Do NFL Player Earnings Compensate for Monopsony Exploitation in College?

Abstract

This paper examines the extent to which a college player’s future income in professional football offsets his monopsony exploitation experienced at the college level. Stated differently, it attempts to measure whether a future NFL draftee's professional earnings compensates for his monopsony-induced loss in income at the college level. This is an important issue in the debate surrounding compensating college players, opposed by many on grounds that the top college players ultimately receive lucrative financial rewards as professionals.

First, this paper uses a quantile regression method to account for differences in player marginal revenue products across college teams with different revenue-generating capabilities; for instance, players at high-revenue college teams produce higher marginal revenue products and thereby experience greater degrees of monopsony exploitation to overcome at the professional level. Next, it approximates professional players' earning profiles using NFL salary data, and then weighs these earnings against a player's foregone college compensation resulting from monopsony-induced restrictions in college football. The results indicate that between 33 and 38 percent of this sample of players (active and inactive) will earn NFL incomes sufficient to offset their monopsony-lost college earnings: A handful of these NFL players earn huge net surpluses but most can expect more modest net earnings.