Let Agents Pay the Players

I share John Gasaway's beliefs about amateurism and see the NCAA's attempts to define amateurism as "accepting no benefits besides a scholarship from anyone ever) as misguided. I also think there are a few low-hanging fruit situations where athletes are clearly getting a raw deal. Case in point: EA Sports sold about 1.5 million copies of NCAA Football 2011 for XBox 360 and PS3. If they sold the game for $5 more, maybe sales fall to 1 million (assuming an unrealistically inelastic demand curve), but that $5,000,000 could be given back to the players through the NCAA. It wouldn't be a huge amount of money even then (less than $1000 per player), but it would be equitable--every DI player that had his likeness in the game would get the money--and fair--the game gets every single detail about these players correct except the names, so they are effectively already using their likeness. If the NCAA wanted to play hardball on this I have no doubt that the changes would be implemented immediately.


The argument for allowing players to sell their stuff is also easy, although it assumes no second-stage problems. What I mean is this: there was a mini-uproar after the A.J. Green jersey sale suspension, and later during Gold Pantsgate, as to whether players should be allowed to sell their own stuff, with lots of people coming down on the side of "this is America so yes." And as a first-stage approximation I think this is correct. Some players are more valuable than others, and a good way of letting those players benefit without exacerbating the differences between the SEC and the MEAC would be to let the valuable players sell stuff that other people want. Third parties, and not strapped athletic departments, will then foot the bill.


The second-stage problem is, what happens when teams start giving players cheap crap that they can then sell on the open market. Think of the Gold Pants problem, only if the Gold Pants were made of tin. Every Ohio State player gets Very Special Tin Pants with their initials engraved, and those Tin Pants cost the school $10 each. Boosters know about the Tin Pants arrangement and pay $1,000 a pair for them. There is no difference between this arrangement than the boosters giving that money to the players directly, or the boosters giving that money to the school to give to the players. And I'm not sure how to avoid these fake secondary markets for crappy trinkets that will undoubtedly spring up purely as a way of providing backdoor salaries.


The only solution I can imagine is to permit binding agent relationships on the players at any point during their collegiate careers. In other words, players can agree to agents while in school, and those agents can give money to the players once those players have signed. However, the player must use that agent for his first contract in whatever professional league they next play. Now, agents have a vested interest in finding the best players; they won't just throw money at the backup long-snapper on Auburn because he goes to Auburn. Those few players that are actually underpaid can earn something approximating their true value early, and third parties will take on the risk. There will have to be rules protecting against unconscionable agreements and all that, but the details don't seem all that hard to fill in. And despite my protestations that I really could not care less about the MEAC, this rule will help better protect the little conferences; agents will be more interest in talent than name recognition, and if you are a safety at Southeast Missouri State that will definitely go in the top three rounds of the NFL draft, and agent somewhere will throw money at you to sign.

Will Paying Players Destroy College Basketball?

I absolutely love John Gasaway, the original Big Ten Wonk, but I have to admit that I think this isn't the most compelling argument he has ever made:

If the Big Ten wants players in its revenue sports to have “full cost of attendance” scholarships, the league has the resources to make it happen. (They have the resources to make it happen even assuming the bottom-line figure would need to be doubled and shared with an equal number of non-revenue athletes in women’s sports to survive Title IX scrutiny.) But creating these new dollarships, while merely cementing existing imbalances in college football recruiting in place, would revolutionize college basketball recruiting overnight. The elite high school football player already chooses between programs that can afford full cost of attendance scholarships. Not so the top high school basketball talent. In a sport where TV exposure and NCAA bids are spread (relatively) far and wide, talent currently has far less incentive to travel in packs. That will change, dramatically, when major conference programs can offer recruits a better financial package than what mid-majors are able to afford. 

These are two very different sports — each with its own very different revenue model — and if you ask me if they share any needs in common I would cite just two things: better athletic directors and a new definition of amateurism. If you’re concerned that the very same SEC West football coaches who make plainly unprincipled decisions receive millions of dollars while their players struggle to afford a plane ticket home, the solution is two-pronged: 1) principled athletic directors creating compensation packages more aligned with empirical reality than with the HR equivalent of the mid-00s housing bubble; and 2) allowing stars in any college sport to strike whatever deals they can with agents and advertisers. Meantime tell college football no one wants them exporting their stale oligarchical ways to the one revenue sport where surprises actually happen.

During the course of the last paragraph, Gasaway links to his essay on amateurism, which I encourage everyone to read when they get the opportunity. The Readers' Digest version is that the NCAA should allow deals between athletes and third-parties such as agents and clothing manufacturers, a suggestion with which I agree.


But the juxtaposition of that article and the complaints quoted above is jarring. NCAA protestations aside, the reason that college athletes have not been allowed to pursue these opportunities is because the playing field will be skewed even further towards major teams; Longhorns will sell a lot more jerseys than Owls of either the Rice or Temple variety. 


Of course, it is already conventional wisdom that the Big Ten made their proposal to put the screws to the MAC and the Sun Belt, so Gasaway's point might seem irrefutable. But the scheme only works because football teams are massive. Basketball programs only get 13 scholarships; an extra $5000 per scholarship is only $65,000 per year, or approximately one-and-a-half secretaries. Title IX will require an extra 13 Super Scholarships in women's sports as well, but we're still only at $130,000 per year, and if the athletic department at Long Beach State can't scrounge that together, maybe Division I just isn't for them.


Besides, it's doubtful whether slightly different compensation for athletes would even mean The End of Long Beach State, either in reality or in concept. Assuming that only the major conferences (major defined as "BCS auto-qualifying") adopt the Super Scholarship proposal and that those teams recruit three basketball players a year, that means about 222 recruits each year will accept major conference scholarships. (I'll call it 225 for simplicity's sake). Of the Rivals Top 150 recruits for 2011, only 16 are headed to "mid-major" teams anyway, even without Super Scholarships. (Those recruits are headed to Memphis, Charleston, Xavier (3), BYU, Harvard, Alcorn State, SMU, Western Kentucky (2), North Texas, Houston, George Mason, New Mexico, and Butler). And even of those schools, several would be either certain to pay the small amount of money (Xavier, BYU, Butler, maybe SMU, North Texas, and George Mason) or aren't paying money anyway (Harvard). A few players each season will choose Iowa State or Depaul over Wichita State because of the extra $10 a day, but is this really going to be enough to upset whatever balance of power exists in college basketball?


More likely, this proposal, like death, will focus the minds of athletic directors around the country. Men's basketball is still a revenue sport even as football drains athletic department coffers. Rather than pouring endless resources into football, many mid-level schools may decide that the Cinderella-friendly nature of college basketball provides greater bang for the athletic department buck. And unlike third-party contracts, compensation is capped; a top recruit is turning down perhaps hundreds of thousands of dollars by choosing to play for Detroit or Central Michigan rather than Ohio State if they get to sell their personages while on campus. If competitive balance is the concern, the Big Ten proposal should be seen as the lesser of two evils by college hoops fans.

Schools Are Not Profiting From Bowl Games. So What?

This post from the Wiz of Odds caught like wildfire on the intertubes yesterday, and I'd be remiss if I didn't comment:

When the Bowl Championship Series (BCS) announced matchups for its five games last December, the Fiesta Bowl was handed the biggest clunker of them all — Connecticut vs. Oklahoma. 

But Fiesta officials never had to worry about monetary risk because they were handing off the financial burden to the Huskies and Sooners. 

Each team, as part of the agreement to play in the Glendale, Ariz., game, had to purchase 17,500 tickets with a face value between $105 and $235. 

Combined, Connecticut and Oklahoma sold only 8,338 of their allotted 35,000 tickets. That left the schools and their conferences on the hook for a jaw-dropping $5.14 million in "absorbed" tickets — or tickets that go unsold to the public or have to be purchased by the university for use by staff, families of players, coaches and even the band. 

Last season marked a record 35 bowl games and nearly every game required teams to purchase a minimum number of tickets. Teams, in search of prestige, never hesitate to take on the financial burden.

The Fiesta Bowl sales were going to be awful no matter what because Connecticut; this is an unavoidable truth. That the two largest ticket-gorges came from the two schools playing in Tempe is completely unsurprising. Had this been an opening round matchup at a neutral site of a playoff, no one would have went either. Connecticut.


There are two takeaways from this though, one negative and one neutral. The negative story isn't the "losses" from the Fiesta Bowl (the BCS and bowl payouts will more than compensate those schools), but the losses from the crap bowls that feature Sun Belt vs Conference USA. Those teams absolutely have to attend those crap bowls, because a refusal to attend would annihilate recruiting for years ("why go to Northern Illinois when they won't even go to the bowl game they earned?") That may work for Notre Dame but not Ball State, but when Ball State can't pay the bills anyway, adding an extra six figures in ticket losses is downright disgraceful. 


But this is only a problem at schools that, relatively speaking, no one cares about; that's why it's a problem. The big schools lose money on bowls because they don't try to make money on bowls. For just one example, Wisconsin picked up the tab for over a thousand people to make the multi-day trip to Pasadena, including a few hundred band members and other extremely marginal members of the team. The players stay in nice hotels, take in Disneyland, eat expensive meals, etc. There is plenty of fat to be cut, except that, why cut the fat? The fat is where all the flavor is, and if athletic programs want to reward their teams for good seasons rather than hoarding a little extra money, then why not go ahead? I'd rather have teams willingly go into the red and players have themselves an experience of a lifetime than know that the program maximized its earning potential on behalf of the coaching staff salaries that will inevitably absorb that money.


Of course, it's only the Wisconsins and Ohio States that have that luxury. For Central Florida and UTEP, a bowl trip is just another game with a huge ticket bill tacked on. Those schools aren't merely forgoing profit for the sake of their players. Then again, if the alternative is just eliminating postseason play for those schools, I'm not sure they'd appreciate that either.

NCAA Goes Four for Five on Rules Changes

("I strongly disagree with your intepretation of the rulebook!" Image USA Today.)


Only the final two will get any attention, but all five of the changes to the college football rulebook made by the Player Rules Oversight Panel deserve mention:

Beginning this coming season, blocking below the waist will be illegal except on scrimmage plays in the following instances:

• Wide receivers more than seven yards from the center at the snap of the ball can block below the waist only against a player facing him or toward the nearest sideline.

• Running backs/receivers in the backfield and outside the tackle box (the area five yards on either side of the center) or players in motion can block below the waist only on players facing them or toward the nearest sideline.

Players on the line of scrimmage within seven yards of the center are still allowed to block below the waist anywhere on the field.

This is not drastically different from previous years, except that it makes the call somewhat easier for the referees to call, especially for players in motion. If you thought the rule was a good one before (and I've never heard a complaint about it), then this is a net positive.

Also in the player-safety vein, the panel approved penalizing instances in which three defensive players line up shoulder-to-shoulder and move forward on place kicks. Coaches on the NCAA Football Rules Committee cited examples of where one offensive lineman is overpowered by three defensive players in an attempt to penetrate the line of scrimmage to block a kick.

I thought this was already in the rules, much like lining up directly over the center and stepping on another defensive player to get a boost are forbidden. Once again, I don't have a problem with this, as the end result of these plays is usually a second-string guard being trampled by 850 pounds of mass.


Now, onto the changes people are actually going to talk about:

Another new football rule that will be enforced is a 10-second rundown of the game clock if a team commits a foul that stops the clock in the final minute of both halves. 

The opponent has three options in these instances:

• Take the yardage penalty and the 10-second rundown.

• Take the yardage penalty without the 10-second rundown.

• Decline both the 10-second rundown and the penalty yardage.

I.e., the Dooley Rule:

Like Matt Hinton, I think this is mostly unnecessary, seeking to solve a problem that only rarely exists. Unlike Hinton though, I think that this is probably the way the rule should have been written in the first place, so even if it won't prevent many situations like the above, it's still a better rule.


Hinton's objection is that a football game is 60 minutes, and that imposing a ten second runoff shortens that time just as much as if a fraction of the field was buzzed off one side. I think in the majority of cases, the runoff is replicating what would have happened in absence of the penalty. For example, he cites intentional grounding penalties, but the reason for the penalty there is that the play should have been a sack, which would result in a running clock and loss of yardage. The clock runoff now more closely approximates how the game would have been had the penalty not been committed. The rule is less obvious with penalties such as false starts but there the concern is that teams will take the penalty and the stopped clock over the running clock; giving the offending team that option is lengthening the game, even if not on the official clock.


The change that will get the most attention is this:

This will be the first year of the rule change regarding unsportsmanlike conduct penalties, which will be treated as either live-ball or dead-ball fouls. Previously, all fouls of this kind were treated as dead-ball fouls. 

The change means, for example, that if a player makes a taunting gesture to an opponent on the way to scoring a touchdown, the flag would nullify the score and penalize the offending team 15 yards from the spot of the foul. 

Penalties for dead-ball misconduct fouls (for example, unsportsmanlike behavior after the player crosses the goal line) continue to be assessed on the ensuing kickoff or the extra point/two point conversion attempt.

Just because this is going to be hilarious when it happens does not mean that it won't be awful, too. The NCAA rules are too rigid on this front already, and taking away a score because a kid high-steps into the end zone isn't going to help anyone enjoy the game more. Boo, NCAA.


Finally, coaches can get live broadcasts of the game in their boots for deciding whether to challenge a call on the field, which I thought was already true. Usually this doesn't matter much in college because everything within the same zip code of a close call is already reviewed by the officials; coaching challenges are usually the last desperate heave in the face of all available evidence. But giving the staffs a little more evidence can't be a bad thing.

Revenue is Not Profit

I don't know what it is about college sports that gets otherwise smart people loony, but I'll say it again: revenue is not profit. If I buy an aircraft carrier for $15 billion and sell it for $150 million, I have not made $150 million. I have lost $14.85 billion. There is no profit in that set of transactions, even though there is revenue.

That's why things like this drive me gray(er):

As non-profit organizations, NCAA colleges and universities are mostly tax exempt. At present, that includes the huge profits that are generated by many big time football and basketball programs (of course, not all are profitable; some are cash sinks dragging down the rest pf the university). 

These profits go to support enormous salaries for coaches, bowl game officials, top NCAA executives, athletic department staff, and so on. Sure, at some schools, some pittance goes to support non-revenue sports, but that can't excuse the massive corruption that pervades revenue sports.

Now, Steve Bainbridge is a really smart guy: UCLA law professor, top scholar in the field of corporate law, etc. It would be insulting to go through the "revenue is not profit" rant in front of him. He understands that.


What he doesn't understand is that the bolded part of that paragraph above isn't some parenthetical you can throw out in a "to be sure" sentence. At every major school--major defined quite liberally--a huge percentage of total revenue goes towards supporting dozens upon dozens of sports that don't come within a metric mile of breaking even. Women's basketball programs alone lost about $2 million per team last year, and women's basketball is the only other program that has a national television deal. Everything else is pure money suck without anything in return. That difference comes from somewhere, and somewhere is football. He knows revenue isn't profit, but when he hears the huge revenue numbers, he assumes there must be many digits of profits there.


His categorization of athletic department expenses is screwy as well. Coaches salaries are becoming an ever-increasing drain on athletic departments, but the rest of those categories listed by Bainbridge are almost nothing. The NCAA's operating expenses are laughably small (about $250k per major football-playing school, and that's not counting contributions from the Villanovas, Gonzagas, and Butlers of the world. As for the rest, Brian Cook broke down the numbers for Michigan, which I figure are representative for the highest revenue-producing schools:

Who is benefiting from hypothetical exploitation? Three parties:

• Non-revenue athletes
. About 30% of Michigan's expenses are related to housing, educating, transporting, and outfitting athletes with another 16% devoted to giving them places to play.

• Coaches
. 17% of Michigan's revenue pays them.

• Everyone else
. 21% of Michigan's revenue goes to the rest of the department.

Michigan profited by about $17 million last year, which is highly unusual; Ohio State profited by only 400K, while Nebraska profited by about $1.7 million (All numbers from the USA Today database). These are not wild amounts. And remember, these are the biggest of the big programs. At the vast, vast majority of schools, the only way the athletic department breaks out even or "profits" is from direct aid from either the government or the school.


The margins are tight all around. Schools are already cutting sports wherever possible, but Title IX requires balance between women's and men's sports, so the former can only be cut so far. Make those margins tighter, and you will decrease coaching salaries. You will also drive a nail into the heart of every single men's non-revenue sport, along with every women's sport no longer necessary for federal compliance.


The tax argument (not the legal argument, but the "should or shouldn't we" argument) is the same as the paying players argument: the money just isn't there, unless you pay only a few (and try explaining to people why male athletes should be paid but female athletes shouldn't in a way that doesn't sound creepy). Both arguments a premised on this idea that there's a huge pot of gridiron gold being hoarded by mustache-twirling athletic directors (an idea that gets reinforced by every "the NCAA gets how much money from March Madness?" story without people doing the arithmetic to figure out just how many friggin' teams are in Division I alone). I'd much rather have the "should college sports exist?" debate, which really cuts to the quick of the matter, than a debate founded on a false premise.

The Omnipresent Tournament

This isn’t going to be a “Butler wasn’t very good” or “UConn isn’t really the best team” essay. You’ll find those articles elsewhere today, no doubt, with people arguing to various degrees why those teams did or didn’t deserve to play in the championship game. They are invested in that question much more than I am.

More interesting, at least to me, is why we—as sports fans—put so much emphasis on tournaments as a way of testing a team’s ability. Ordeal by bracket is fully engrained into the constitution of every major American sport, and most of the minor ones. Yet while we love tournaments, we change the details in every sport. The NBA and NHL let almost everyone in, then play four rounds of best-of-seven series. MLB lets fewer teams in, plays a best-of-five series to start, then two rounds of best-of-seven series. The NFL uses a single elimination tournament, but some teams have to win fewer games than others. College basketball uses a single elimination tournament where (almost) every team has to win six games without losing any; college baseball teams are allowed to lose one game in their tournament. Bowling has an interesting ladder structure where better seeded players get multiple byes (the five seed plays the four seed, the winner of which plays the three seed, the winner of which plays the two seed, etc.)

The official reason for this variation is that no sport is the same, and that tournaments have to be fitted to the peculiarities of the game. Football is too strenuous for series instead of single elimination games, for example. I’m sure that’s true, but the tournament choices made in each league are peculiar, to say the least. College basketball uses a single elimination tournament, while the NBA uses best-of-seven series. Hockey follows the same pattern. Baseball is a sport with lots of variation from game to game—the best teams win only about 60% of their games during the regular season—but the opening round is only a best-of-five series. There is far less variation in the NBA, but the first round is a best-of-seven series nonetheless. The NFL has 32 teams and uses a bracket of 12; Division I has 120 college football teams and uses a bracket of 2.

There’s a cynical answer, which is also true, that playoffs are just as much about generating revenue as they are about finding champions. But that can’t tell the whole story, because even with that economic reality lurking in the background, we as fans invest these tournaments with legitimacy. By and large, these tournaments would not exist if we didn’t confer legitimacy; if we all stopped watching football after the regular season, the playoffs would just be a drain on NFL coffers. (I also find the exceptions to the rule interesting; I think most people treat college basketball conference season results as more important, at least in the major conferences, than conference tournaments. Why?) Tournaments might just be money grabs, but only because we consumers are offering our money for them. Leagues are giving people what they want to watch.

So why do we want tournaments? I have a few ideas, though I am probably missing others:

  

1.) Tournaments provide certainty as to which games are important. No league is headquartered in Lake Wobegon; some teams each season are below average. A few are awful. But we might not know which teams won’t matter, especially early in the season. We also don’t know which games will “matter” in the sense of telling us which team is truly the best (will this October Jacksonville Jaguars vs. Kansas City Chiefs game tell me anything about the best team in the NFL?) The tournament is a powerful signal: watch these games, because the league has guaranteed quality by filtering bad teams out. 

2.) Tournaments are shorter than seasons. Diehard fans will watch all season long, but lots of people aren’t interested enough to pay attention to the NBA from October to June, or MLB from April to November. Tournaments provide a condensed season within a season; a two month NBA season, a one month MLB season, a three week college basketball season. Beginnings of tournaments also provide convenient jumping-on points for casual fans that may never get involved if there was no playoff.

3.) Tournaments have one winner. Regular seasons can have winners, too, but there’s usually some room for interpretation. Who was the winner of the college basketball regular season this year? Ohio State was the #1 overall seed in the tournament, so they are a reasonable answer, but Kansas and Pittsburgh (just to name two) were plausible answers also. The question in this context also seems peculiar—how can a 30 game season have a winner when there are 340 teams and the vast majority will never play each other? In lots of sports, there just can’t be an answer; the regular season isn’t long enough (perhaps can’t be long enough) to give us enough data.

I think reasons 1 and 2 are valid, but number 3 is probably what really drives our love of the tournament. UConn won; no one else did. No interpretation is necessary. We have an answer, and we can look at Wikipedia (and maybe the NCAA record book) twenty years from now and find out who won the 2011 men’s basketball season.

Sports are as much about plot as they are about truth. You might make a movie with an indeterminate ending, but I doubt it would be popular (look how people wigged out at the blackout ending of The Sopranos—that’s how lots of people would feel if we didn’t have a winner at the end of seasons). Fans want sports to have a point, so the tournament becomes the point. The season had an end, and at the end, a good team won a set of games all good teams were trying to win. They were the champion. They overcame adversity and long odds and won when winning was important. The End.

Obviously, I’m skeptical, or at least won’t lose much sleep if the “who was the best team?” question has no clear answer. But what if investment in the useful myth of the infallibility of brackets what keeps leagues going? The English Premier League is plenty popular and uses only a regular season, but maybe all the above ruminations are culture specific. Maybe American sports leagues are in such competition with one another that a tournament-less sport is at a marked disadvantage against others (perhaps this explains the decline of boxing and horse racing through the years, though even horse racing has tried to implement a quasi-championship in the Breeders’ Cup). Paris was worth a mass; college basketball is worth a tournament.

Bonus Linkage! Brian at Mgoblog claims the NCAA tournament still works just fine, since the matchup is usually at a plausible pairing of the two best teams in the nation. I think this is a funny definition of working, where the tournament is useful only insofar as it confirms what we know from the regular season. It's not an additional justification for the tournament, besides from "it is fun." This may be enough. 

He also uses Kenpom a little too liberally here, since 1.) Pomeroy has changed his formula around to backfit tournament results in some cases (nothing wrong with that necessarily, if the formula becomes more accurate), and 2.) those teams rise in the rankings as they win their tournament games. The rankings of those teams after the season is not their rankings before the season. To the extent that tournament performance is just one more piece of evidence concerning a team's quality, that's fine. To the extent that it's being used to argue that the tournament confirmed what the numbers said all along, it's not fine.

Smart People Own Hammer, Spot Nail-Looking NCAA Arrangement

[Sorry for all the recent NCAA stuff, which will not be the focus of the site (I swear). But this is slow season for college sports, and since everyone else is writing about this stuff, I guess I will too]


The Becker-Posner blog is like porn for people with economics commentary fetishes. I'm not quite at that level, but I'm close enough to read the blog semi-regularly. Gary Becker is a Nobel Prize-winning economist; Richard Posner is a judge on the Seventh Circuit Court of Appeals. They are smarter than you or I.


Becker is wrong, however, when it comes to the NCAA, not because his conclusions are wrong (the NCAA is a cartel in some areas). Instead, he is wrong in lots of little ways--the kinds of errors that sneak in when someone is looking at a problem for the first time and don't realize that this ground has been covered several times over. 


I call it the "Why is there evil?" fallacy. When that question gets asked by an atheist to a religious person, you immediately know that the conversation is useless, not so much because the question isn't interesting, but because the question is so interesting that it has been hashed and rehashed for thousands of years. The sophisticated atheist and the sophisticated believer are dozens of intellectual "moves" ahead by this point. The philosophical and theological questions are subtler, more layered now. The fallacy doesn't make the atheist wrong (or correct); it is just a signal that the conversation will not be particularly valuable.


First, I encourage everyone to read Becker's piece in full.

The toughest competition for basketball and football players occurs at the Division I level. These sports have both large attendances at games-sometimes, more than 100,000 persons attend college football games- and widespread television coverage. As a result, many Division I schools with big time sports programs get many millions of dollars from their basketball and football programs. Absent the rules enforced by the NCAA, the competition for players would stiffen, especially for the big stars, as they would receive large scholarships and various gifts of cars, housing, and cash to themselves and their families. Payment to players, if competition for players were allowed to operate freely, would severely eat into the profits made by colleges from the big time sports

All is good until the last sentence. Competition for players wouldn't eat into profits, because, by and large, there are no profits. According to the author of the report which I just linked, "If you're not selling a bunch of tickets and you don't have a large alumni-booster base making contributions, and you're not in the right conference, you have very little chance of showing net positive revenue." There are lots of reasons for this, the most important of which is Title IX. That's not necessarily an argument against Title IX, especially if we think that gender equality in collegiate sports is more important than revenue production by athletic departments. Even the most popular women's sport, college basketball (the only women's collegiate sport with a national television deal) is a net drain on athletic departments.


The next biggest reason that there isn't much by way of profits is that, by and large, schools just don't raise that much revenue through sports programs. (Permalinks aren't available, but you can play around on the USA Today database for this). The Nevada sports department lost $800,000 last year, even though it receives almost $6 million from the government and another $2.3 million in student fees (that is, $40 a semester from every student that no one realizes because the tuition bill is so damn big anyway). Almost 60% of Eastern Michigan's athletic department revenue--over $15 million total--comes from "direct institutional support" (i.e., is subsidized). With that revenue, Eastern Michigan's athletic department had a $2 million "profit," but it's obviously a funny kind of profit. Take away the subsidy and EMU is $13 million in the red.


That isn't true of all schools, of course, especially those that make most of their money through ticket sales and contributions from donors. That would be all the Big Ten schools, for starters, along with most major conference schools (though there are exceptions). The top schools could probably squeeze somewhere else in the budget, such as coaching salaries and ancillary facilities. But this is a college sports universe in which only a few dozen teams are competitive each year, and in which only a dozen or so have any chance at a championship (and before the guffaws about how that's pretty much the situation today: Butler would not happen in this universe. VCU, with 78% of its athletic department revenue from student fees, would not happen in this universe. Boise State would not happen in this universe). Are college sports without Butler, VCU, and Boise State as competitive as college sports with those teams? Lots of professional sports leagues have decided that some level of competitive balance is necessary to preserve value in the league. It is not implausible that this is also true in the NCAA--perhaps more true, since preserving balance across hundreds of teams is harder than preserving it across 32. 


Then, there are the silly mistakes. Becker complains that the average graduation rate of black male DI basketball and football players is below 50%, while not noting that the graduation rate of all black males in college is 35%. In just about every demographic, if you take a student-athlete and a regular student from the population, the chances of the athlete graduating are better than the chances for the regular student. There's also the assumption that most athletes will see their compensation go up in a free system of compensation, which I've already argued is not likely.


There are similar problems with Posner's response to Becker, though I think his final analysis comes much closer to the mark:

College athletics would be less profitable for colleges if the student athlete market were competitive. If permitted, colleges would continue to agree to limit recruitment of athletes who could not satisfy degree requirements and to require athletes to attend classes and thus be bona fide students, because otherwise competition for the best athletes would tend to eliminate the “student athlete”; college teams would be largely composed of athletes who had no interest in or capacity to obtain a college education; awarding them a degree would be meaningless. The college would be engaged in a business unrelated to its academic mission and would thus have to pay taxes on its teams’ earnings. Worse, alumni donations to their alma mater, which are stimulated by the success of the college’s teams, would wilt if the teams were composed of non-students. If the University of Chicago bought the Chicago Bears, and renamed the team the University of Chicago Bears, would alumni of the University of Chicago write bigger checks to the University?  

For similar reasons, I don’t think eliminating the rule against paying student athletes would result in their being paid actual salaries. The concept of a student who is also a professional athlete would trouble alumni. I expect that instead the student athletes would receive exceptionally generous scholarships—scholarships that would yield more than the full cost of tuition and living expenses. But the sky would not be the limit, since, facing higher labor costs, college teams would be less lucrative 

A possible legal complication in repealing the rule against athlete salaries would be the salary disparity between male and female college athletes. The only really lucrative college sports are football, a male sport, and men’s basketball. Competitive salaries for college football and basketball players would vastly exceed those for other sports, including women’s sports. Paying lower salaries to women athletes could invite challenges under Title IX of the Education Amendments of 1972, which among other things forbids sex discrimination in education that receives federal subsidies. 

The strongest argument against eliminating the NCAA cartel is that it would make colleges and universities poorer, and this would be a social loss if one assumes (plausibly) that higher education creates external benefits. Of course the government could replace the lost revenues with subsidies financed by taxes. But while monopsony is inefficient, tax increases create distortions similar to those created by monopoly and monopsony.

Division I Athletes are Overpaid

Well, not all of them. Cam Newton probably wasn’t, at least officially. Jared Sullinger probably isn’t. When you give all scholarship athletes the same compensation, at least a few will fall on either side of the line. Your best coworkers (maybe even you!) are probably underpaid; your worst coworkers are probably overpaid. This is not unique to college athletes, though the problem is perhaps more severe because everyone gets paid the same amount; imagine how underpaid you would be if you made the same amount as everyone else at your office.

Just so that we are all clear: the question is not “should college athletes be paid?” They already are. Even if we strip away all the other ancillary benefits of being an athlete at a major school (job training; attractive girls (probably NSFW); social status; training tables), scholarships are payment from both the perspective of the school and the player. Providing a player a $25,000 scholarship is exactly the same as paying him $25,000 and requiring him to attend the university. This isn’t controversial (nor, I don’t think, is it controversial that players should have to attend the university for which they play). What is a little controversial—but only a little—is whether a scholarship is a true cost to the university, or whether the school can just “write off” the costs. Universities, like just about every other non-profit organization, want to make money. If colleges run at full capacity—which they do, because it doesn’t make sense to leave money on the table for no reason—a spot for an athlete means one less spot for a paying student. If the university would be getting $25,000 from that student, and they are getting $0 from the athlete, that is a $25,000 cost.

So the question is not whether athletes should be paid (unless you’re Ralph Nader and you think the answer should be "no," full stop), but how much should they be paid. Too often, the issue is framed as a percentage of the revenue: the NCAA gets $700+ million from the men’s basketball tournament, and athletes get only a slice of that. We watch basketball to watch the athletes—the argument goes—so why don’t the athletes get most of the money?

There couldn’t be a tournament without players, but there could still be one without these players. In fact, that alternate-universe tournament would probably be wildly successful, even if the quality went down (the value of the NCAA tournament wasn’t hurt much, if at all, by high school players skipping to the NCAA, and it doesn’t seem to be hurt much by players skipping up to three seasons). This is unique to college sports. If the quality of the NFL dropped significantly because, say, its best players left for the USFL or Arena League, the value of the NFL would fall precipitously. Fan loyalty to college teams seems to be different. College football and college basketball are not the highest level of the sport available. In fact, college sports are often several grades below the highest professional version; most NBA developmental league teams would be favored over most college basketball teams, and most USFL teams would be favored over most college football teams. Yet almost no one cares about the USFL or NBA D-league, and 100,000 people freeze their butts off in Ann Arbor, Columbus, and State College seven Saturdays a year. The equity is in the team, not the players.

Colleges would still need players, of course, but there doesn’t seem to be any shortage of those. Most major college football teams have dozens of players willing to pay their own way to work their butts off and stand around on the sideline. Those walk-ons are still much better athletes than you or I; watching a game consisting entirely of walk-on players would be less entertaining than a current college game, but it would be a lot better than watching the local rec league game. DIII players, who understand they have almost no hope of ever playing professional football and are not well compensated through facilities or training tables, are not given scholarships. Club sport members pay thousands of dollars in addition to tuition to play their sport. It’s safe to say that some current scholarship players—no one knows how many, but I suspect a very large percentage—would be willing to play without scholarships, especially if need-based financial aid were available.

Still, this only tells us that the sport would still exist, and that it would still be popular; it does not tell us whether players are underpaid. In a perfectly free market for college football athletes, colleges would bid against one another for players, both through direct payments (wages) and ancillary benefits (facilities, nice campus, good weather, winning games, etc.). Because wages are limited to the amount the school requires for tuition, teams compete by pouring money into facilities and coaches to lure players. Presumably, many players would prefer to just have the cash, and in a free market, more money would be paid directly to the players than currently. This is, I think, what people mean when they say players are underpaid.

This assumes, however, that once money is freed for wages, everyone’s wages will go up. But scholarships are a floor as much as they are a ceiling. Jared Sullinger was one of the top recruits in the country, and just about every program would have been happy to reward him well. As in most other industries, the compensation of top college athletes would likely dwarf the compensation of everyone else (this happens in professional sports leagues as well, though minimum salaries prevent the lowest wages from falling below a certain level). I favor allowing players to accept endorsement money and use their own likeness, but even this is a solution likely to benefit the top athletes disproportionately.

I don’t think that most people who want college athletes to be paid (more) want a perfectly free market; what they want is scholarships, plus some extra spending money beyond the per diem players are getting currently, plus opportunities for outside compensation. These may be good ideas, but often the assumption behind them is that this is what athletes would likely be receiving anyway, if not for the NCAA. If I were the average football player at the average DI program, I would be awfully hesitant to test that assumption.

Bonus linkage! John Gasaway asks for an end to the self-flagellation here. The Big Ten Geeks point out that most of the proffered solutions to the problem are illegal (there's also the pesky legal issue that only male athletes would be paid, since women's teams are already a huge financial drain on athletic departments.) Antitrust law is not the friend of most of the crusaders. I still think the BTGs assume unnecessarily that players are undercompensated; I am obviously not so sure. Still, I think all our solutions are mostly the same, though I also think that some of the money that goes to coaches would end up going to players in a freer system. Teams pour money into coaching salaries because they need to spend it on something. If they could compete on players’ wages, coaching salaries would go down (or at least would not rise so quickly). No illegal collusion would be necessary. I just think that most of that money will end up in the hands of a few players.

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.