The Money Game: A Statistical Analysis of Revenue and Competitive Imbalances in College Athletics
Date
2008
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Haverford College. Department of Economics
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Thesis
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Award
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eng
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Haverford users only
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Abstract
Revenue imbalance has been linked to competitive imbalance in athletics by many researchers over the years. However, much of the previous research has centered around professional sports leagues, leaving the financial aspects of college sports somewhat unexplored. I tested my hypothesis, that revenue imbalance leads to competitive imbalance in both college football and basketball and that high revenue teams will be more successful in terms of winning percentage, by conducting a statistical analysis of the financial records and performance of 68 schools. Using Lorenz curves and the gini coefficient to calculate revenue imbalance, I was able to correlate my results with a measure of competitive imbalance: the standard deviation ratio of winning percentage. Results showed a significant positive relationship between the two, supporting the first part of my hypothesis. However, regressions used to determine the relationship between revenue and winning percentage returned no significant results. Although revenue imbalance is creating competitive imbalance, there are no particular revenue-based groups that are benefiting from this imbalance. There is still a need for future research in this area. While this study was hampered by a small sample size, a broader and more lengthy examination of revenue and competitive imbalance could produce more significant results.