NCAA Football: Can Money Buy Success?

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NCAA Football: Can Money Buy Success?
Introduction
Can money buy success? In the college sports world, sometimes money is an essential factor in increasing a school’s chances at winning. Our group has chosen to take a look into collegiate football in the United States, specifically the expenditures of particular schools in NCAA football ranging from coaching salaries, facility and recruitment costs, and how the arms race is related to the amount these schools spend between 2010 and 2012. The schools we will be examining are the top six highest spending football programs in the United States. This includes the University of Alabama, Louisiana State University, the University of Florida, Auburn University, the University of Notre Dame, and Ohio State University. Through analyzing school’s expenditures on the football teams and determining whether or not increasing expenditure in resources translates to success or if it results in a prisoner’s dilemma.

Source: Gaines (2012)
The chart above shows the amount each of the six schools has spent between the 2010 to 2012 seasons. Three schools in particular have always been in the top three between these years and with this chart, it will determine if their expenses paid off in the end. Later in this essay statistics will be compared with the amount of wins they produced to the amount of money they spent in the season.

Source: http://www.knightcommission.org/collegesports101/chapter-2

Coach Salaries
Coaching compensation is the fastest growing and largest expenditure in athletic department budgets. The commission said the presidents blamed most of the budget deficits on "excessive" salaries for football coaches and noted that it could come down to dumping some other sports programs in sacrifice. The average annual salary for head football coaches at major colleges is $1.64 million. According to a salary analysis by USA Today in 2012 of the 120 football coaches in Division I, at least 25 coaches made $2 million or more in total income last season. Nine of them made $3 million or more (Brady, Berkowitz, Upton, 2011). The highest paid coach is currently Nick Saban, Alabama’s coach; at $5.5 million (Brady, Berkowitz, Upton, 2011). The high salaries offered to coaches are done so to maximize a school’s probability of winning. Also, “buyout clauses” in coaches’ contracts allow them to jump to another university who is willing to offer them higher pay. Part of the arms race is hiring and retaining the coach or else another school will hire him. Universities and colleges attempting to upgrade their football program with a “zero-sum game” mentality compete against one another to hire the best coach who has a strong likelihood to transform a losing program into a winning one or keep it as a winning one. The competitive process in which a superstar coach is hired is essentially an auction. Numerous bidders, in this case, university presidents or administrators, are vying against each other and no one wants to lose. Due to risk-aversion tendencies, a “win at all costs” mentality seems to justify higher and higher bids. This process does not reveal perfect information because no one can predict the impact a coach will have once he is hired (in terms of wins, publicity and additional revenue sources). Some coaches’ productivities may be perceived to be greater in theory than it actually turns out to be. In this case, a winner’s curse can occur if the season does not produce desired results, such as in Auburn and LSU in 2012, which also led to the firing of Auburn’s head coach, Gene Chizik, after having the second worst record in the SEC in 2012 (3-9 record and no ranking) (Bradley, 2012). This means that some universities may be paying their coaches more than they are “worth” in the sense that they have overestimated the value of the coach, whereas they could have hired a different one at a lower expense. This reinforces the arms race among colleges. Over-bidding for the coaches is
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