Competition Among Athletic Conferences for New Members: Evidence from NCAA Sports Jane E. Ruseski∗ Patrick A. Reillyy West Virginia University Skidmore College Brad R. Humphreysz West Virginia University Abstract Elite college athletics conferences' television broadcast rights provide additional revenue to their members. These \big-time" athletics programs derive most of their value from football. Unlike a typical market, football programs cannot compete on price because of weekly games and the limited length of the college football season. Instead, conferences must rely on other forms of competition. In this paper, we investigate nonprice competition in the form of changes in conference affiliates. We seek to estimate how conferences value program ranking and program popularity when adding conference members. Our data consist of 73 conference changes for 120 FBS college football programs between 2002 and 2015. Using probit models, we estimate the likelihood of a conference adding a team. Our findings suggest that the most prestigious conferences value both our measures of success and team popularity when seeking new conference members. Less prestigious conferences put a greater value on success and less on team popularity. Introduction This paper analyzes a novel form of competition in sports: competition among US college sports conferences for new members. A 1984 Supreme Court of the United States ruling, the Board of Regents (BOR) decision, prohibited the National Collegiate Athletic Association (NCAA) from collectively bargaining for television rights fees with broadcast networks for games played by big-time college football teams and instead granted this power to conferences and individual schools. The BOR decision clearly impacted conferences, spurring realignment and other outcomes in big-time college sports (Carroll and Humphreys, 2016). This ruling generated enormous increases in broadcast revenues earned by US universities and caused ∗Department of Economics, Chambers College of Business and Economics, PO Box 6025, Morgantown WV 26506-6025; email: [email protected]; phone: 304-293-7835. yDepartment of Economics, Skidmore College, 815 N. Broadway, Saratoga Springs, NY 12866; email: [email protected]; phone: 518-580-8432 zDepartment of Economics, Chambers College of Business and Economics, PO Box 6025, Morgantown WV 26506-6025; email: [email protected]; phone: 304-293-7871. Fax: 304-293-7061. 1 significant changes in conference composition and size. Televised NCAA athletics began with a $1.1 million ($10.5 million in 2018 dollars) broadcast rights deal in 1952 between NBC and the entire NCAA. Today, broadcast rights can earn upwards of half a billion dollars annually for an individual conference. These increased stakes and limited number of agents (for the most part five or six con- ferences controlled the market) make this a highly lucrative oligopolistic setting. However, conferences face inelastic supply, i.e. the number of games cannot expand very much due to time constraints and concerns for players' health. This limits conferences' ability to com- pete with price per game. Instead, to increase profits, conferences attract demand for their particular brand. To do this, conferences must generate a high quality product and, perhaps more importantly, attract viewers away from their competitors through advertising. This is how we see conference expansion and realignment, conferences are acting to increase their consumer base by selectively choosing schools with large fan bases that will draw larger tele- vision audiences. In this paper, we investigate whether or not teams with larger fan bases are more attractive to conferences contemplating realignment. This research will help shed light on the important role played by commercial incentives in \amateur" US intercollegiate athletic competitions. This question has not been explored empirically in this context. Roberts and Samuelson (1988) developed a model of nonprice competition and empirically studied the cigarette industry. Cigarette companies cannot compete with price due to federal and state price floors. They found that advertising as a form of nonprice competition in the cigarette industry increased the market demand rather than demand for the advertised brand. In its current form, our paper does not explore the payoff of conferences' advertising efforts via conference expansion/realignment, rather we focus on the determinants of selection of programs involved in expansion/realignment. The outcome of this analysis has potential implications outside of oligopolistic nonprice competition. Many researchers have used athletic success to measure advertising effect of big-time athletic programs on academic outcomes at universities, e.g. incoming student SAT scores (Mixon et al., 2004, Tucker and Amato, 2006, Pope and Pope, 2009, Segura and Willner, 2016 and others). However, athletic success is likely endogenous to other university outcomes. For example, donors are not solely giving to athletics departments, thus, athletic success might accompany improvements in other parts of the university. Conference changes provide a potentially exogenous change in advertising effect. It creates advertising since a school moving to a better conference likely receives more national attention. If we can identify why schools are selected to join big-time athletics conferences, we can clarify whether or not conference changes are exogenous with respect to academic outcomes at universities. With evidence of exogeneity, conference changes could prove a useful tool to study the impact of big-time athletics on academic outcomes at universities. The paper will analyze the characteristics of teams that switched conference affiliation in this period. We estimate probit models that explain which teams switch conferences. We collected data from 121 NCAA Division 1 Football Bowl Subdivision (FBS) colleges and universities over the period 2002-2015 from a number of sources. We combine data on uni- versity characteristics from the Integrated Postsecondary Education Data System (IPEDS), state and local macroeconomic indicators from Bureau of Economic Analysis (BEA) Regional Economic Information System (REIS), and data on Division 1 athletic conference affiliation 2 from publicly available news outlets. Seventy-three conference changes occurred over the sample, so there is ample variation in conference affiliation to analyze. We find evidence that, when looking for new conference members the most prestigious conferences value our proxies for success and team popularity. Less prestigious conferences put a greater value on success and less on team popularity.1. Background The Board of Regents Decision and Aftermath A 1984 Supreme Court of the United States ruling, the Board of Regents (BOR) decision, prohibited the National Collegiate Athletic Association (NCAA) from collectively bargaining for television rights fees with broadcast networks for games played by big-time college football teams and instead granted this power to conferences and individual schools. The BOR decision clearly impacted conferences, spurring realignment and other outcomes in big-time college sports (Carroll and Humphreys, 2016). This ruling generated enormous increases in broadcast revenues earned by US universities and caused significant changes in conference composition and size. Following the BOR decision, conferences expanded, adding new members. Most new con- ference members came from existing conferences, as the high cost of big-time college sports programs deters colleges with smaller programs from expanding to meet the requirements of big-time college sports. We analyze the competition between conferences for new members from the existing ranks of big-time college athletic programs and the role of factors like enrollment and the local population in determining which schools switched conferences and which remained in their current conference. Athletic conference changes reflect the growing importance of television broadcast rights revenues in big-time college sports. Until the early 1980s, the NCAA negotiated with tele- vision networks for the rights to broadcast college football and men's basketball games on behalf of schools and tightly controlled the number of games televised and the number of television appearances any school could make in a season. Relatively few networks expressed interest in televising NCAA sporting events. NBC began broadcasting college football games in 1952. ESPN began operation on 7 September 1979, and broadcast a few college football games on tape delay starting in the 1979 regular season, but did not begin broadcasting live college football games until the 1984 season. The NCAA sold the first football television broadcast rights deal to NBC in 1952 for $1.1 million ($10.5 million in 2018 dollars).2 The contract allowed NBC to broadcast one regular season game per week to a national audience on Saturday afternoon. In 1953 the NCAA allowed multiple regional broadcasts of different games on selected weeks. This contract was terminated after the 1953 season. In 1955 the contract was again sold, this time for the rights to broadcast one nationally-televised regular season Saturday afternoon game per week for eight Saturdays and a small number of regionally-televised games in a single time 1We proxy team success with rankings and popularity with state population and size of school. 2The first game broadcast under this contract was TCU versus Kansas on 20 September 1952. 3 slot on Saturday afternoon