a single major-league baseball team in the Mountain time zone.) College sports then appeals to the surrounding populace that is not attractive to the pro leagues. (Anyone who has watched people travel across Tennessee or Nebraska on game day with school flags flying out of the windows of their cars can appreciate this.) This theory is also supported by the fact that in the Northeast, the most densely populated part of the country (in terms of people and pro franchises), big-time college football is least popular.

But I confess this is not an entirely satisfying theory at the intuitive level. Jamming 100,000 people into a stadium or being transfixed for three weeks by the Division I basketball tournament to watch university athletes who are for the most part of lesser talent than professionals is still a mystery in need of an explanation.


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