Tuesday, March 29, 2011

Mark Emmert Makes a Lot of Money and I Don't Care

Other, smarter people (Big Ten grads, no less) have waxed more eloquently on the problems with the NCAA’s eccentric definition of amateurism. The current system—scholarships are OK, training tables are fine, outside money not so much—is more an historical curiosity than a principled philosophy. I have my problems with the current system; I also think it works in several ways and that wholesale revolution is not necessary. Others disagree. These spats are what make life worth living, along with guitars tuned good and firm-feeling women.

What aggravates me, however, is the looseness in definitions (this is an ongoing jihad of mine, as readers will learn). So when PBS rallies against the inherent contradictions of a non-profit organization paying its officers too much money because “nonprofit” means wholesome, I look a wee bit more like Cal Ripken, Jr.

Nonprofit is not non-revenue. Every competently run organization seeks to increase its revenue--even non-profit organizations. Of course they do; there would be no reason to create the organization if it didn’t take in more money than it spent. A cancer research charity spends some money, hopes to solicit more, and we wish them the best, even though they are a non-profit getting “profits.” It is even OK for the charity to sell stuff, rather than just passing around a collection plate.

There are two disadvantages, and one huge advantage, to being a nonprofit organization. First, all the money raised has to be plowed into the purpose of your organization. Shareholders do not earn dividends (also, there are no shareholders). Second, state and federal governments impose many registration and audit requirements. In return for these restrictions, non-profit organizations are not taxed.

Very simple, no? Nonprofit does not mean that employees cannot be paid, or that officers’ salaries are limited. To be sure, non-profits are often rated on how much money goes towards the stated purpose; nobody wants a charity where three-quarters of the money goes towards the salaries of its officers. But when a museum director makes a cool $2.5 million, the status of the organization as a nonprofit is not put in danger. Of course, the donors might not be pleased, but that is a separate problem. And the donors might not be all that unhappy. If a nonprofit is worth doing, it’s worth doing well, with sound management. Sound management often costs money (though, of course, paying lots of money is not a guarantee of sound management).

With that out of the way: yes, NCAA President Mark Emmert probably makes a lot of money. Emmert may not deserve that much money. But if the NCAA’s purpose is worth doing, it’s worth paying a very successful manager a lot of money to do it well, if that is what it takes. That the purpose of the NCAA is amateurism makes that much money does not render the salary ironic. Good nonprofits often pay their officers well. Whether the NCAA is a good nonprofit is a different argument, but Emmert's salary is not a data point that points in either direction.