Here’s a primer in Economics 101 applied to major college sports.
In the ever-evolving landscape of college sports, one phenomenon has become prominent and reshaped how we think about team dynamics: the transfer portal. For all the handwringing from coaches, athletic directors, and NCAA brass, they and we are observing nothing more or less than Economics 101 in action. When you create a system where unemployment effectively doesn’t exist, the result is perpetual movement.
This isn’t just a sports story; it’s a crash course in economic theory that anyone should have seen coming. Yet, as usual, academics don’t care about sports, and the NCAA doesn’t understand its business model.
The Economic Theory: 0% Unemployment = Chaos
Economists have long argued that in a system with 0% unemployment, where everyone has a job (or, in this case, a spot on a roster), there’s only one direction to go when dissatisfaction sets in: move. In a perfectly functioning economy, people change jobs when they see better opportunities, more pay, or better working conditions. In sports, it’s no different.
The transfer portal becomes an open marketplace when every college athlete has a “job” (i.e., a scholarship and a spot on the roster). Players shop around for better opportunities—more playing time, better facilities, bigger NIL deals, or a more straightforward path to the pros. With no risk of unemployment, there’s no downside to exploring options.
On the flip side, coaches operate like CEOs. They’re under immense pressure from athletic directors (ADs) to deliver wins. Wins translate into revenue, fan engagement, and job security. So, what do they do? They treat the transfer portal like a free-agency pool, constantly recruiting the best players to plug gaps and improve their teams.
Pressure on Coaches Is Fueling the Fire
Let’s be clear: the transfer portal is not an unintended consequence of the NCAA’s laissez-faire policy. It’s the logical outcome of a system in which everyone in college sports—athletes, coaches, and administrators—is incentivized to prioritize winning.
Coaches don’t have the luxury of playing the long game, and ADs want results yesterday. If a coach can replace a middling sophomore with a proven senior transfer, that’s a no-brainer. The portal allows coaches to upgrade their rosters quickly, and with job security on the line, they can’t pass up that opportunity.
But the problem doesn’t end there. The pressure to win isn’t limited to head coaches. Assistant coaches, support staff, and recruiting coordinators are all part of the same ecosystem. Their livelihoods depend on the program’s success, which creates a ripple effect of constant roster churn.
Academics Don’t Care, and the NCAA Is Lost
Here’s where things get frustrating. You’d think that academics—who spend their careers studying economic models, labor markets, and institutional behavior—would be interested in this. After all, the transfer portal is one of the most compelling real-world applications of economic theory we’ve seen in years. But academics, by and large, don’t care about sports. To them, college athletics distracts from their research and teaching mission.
Then there’s the NCAA. Under Charlie Baker’s leadership, the NCAA has taken steps to “manage” the transfer portal by introducing windows during which athletes can enter their names. The idea is to bring some order to chaos.
But this approach is akin to slapping a Band-Aid on a gaping wound. How could that happen? Easy. The NCAA fundamentally misunderstands the forces at play
The transfer portal isn’t just a logistical issue; it’s a symptom of a broader economic reality. Limiting transfer windows might slow the flood but won’t stop the movement. As long as players and coaches are incentivized to prioritize winning—and unemployment is effectively 0%—the portal will remain a hotbed of activity.
Nudging, Not Free Markets
The most baffling part of this saga is that no one seems to have anticipated it. How could athletic directors, NCAA officials, and media pundits miss something obvious? Eliminating movement restrictions (like the one-year sit-out rule) and creating a hypercompetitive marketplace will result in people moving.
The Supreme Court’s *Alston* decision, which ruled that the NCAA violated antitrust laws, sent shockwaves through college sports. But just because rules like the amateurism model were flawed doesn’t mean *all* rules should disappear. The NCAA has been so eager to appear athlete-friendly post-*Alston* that they’ve stripped away regulations without considering what should replace them.
Yet, it doesn’t have to be this way. Research by Nobel laureate Richard Thaler on behavioral economics suggests that small nudges, rather than completely free markets, can effectively guide people toward better outcomes. Thaler’s insights suggest that the NCAA should focus on designing rules that gently guide athletes and programs without stifling movement altogether. For example, more structured incentives for athletes to stay at one school—like enhanced academic opportunities or guaranteed NIL earning thresholds—could nudge players to think twice about transferring.
Thaler’s work demonstrates that thoughtfully designed systems help individuals make better decisions for themselves and the collective. In contrast, leaving decisions to a purely free market often leads to chaos and inefficiency, a reality we see unfold in the transfer portal.
What’s Next?
An entirely free-market system isn’t sustainable for anyone involved—athletes, coaches, or administrators. The NCAA doesn’t need to shut down the movement completely but must craft more innovative, evidence-based policies that align with college sports goals.
While there is no research on how this new world impacts kids, their lives, and their futures, everyone involved has much at stake. Kids deserve better.
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B.M. Ryan is a retired entrepreneur who plays too much golf and–when struck to do so–writes about a diverse and broad spectrum of ideas.
