Marginal Revenue Products of Collegiate Basketball Players: What's March Madness Worth to Your Team?

Basketball is considered a revenue sport within the context of the National Collegiate Athletic Association (NCAA). The annual March Madness tournament brings in over a billion dollars in advertising revenue alone. This is just one illustration of the influx of money lining the coffers of the NCAA and Division 1 teams each year, leading many to question why the student-athletes don't receive a bigger piece of the pie. Some pundits argue that the athletic scholarship caps and restriction of player movement enforced by the NCAA lead to players contributing more in revenue to their schools than they receive in scholarship value. We test this claim by using a modified approach to estimate marginal revenue products (MRPs) across collegiate basketball teams. We find that for 37% of the teams in our panel, the players are collectively contributing more to revenues than the amount they cost their institutions. We argue that, based on how a MRP is defined within this context, we cannot say with certainty that the current on-court revenue contributions of the remaining teams do not exceed their costs.