What Makes a College Coach Overpaid?

From the Bleacher Report, we have a list of 20 coaches who are supposedly being paid too much.

College football coaches make incredible amounts of money in today’s football-obsessed society. Schools want wins and they want a lot of them. They want conference championships and national championships.

And they’re willing to pay for them.

According to a study conducted by USA TODAY, at least two-dozen head coaches made more than $2 million in 2010.

Doesn’t that seem ridiculous?

There is no doubt that these men work extremely hard in an excruciatingly competitive field, but many are overpaid.

Here are the 20 most-overpaid head coaches in the FBS.

The problem with the analysis is the benchmark:  championships.  “Production” of competition requires multiple teams (see Walter Neale’s “Peculiar Economics of Professional Sports.”).  If one coach fails to win championships, perhaps it’s because he’s competing against elite programs year in and year out.

Take Mizzou’s Gary Pinkel, for example.  BR ranks him 10th on the list and writes that he is “milking it” because he gets paid a lot without winning even a conference championship at Mizzou.  It is true he has never won a conference championship.  The two years Mizzou won the Big XII north, a program called Oklahoma beat them three times, once in the regular season and twice in the conference championship game (2007 and 2008).  Maybe it isn’t Pinkel not getting his team to produce at the top of their games.  Maybe credit should go to Bob Stoops (who also appears on the list) in getting the Sooners to play at the very best of his players’ ability.

A better benchmark is to use a coach’s marginal revenue product: how much revenue he generates for his school.  MRP, in turn, is determined by fan willingness to pay for tickets, souvenirs, concessions, etc.  It also depends on fan willingness to watch the Tigers on television and their willingness to donate to the university.  If Gary Pinkel generates $3 million in revenue to Mizzou and is paid $2 million, is he over paid?  No.  If anything, he’s underpaid.

BR link via Craig Depken on Facebook.

Cross posted at Market Power.

3 thoughts on “What Makes a College Coach Overpaid?”

  1. At the end of the day a Football Coach is worth whatever a University will pay him…deciding how much they should pay him boils down to 2 areas…one is touched on above..

    How much revenue does the team produce beyond what it costs to put it on the field for a season?? I would certainly include Alumni gifts to the program..they are a very solid marker on how good people affiliated with the school feel about how things are going. My guess would be that at Michigan this extremely important source shriveled.

    How well does the Coach represent and carry on the values of the University? At Stanford Jim Harbaugh excelled at fulfilling some very stringent criteria…the criteria at Alabama is very different. At Miami of Fla. it’s probably limited to not being on parole.

  2. As someone new to Mizzou this year, I was surprised how much criticism Pinkel gets around Columbia, MO and the entire state of Missouri. Sure he hasn’t won the Big 12 title, but I think with College Gameday and the win over #1 ranked OU earlier in the year (with a record 85,000 attendance), Pinkel has turned the team around, they rank about 4th or 5th in the Big 12 in terms of average attendance now, they win more than they lose, and fans are coming in large numbers to the game, buying jerseys, spending money.

    The most recent equity in athletics data shows Mizzou football bringing in about 25 million in revenue, and just under 14 million in costs for the football program. That 11 million profit I think helps to justify Pinkel’s salary to some extent.

    Also considering the Bleacher Report has Nick Saban at #1 on their list because of his $6 million a year… well Bama has 80,000 people show up to their spring game. $71 million revenue versus $31 million in expenses for football.

    I agree totally with your Dr. Miller, I think Pinkel may be overpaid, especially in regards to the revenue Mizzou generates, though they could probably get a lot more if they got a better TV deal (not many people want to pay $40 to watch Mizzou vs McNeese St. on PPV).

  3. Saban, Brown, Miles and Stoops have all won championships at their current schools so it is hard to say they have underperformed unless they are expected to win the BCS every year. Using a national championship as the yardstick means all but one coach is overpaid each year.

    People forget where OU was before Stoops took over. He’s not Bud Wilkinson but he deserves credit for putting OU in the top tier of schools. Same with the other coaches. Getting LSU and Alabama into the top tier is hard enough. Keeping them there is another thing.

    As for Pellini and Pinkel and the others that have not won championships, you have to look at where their programs were before they came along. And by that measurement it is hard to say they are overpaid. Unless you want to say the entire economic structure of NCAA athletics is out of whack in which case you might have an argument.

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