In the Freakonomics Blog, Dave Berri writes that college football coaches are overpaid compared to NFL coaches based on the revenue those sports produce. The revenue generated by the Giants far surpasses that of Alabama, thus it “doesn’t make a great deal of sense” that Nick Saban is paid more than Tom Coughlin.

As sports economist Andrew Zimbalist has noted in the past, this doesn’t make a great deal of sense.  The NFL only has 32 teams sharing at least twice the revenue generated by all NCAA sports (the NFL generated about $9 billion in revenue in 2010, about twice what Kahane reports the entire NCAA generated in 2008).  Not only does college football generate less revenue, there are far more teams claiming a piece of the pie (there are more than 100 FBS schools).  So the revenue per team in the NFL dwarfs what we see at the college ranks.  And yet, the salaries of top coaches in both places are similar.

How is this possible? Coughlin’s players face far fewer salary restrictions. Consequently, Coughlin’s pay — as a share of organizational revenues – is far less than Saban’s salary.

Berri attributes this to colleges not paying the players, with coaches and administrators reaping the benefits. While that certainly facilitates that money being available, it’s not the root cause. At many schools it’s not a one or the other relationship. Many highly paid coaches would support paying their players even if it came out of their own pocket. Coaching salaries are dictated by the market.

College football coaches are more valuable to schools than NFL coaches are to franchises. Every team has equal resources in the NFL. Fresh players are assigned through the draft. Schemes are homogenous. Players are adaptable and interchangeable. Coaches are an important cog, but, in most cases, not irreplaceable. The Giants can substitute Tom Coughlin with an average, competent NFL head coach and not expect a dramatic drop off.

The college game is different. A college football coach controls every aspect. He recruits and grooms his own players. He tailors that recruiting and grooming to fit his own specialized schemes. The program embodies his specific vision. Transitions are painful and risky. Even a great program like Alabama bringing in another proven coach to replace Nick Saban is at risk for a major backslide. The Giants will be the Giants. Nick Saban Alabama could very easily revert to Mike Shula Alabama.

The cost of losing a college football coach is greater. It’s also far more likely to happen. College football coaches, unlike NFL coaches, do not have non-compete clauses in their contracts. Nick Saban can submit his resignation today, leave and coach somewhere else immediately. Another coach can submit his resignation tomorrow and leave his school to take Nick Saban’s place. NFL coaches can’t do that.

Merging these two factors creates paranoia and grants major college football coaches a tremendous amount of leverage. Saban is essential to Alabama and he can leave whenever he wants. Coughlin, despite winning two Super Bowls, can’t leave because of his non-compete clause and can be replaced far more easily. Coughlin has to negotiate a raise or a contract extension. Saban receives one without asking if there’s even a whiff of a rumor he might leave. NFL teams could pay coaches a greater percentage of revenue, but their coaches don’t have the leverage to force it.

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