Alabama Texas fact of the day

by on April 8, 2014 at 12:44 pm in Education, Sports | Permalink

 “Revenues derived from college athletics is greater than the aggregate revenues of the NBA and the NHL,” said Marc Edelman, an associate professor at City University of New York who specializes in sports and antitrust law. He also noted that Alabama’s athletic revenues last year, which totaled $143 million, exceeded those of all 30 NHL teams and 25 of the 30 NBA teams.

Texas is the largest athletic department, earning more than $165 million last year in revenue — with $109 million coming from football, according to Education Department data. The university netted $27 million after expenses.

Other major programs such as Florida ($129 million), Ohio State ($123 million), Michigan ($122 million), Southern California ($97 million) and Oregon ($81 million) also are grossing massive dollars.

Those numbers of course are not counting the fundraising value of collegiate athletics.  There is more here, via Michael Makowsky.

Here is our previous post on higher education and athletics.

ummm April 8, 2014 at 12:59 pm

It may not be to surprising considering there are so many teams and sports

there’s no need to pay them because demand for athletes is being met. If the athletes thought they were getting a bad deal they would simply quit.

wait April 8, 2014 at 1:09 pm

I don’t think you understand how monopsonies work. NCAA basketball players may have other options (Europe) but football players really only have one way into the NFL

Jay April 8, 2014 at 1:40 pm

When people say “oh of course college athletes should be payed” I don’t think they think through to the end how that would work (or at least don’t reveal they do). Should ALL athletes get payed or only those at schools who net profits from their programs (those in the OP and relatively few others actually do)? Because of Title 9, if the mens team makes money but the female teams lose money, should they get payed? Should DIII teams pay their athletes, if so how much in comparison to University of Texas?

Z April 8, 2014 at 1:52 pm

“Of course athletes should get paid” is a cost free pose. A Texas paying all scholarship athletes is possible, even ignoring the current system of undisclosed payments. For most schools, it is an impossibility. The revenues for football support the women’s teams and the rest of the men’s teams. Even then they lose money over all. A school like Northwestern looks at their athletic department as cheap advertising.

Jared April 8, 2014 at 2:33 pm

No offense, but this is the greatest of conservative defects. Since reform isn’t cost free, it must be the dream of naifs who don’t respect the elgance of existing structures. How are you people so in favor of allowing a rent extracting cartel born of the progressive era to continue perpetuating the fiction of amateurism?

Z April 8, 2014 at 2:45 pm

None taken. I will note you are assuming a lot of facts not in evidence. I’m not a conservative, for example. I never said reform is cost free or that reformers are naive. I offered no opinion on the NCAA or paying players more than they are being paid today.

I merely pointed out the mathematic lunacy of the “of course we should pay the players” chant heard so often from pseudo-intellectual posers. When you dig into the economics of the typical athletic department and then look at current law, it gets complicated in a hurry. As is almost always the case with reform, the results will not be as expected.

mavery April 8, 2014 at 2:58 pm

Why are you assuming that all sports should be paid? Or that all schools need to pay folks? Why assume that all sports should be paid equally?

There’s a million ways you can allocate the money the NCAA brings in from stuff like football and men’s basketball. The current way is clearly unfair and exploitative. IMO, that’s as far as the argument for reform has to get.

Z April 8, 2014 at 3:05 pm

Title IX will most likely require all scholarship athletes to get the exact same package. Alternatively, if you make the athletes employees, you then have to comply with all state and federal labor laws.

As i said, it is easy to scream “reform” from a position of ignorance. Once you start digging into it, it is not so simple.

GiT April 8, 2014 at 3:32 pm

Calling for reform does not imply thinking reform is simple, you hypocritical dolt.

“I will note you are assuming a lot of facts not in evidence.”

wait April 8, 2014 at 3:44 pm

Z is on a pretty high horse thinking he’s a genius being a contrarian while everyone favoring paying athletes is just an idiot. There are many options for reform. We can amend Title IX. We can comply with state and federal labor laws. Perhaps easier than those, we can allow athletes to be paid for endorsements. No one said it would be easy. And your position is actually the idiotic one. I’m sure when people were talking about paying indentured servants for work lots of people were screaming OMG it’s not going to be simple you’re all ignorant; you’re not thinking of the consequences! Scholarship athletes already get paid via housing, food, and tuition money. If “pseudo-intellectuals” believe the athletes should be paid more, it is perfectly legitimate position, and I have no idea why they are “pseudo-intellectuals” for having it.

Z April 8, 2014 at 4:06 pm

@Wait: Saying “we can…” is just another pose. Until you actually convince anyone with a stake in Tittle IX, for example, to go along with your plan, you are just flapping your gums for effect.

msgkings April 9, 2014 at 1:09 pm

@Z: you do realize that every single post on this blog and every other is just “flapping your gums for effect”, right?

If we are being charitable the effect is hopefully to convince readers here of your position. But it’s all just pixels.

PD Shaw April 8, 2014 at 3:52 pm

If we start with the assumption that college athletes are already getting paid for services, either through scholarships or other compensation, then the first step is to tax the athlete for that income. Of course, the value of that compensation would vary greatly between Northwestern and U of Alabama. And while Northwestern could provide a stipend to the student-athlete to pay taxes, maybe other private schools could not, or at the very least schools with higher tuition values are placed at a cost disadvantage to cheaper programs.

Z April 8, 2014 at 4:00 pm

They do get taxed on a portion of it of their aid package. Room and board are taxed. I think some travel expenses are taxed and their meal plan is taxed.

PD Shaw April 8, 2014 at 4:21 pm

But a Northwestern student isn’t currently paying a tax on the approx. $50k per year he receives in tuition?

GiT April 8, 2014 at 7:19 pm

“Tuition reimbursements” are funny money. I could say that, normally, I charge people a hundred thousand dollars for the privilege of working at and drawing a salary from my business, but I’m going to make an exception for you and let you work there without the entry payment. If you were to believe that my performing this bit of sleight of hand had any effect on your salary or compensation, you’d be a fool. The value of whatever services the athlete is receiving in virtue of their tuition has only a little to do with whatever their alleged tuition reimbursement is.

dan1111 April 8, 2014 at 3:30 pm

In the absence of a prohibition on payment, whether to pay athletes at each level and the amount of pay would sort itself out. It doesn’t have to be decided in a top-down manner. I don’t really see the problem here.

In any other context the actions of the universities would be seen as exploitive. Do you think the Silicon Valley pay scandal was bad, in which executives conspired to (possibly slightly) suppress wages? How about an industry that conspired to withhold all pay from the main employees who generate value?

Title 9 is, in my opinion, a dumb law that should be done away with. But in any case, it wouldn’t be prohibitive to paying players. Universities would just have to factor in the cost of additional support to women’s programs into the salaries they are willing to pay.

Victor April 13, 2014 at 9:20 pm

“Title 9 is, in my opinion, a dumb law that should be done away with.”

So you are against a law that specifically states “No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance.”

Hmmm, interesting.

Chris S April 8, 2014 at 5:01 pm

“Of course all athletes should be paid [their value in the market]” -Yes, absolutely.

The market price of the vast majority of athletes will be zero, or even negative (fees to play sports are common). The top x% will be worth at least hundreds of thousands, and there could easily be a competitive auction for their talents. Let the schools make offers and the athletes accept, or not.

The NCAA has two problems:
1. Victim of their own success. College sports are worth so much money due to demand, it invites a lot of scrutiny. If this was engineering students fooling around on the weekend, no one would care. This invited overreach, such as licensing college students’ images to video games without recourse for the student, even after graduation.
2. “Piercing of the veil” if they let one exception in, pay one player or class of players anything determined by the market, the question becomes: if those players are earning money to play, therefore professional, where is the fig leaf of amateurism? The facade crashes.

Z April 8, 2014 at 5:39 pm

All very good points. I think their ham-handed public relations has invited the usual suspects to turn these issues into acts of public piety. As we see here in this thread, the soap box is inviting to the most ignorant. Without a more intelligent counter from the NCAA, loads of bad ideas get into the public domain. The NFL, in contrast, is very good at handling public relations, thus avoiding a lot of this.

Anti-ummm April 8, 2014 at 1:12 pm

They are skilled labor and sources of revenue. They deserve compensation.

zbicyclist April 8, 2014 at 1:19 pm

Whether they “deserve” compensation or not, one can hardly fault them for trying to get compensation.

Jared April 8, 2014 at 2:26 pm

Right?

How are the commentators on here so in favor of the university administrative class?

Brandon April 8, 2014 at 4:56 pm

They’re generally in favor of the management or ownership class over labor?

BC April 8, 2014 at 7:26 pm

Girl scouts sell cookies to raise funds for the Girl Scouts of America (GSA). Does that make girl scouts employees of GSA? Should girl scouts be allowed to unionize so that they can be fairly compensated? Is GSA an exploiter of child labor? Of course not — fundraising to support one’s own activities does not make one an employee of the organization sponsoring those activities. If girl scout cookie revenues increased 10X next year, or even 100X, and GSA spending on girl scouts’ activities became more lavish, would that convert them into employees?

No one claims that high school athletes that raise funds through car washes and candy bar sales are employees of their schools’ athletic departments. The fact that major college athletes can raise substantially more funds without even needing to do anything beyond playing the sport that they were already signed up to play makes them better off than if they were required to wash cars and sell candy. So, why would they be considered “exploited” if high school athletes and girl scouts are not “exploited”?

All of the money raised by college athletic departments supports athletic programs. The student-athletes are the beneficiaries of those those programs. They are not employees.

dan1111 April 9, 2014 at 2:28 am

Big problem: the Girl Scouts and high school athletes are actually raising funds for their own activities. On this basis, the fundraising is seen as legitimate. If the GSA made a $27 million profit from the cookies that did not go toward programs for girls, do you think no one would have a problem with that? Similarly, if NCAA sports only brought in enough money to support the programs themselves, I don’t see any demands that the athletes get paid.

More generally, the reductio ad absurdum doesn’t work, because the difference of the degree really matters in this case. The argument is that top NCAA athletes bring millions of dollars of value to their school and have a professional-level commitment to their sport. What we think about kids who spend a few hours per year raising money is not really relevant to that argument.

BC April 9, 2014 at 4:13 am

“Similarly, if NCAA sports only brought in enough money to support the programs themselves, I don’t see any demands that the athletes get paid.”

Then, I’m glad that we’re in agreement. As the linked article said, “The idea is, on average, athletic departments are run on a break-even proposition. They’re not expected to make money, and they’re not expected to lose money.” Like most organizations, the more revenue athletic departments generate, the more they find ways to spend that revenue *on athletics*.

Employers employ employees for the purpose of providing goods and services to their customers. Employees are part of the means, not the ends. University athletic programs exist *for the purpose of allowing student-athletes to participate in athletics*. The student-athletes themselves are the end customers.

They have a professional-level commitment to their sport, as do many world-class amateur athletes in many sports, because they desire to perform at professional levels. Sports are by design zero-sum games, driving participants to spend as much time and money as available to gain an edge over opponents. While one can debate the wisdom of devoting so much time to a game, lack of wisdom does not make one an employee.

dan1111 April 9, 2014 at 8:35 am

@BC, this isn’t about the average program; it’s about the top programs, which bring in far more money than needed to run the program.

Brian Donohue April 8, 2014 at 1:22 pm

Exactly. The idea that cossetted professors should see some of this swag is ridiculous. It’s a huge industry, providing a comfortable living for thousands upon thousands of red-blooded Americans, all on the backs of uncompensated workers with no rights. Yay.

Ricardo April 8, 2014 at 2:07 pm

“No rights”? They have the ultimate right: the right to exit.

As Basil Fawlty put it, if they don’t like assembling cars, let them go find work writing violin concertos or building cathedrals or something.

Chris S April 8, 2014 at 5:03 pm

There’s always an excellent selection of varied beans and rice in the post-modern favelas.

PK Sully April 8, 2014 at 6:25 pm

You’re point would be stronger if, say, a bunch of college football players could quit school and start their own college football team and the other schools would have to compete with them. They can’t. They literally can not become a professional basketball player in the U.S. until a year after they’ve graduated from high school. They can go to another country and play professionally right out of high school. That doesn’t seem right to me. Sports in the US are weird. They’re less free market than Europe by a lot.

Nick L April 8, 2014 at 1:46 pm

These athletes are treated like rock stars everywhere they go on campus. I have little sympathy for them. If they feel they aren’t getting paid enough, they’re free to quit the team and spend their time working a part time job like many of us did during our undergrad years.

dead serious April 8, 2014 at 1:49 pm

They already are compensated in the form of scholarships. They are also compensated by being given a national platform to showcase their skills – a pathway to greater riches in the NFL, NBA, etc.

Why is that not enough?

Doug April 8, 2014 at 2:03 pm

It’s not enough because they have not been given a fair chance to negotiate their compensation. If their labor is worth more, they should be able to negotiate for more, without some cartel excluding them from the market for doing so.

dead serious April 8, 2014 at 2:10 pm

They negotiate by choosing which school they want to attend for free.

Should other students get to negotiate for payment, or is this proposed scheme limited to athletes?

Jared April 8, 2014 at 2:24 pm

Other students/student-employees do get to negotiate!! Moreover, no other student is prohibited from benefitting from the labor and skills they provide to the school like athletes are. Adjuncts write for money.

The commentariat here is so thoroughly depressing. The American university is a travesty of oppression studies and the wet nurse of childish marxian pseudo-scholars, unless they collude to strip young men of their rights as workers and entrpreneurs. That’s apparently awesome.

dead serious April 8, 2014 at 5:01 pm

Someone apparently likes the sound of his own voice.

Oh, the oppression. It must absolutely SUCK to have four years’ worth of free tuition, room, and board at a school of your choosing, plus have an opportunity to strike it rich upon graduation.

Schools should be charging these student athletes for the free publicity.

Doug April 8, 2014 at 5:20 pm

Wow, you’re clearly very jealous of athletes and other “cool kids.” You must have had a rough adolescence/young adulthood. Good luck getting over that.

Brandon April 9, 2014 at 10:28 am

Should probably point out that one of the big things the NW football players are fighting for are guaranteed scholarships. If you break you leg and can’t play football again, you’ll be cut from the team and lose your scholarship.

Grad students have unionized at a couple of dozen schools across the US and do negotiate pay, working conditions, etc.

mavery April 8, 2014 at 3:01 pm

Why should that be enough?

Chris S April 8, 2014 at 5:03 pm

Who is to say what’s enough? You?

Let the students test the market. If they are only worth a scholarship, that is all they will be offered.

J April 8, 2014 at 5:22 pm

lol. You call that a market?

dan1111 April 9, 2014 at 3:24 am

Huh?

The whole point is that it is not a market, but it should be.

J April 9, 2014 at 8:57 am

dan1111,

Yes I’m saying the current system is very un-marketlike in its design, procedures, and outcomes, so the idea that what we have now is just the result of students all “testing the market” is false. I was trying to be snarky but I guess I failed.

dan1111 April 9, 2014 at 10:58 am

@J, I think that by “Let the students test the market”, Chris S meant remove current restrictions so that it is a real market.

J April 10, 2014 at 10:58 am

If that’s the case then my bad.

byomtov April 8, 2014 at 1:16 pm

Those numbers of course are not counting the fundraising value of collegiate athletics.

No doubt lots of people are encouraged to donate to the athletic department. What is the evidence that athletics improves fund-raising for the academic part of the university? My impression has been that there is little or no increase, and maybe even a decrease, in non-athletic donations, as donors shift funds to athletics.

Keith April 8, 2014 at 3:05 pm

I believe he meant that the teams spur alumni to donate to the University as a whole, not just to the athletic department. Seeing the teams play on a weekly basis is exciting for people, and these feelings result in more donations.

byomtov April 8, 2014 at 4:39 pm

Yes. I know what he meant.

What I was asking was whether there is actual evidence showing that this happens and benefits the entire university, rather than just providing ever more funding for athletics. There may be some evidence, and you both might be right, but my impression, and that’s all it is, is that this does not in fact happen.

PK Sully April 8, 2014 at 6:48 pm

It does in at least one way. The athletic department writes a check to the university for the list price tuition, room and board etc for all scholarship athletes. If those same kids had been admitted like the rest of the student body, the university’s take would have been much much smaller.

PK Sully April 8, 2014 at 7:03 pm

Checking the U of M site, their athletic department paying 100% of scholarship costs is the exception, not the rule.

Steven R April 9, 2014 at 9:32 pm

The folks at Texas A&M clearly attributed part of their record year to college football and their move to the SEC.

http://college-football.si.com/2013/09/17/texas-am-record-fundraising-johnny-manziel/

RR April 8, 2014 at 1:30 pm
Hadur April 8, 2014 at 1:52 pm

And if a fan decided to reward Mr. Napier by buying him a sandwich or a gift certificate to Safeway, Mr. Napier would be stripped of his NCAA eligibility and athletes going to UConn a few years down the line would be pointlessly stripped of scholarships or the opportunity to compete at a high level.

Z April 8, 2014 at 1:54 pm

In addition to be famous, Napier is a liar. Food is part of his grant in aid. In fact, the training table is more than 99% of students get on campus.

Doug April 8, 2014 at 2:07 pm

Do you think he lives on campus 365 days a year? You think maybe he goes home every once in awhile? What do you know about his home life?

Z April 8, 2014 at 4:13 pm

He most assuredly lives on campus year round. That’s standard for scholarship athletes at major programs. As far as what I know, Shabbaz Napier went to Lawrence Academy, a private high school in Mass. Tuition for non-boarding students is $43K.

Shabbaz is not missing any meals.

JWatts April 8, 2014 at 2:15 pm

“Capitalism at its finest : http://www.cnn.com/2014/04/07/us/ncaa-basketball-finals-shabazz-napier-hungry/

Wouldn’t unpaid college athletes living in school provided dorms, meals and health care be a form of socialism? If it were a capitalist, the players would be paid directly. Instead the aggregate value of their effort is subsumed by the University and the funds are disbursed out to various other programs. I believe that’s the root nature of the current complaints, that the workers aren’t allowed to negotiate their own wages.

dan1111 April 9, 2014 at 2:30 am

+1

spencer April 8, 2014 at 2:03 pm

How does compensation for minor league football and hockey players compare to the cost of a scholarship and room and board for a major college football and basketball player.

ummm April 8, 2014 at 2:12 pm

it’s pretty bad

minor league athletes they make only a few $k a year at most

college athletes have it much better

mavery April 8, 2014 at 3:06 pm

How much money to minor league hockey and football leagues make in media rights? In endorsements?

The NCAA bars you from competing if you sign an endorsement deal. Then they make you play on top of the emblem of Nike or whoever paid them the most. If minor league footballers or hockey players could command endorsements, they’d certainly be able to appear in commercials or whatever.

Take your focus off whether the college athletes “deserve” this money or not and instead consider whether the NCAA, school administrators, and coaches “deserve” it.

PK Sully April 8, 2014 at 3:30 pm

Leaving aside the question of whether the players should be able to negotiate their own compensation (I think they should), why does de-facto minor league football through the NCAA bring in huge revenues compared to minor league baseball and hockey? Clearly it’s the attachment students and alumni have to the university that drives these revenues. If the Michigan Wolverines were the minor league Ann Arbor Hurons (they’d eventually have to change that name) they wouldn’t draw 109,000 fans or share in a huge t.v. contract. The economic value isn’t in the quality of the labor but the value of the ties to the university.

Steve-O April 8, 2014 at 4:21 pm

This is what I’ve always assumed to be the case, too. I think that if you remove the thin veneer of “student-athlete”-ism from college sports and it becomes and explicit professional minor league, college football and basketball might end up as popular as other minor league sports.

Maybe not, since most fans would probably admit in their honest moments that the current system is a farce anyway.

Brandon April 8, 2014 at 4:59 pm

Not necessarily. Everyone in Alabama has either an Alabama or Auburn jacket, hat, bumper sticker etc. but most didn’t go to the school. College sports are much more popular across the south than professional sports are, and it’s not an alumni-driven fanbase.

Doug April 8, 2014 at 5:24 pm

If that was the case, then people would care about college baseball. They don’t. I think the reasons why any particular league in any particular sport is popular are a lot more complicated than that.

PK Sully April 8, 2014 at 5:31 pm

@Brandon- My limiting it to alumni and students is incorrect but it’s the school brand that attracts the fans- the history and rivalries and everything else. The NBA has a minor league and the level of play is higher than that of the best NCAA conferences but no one cares. Two years from now, bring back all the guys who played for UCONN and Kentucky last night and see if you can fill a high school gym. (They’ll be better players by then)

byomtov April 8, 2014 at 5:43 pm

Yes, part of the value lies in the university brand. But a big part lies in winning as well, and means getting good players. Would the big money-makers be as successful with consistently average or worse teams?

PK Sully April 8, 2014 at 5:48 pm

@ Doug– The big difference with baseball is that the professional leagues, including minor leagues, were built out and established before college athletics were commercialized. Competitive football and basketball started with the schools and successful professional leagues came later. A smaller factor is that baseball doesn’t have as strong a tie as football/ basketball to schools at any level since it’s played in the summer. Of course it’s still even more complicated than that. My main argument is: look at how successful minor league baseball is compared to major league then look at NCAA football and basketball compared to their professional leagues. Lastly, look at the NBA minor leagues compared to both NCAA and NBA basketball.

PK Sully April 8, 2014 at 6:34 pm

@byomtov- Over the long run, you’re right– maybe. The conferences split all their t.v. packages (Texas may be an exception to this). The Big 10 (can’t type that stupid logo they have now) even splits up bowl receipts (after expenses directly related to bowl game- big incentive to spend, spend, spend). My alma mater, U of Michigan, went through a stretch where not only did they suck at football and at least half the alumni hated the coach but they still sold out every game. It would take years of poor play and probably a belief that the school was never going to be good again for alums of the big programs to bail on tickets currently priced way below market.

Chris S April 8, 2014 at 5:07 pm

Interesting question. The compensation of minor league hockey is competitively set. Few get much money because most are not very good.

It would be interesting to look at hockey. There are actually two parallel “farm systems” in hockey: in the US, typical NCAA division 1 hockey; in Canada, the Ontario Hockey League and 1-2 others. Should be an interesting natural experiment. As I understand, both are viable routes to the NHL for talented young players.

[Actually I hear the NCAA model is preferred by mothers, who want their kids to at least get an education; and the OHL is preferred by 18-year-olds who want to play hockey and have pocket money for beer.]

chuck martel April 8, 2014 at 6:19 pm

“Few get much money because most are not very good.”
The second tier of the best athletes in the world are “not very good”? Don’t act like an ignoramus.

Canadian Hockey League players are age 20 and under and ineligible to compete in the NCAA, although for each year they play in the CHL they receive a year scholarship to a Canadian university, where they can also play, although college hockey in Canada is a minor sport. Most US NCAA players are recruited from second level Canadian junior leagues like the SJHL or BCJHL and US junior leagues, the USHL, NAHL, NA3HL. A few even move directly from high school to the college ranks. Junior players in both countries are expected to attend school or work when not on the road. More and more juniors are coming from Europe, playing in the NCAA and moving on the pros. For instance Finn Erik Haula played juniors in Finland and with the Omaha Lancers USHL team, three years at the Univ. of Minnesota, with the AHL Houston Aeros and now with the NHL Minnesota Wild. In general, the NCAA is not the most effective route to the NHL. Most of the players at the top level have played Canadian League hockey, their normal season has about twice as many games as the NCAA.

chuck martel April 8, 2014 at 6:34 pm

Only seven of the 30 NHL teams are in Canada. While there’s great interest in the NHL product all over the country, every town of consequence has a junior hockey team. The Kelowna Rockets, Barrie Colts, Medicine Hat Tigers, Notre Dame Hounds, Halifax Mooseheads and Flin Flon Bombers are famous across the country and regularly draw sell-out crowds. One division of the WHL consists of teams from the US Pacific Northwest. College hockey in Canada can’t compare with the junior leagues in fan support or quality of play.

Edward Burke April 8, 2014 at 2:05 pm

IF 78% of NFL players are bankrupt or facing severe financial difficulty within two years of retirement and 60% of NBA players are similarly situated within five years of retirement, exposure of college athletes to post-secondary education seems intrinsically a law of diminishing returns at work.

Abolish the NCAA.

Edward Burke April 8, 2014 at 4:56 pm

–or, even better or just as good, or additionally: abolish all post-secondary remedial programs, without which many a university athletic program would quickly founder.

dan in philly April 8, 2014 at 2:22 pm

The athletes are being paid. The real argument is are they being underpaid, and if so should they have the right and be given the ability to do anything about it?
My only contribution to the argument is if college football players are allowed to strike, organize, independently negotiate with schools, etc, it will effectively end college football, and without school associations, will what is in fact an inferior product be able to compete with the NFL?
My concern is paying the athletes will enrich some stars but will end up killing the goose that laid the golden eggs.

ummm April 8, 2014 at 2:27 pm

The XFL was a alternative to the NFL that had much lower salaries and much poorer quality of play. Take away the college and what is left are some mediocre athletes and no one one will care.

AlanW April 8, 2014 at 3:48 pm

That’s obviously untrue. Minor league baseball is largely a successful second-tier system. Same with hockey. Do away with the NCAA and a system would arise to replace it. Now, it seems very likely that the branding and affinity relationship between minor league sports and large universities is mutually beneficial in boosting attendance and revenue, but that system crowds out the potential for unaffiliated minor league teams.

Chris S April 8, 2014 at 5:10 pm

Agreed. Most 18-year-olds are not skilled or large enough to play professional sports, with a few exceptions.

Especially in football, men usually “bulk up” between 18-22 and this is required to play. If there was no NCAA football, the NFL would find another farm system.

Actually the big threat to the NFL is currently working its way up the ranks of children as more and more parents read about the concussion issues in football and don’t allow their children to play. Fewer young talent development, fewer hardcore fans. I even know a few midwestern high school football coaches that have forbid their sons to play.

chuck martel April 8, 2014 at 6:01 pm

Insurance coverage costs are what will make high school football obsolete. As players that have been out of the game for 3 or 4 years start filing suits for brain damage insurance companies will get out of the high school football business in a hurry.

PK Sully April 8, 2014 at 5:39 pm

The key is that it’s a mutually beneficial relationship so, even if they could, the NBA and NFL don’t want to replace the NCAA as the primary minor league. If college sports disappeared, the NFL and NBA and their minor leagues would see a bump in revenue but only a small percentage of what is brought in by NCAA football and basketball. The total athletic pie would get much smaller. It’s also not a foregone conclusion that total compensation paid to athletes would increase.

dead serious April 8, 2014 at 6:10 pm

Have any clue what the average minor league baseball salary is?

It’s a lot less than a college annual tuition, room, and board.

ChacoKevy April 9, 2014 at 2:41 pm

There’s really a lot wrong with this:
1) Depends on the school/residency situation of the athlete. In-state tuition at Iowa State is less than the average minor-league salary.
2) Don’t assume equivalency of value between tuition dollars and cash. Given the choice between classes valued at 40k or 10k in cash, it’s reasonable to assume many would take cash.
3) Minor leaguers are allowed to take second jobs.
and I think most importantly:
4) Minor leaguers make so little money because the MLBPA simply doesn’t care to represent them. It’s no small story about how players in the minors begrudge the bigs, especially when the players in the Majors went through the same grind themselves. The difference is that baseball players themselves have union representation. It’s the players’ own fault that being in the minors sucks.

BUT, a point in your favor would be in drafting. Any kid can choose and leave whatever school they like. Baseball drafts kids into their farm systems.

mavery April 8, 2014 at 3:09 pm

So new plan: the NCAA, instead of pocketing millions in marketing rights, agrees to allocate 50% of the money from their media to player’s pensions accessible to players who graduate school within 6 years of starting and gives annual payments starting at age 55. Revenue from each sport is allocated separately, and multisport athletes are eligible only for one sport’s pension.

Not perfect at all but certainly better than what we’re at now. And it took all of 20 seconds to think of.

PK Sully April 8, 2014 at 3:34 pm

The college athletics industry’s profit margin as a whole is most likely negative– certainly not a 50% profit margin. I can’t stand the NCAA and think players should have the fundamental right to get the best price for their labor but I don’t think the industry survives that plan.

Chris S April 8, 2014 at 5:12 pm

You’re thinking too much.

Let the players negotiate for what they’re worth. If the education is somehow important to the alumni, require them to attend class, for free if that’s in the contract.

But why even link the two? Just give the player $100k/yr, or whatever, and they can pay for college out of that money if they want to. By definition, every scholarship player is worth at least the value of the scholarship.

PK Sully April 8, 2014 at 5:55 pm

College football came close to this in the ’20s and ’30s and when the alumni discovered that the players were free agents and not students, the brand suffered. http://books.google.com/books/about/Shake_Down_the_Thunder.html?id=lXGEcVjBET0C Reforms ensued that got the players back in class, the market reacted by easing academic requirements for athletes and inventing kinesiology as a major etc etc. I don’t think we can assume each player is worth his scholarship. They basically have a salary cap of x scholarships and can only give one to each guy. Lift that cap and the top players get more and the bottom gets less. Don’t take that as an argument against changes of any kind.

dead serious April 8, 2014 at 6:15 pm

“By definition, every scholarship player is worth at least the value of the scholarship.”

What a ridiculous load of garbage. Assuming your logic, every employee is by definition worth at least the value of their salary + benefits.

The average minor league baseball salary is about 1/4 what a college year costs (tuition, room, board). Student athletes are, if anything, overpaid.

PK Sully April 8, 2014 at 6:43 pm

If we take athletic scholarships at list price value (which doesn’t make much sense because few students are paying list price) and call it compensation, couple that with the fact that division 1 athletic departments as a whole lose money (and lose a lot of money if you take out donations- point being, other for-profit industries don’t rely on donations), then the return to labor in college athletics doesn’t look too shabby. Side note: the athletic department at the U of Michigan writes a check for full-boat to the U for all scholarship athletes. I think they could negotiate a better price if they had the motivation. Alumni donate to the A.D. So, cash flows from alumni to the university through the A.D.

byomtov April 8, 2014 at 7:48 pm

If we take athletic scholarships at list price value (which doesn’t make much sense because few students are paying list price) and call it compensation,

But why do that? If you gave the players a check for that amount instead, surely at least some wouldn’t use it for tuition, etc. And maybe some would find a cheaper place to go to school and pocket the difference.

It’s like paying a worker with some expensive item that they don’t want and can’t sell, and telling them you’re paying them the value of that item.

dead serious April 8, 2014 at 8:17 pm

Your proposed model doesn’t make any sense. There is a ‘free market’ system for what you’re talking about, and it’s called the minor leagues.

On another note: libertarians have suddenly turned into pro-union cheerleaders?

Baffling.

PK Sully April 8, 2014 at 8:39 pm

@byomtov- The University only wants them to play for their team if they go to their U. If the kid doesn’t go to the school, the brand suffers and eventually dies. If the U of M players are going to school down the street at EMU, fans stop caring and the A.D. doesn’t bring in $130 million. OTOH, the player can go to EMU but he has to play (work) for an inferior brand that diminishes his future earning potential and other non-economic benefits.

GiT April 8, 2014 at 7:38 pm

“By definition, every scholarship player is worth at least the value of the scholarship”

False, because the “value” of the scholarship is not equivalent to whatever the university says the cost of tuition is. Effective tuition and sticker price tuition are not the same thing, and from the perspective of those receiving the scholarships, I highly doubt whose sticker price tuition is the highest means much when they’re evaluating school selection. An athlete deciding between full rides at Duke or “the” Ohio State or whatever doesn’t give a shit about Duke’s 2-4x more expensive tuition. If anything, that’s a liability because if he loses his support he’s stuck in it. He’s primarily selecting on the basis of the value of the team.

James April 9, 2014 at 10:17 am

This is a sensible plan in terms of offering appropriate compensation to athletes. The NCAA should be a not-for-profit organization that funnels any funds back to the schools and athletes that bring in the money. But delaying the pay out to these students is a smart move based on the statistics posted above (IF 78% of NFL players are bankrupt or facing severe financial difficulty within two years of retirement and 60% of NBA players are similarly situated within five years of retirement..) Very few 18-22 year olds have the maturity to manage large sums of money. And let’s face it, at many of the top universities the athletes would be earning large sums of money.

j r April 8, 2014 at 2:35 pm

I don’t have much of a problem with the idea of paying college athletes, but I hardly ever see anyone discussing possible negative aspects of it. Many young athletes already experience somewhat of a resource curse in that their ability gives them so much so fast and often without giving them the framework to deal with it all. Will paying athletes help or hurt that tendency?

Also, and perhaps the more obvious point. What happens when all this money runs out? The amount of money being made by college athletic departments is almost certainly somewhat of a bubble. It mostly comes from TV revenue and the TV revenue is dependent upon the current model of cable TV subscription services. That won’t last forever. Sooner or later enough people are going to cut the cord or ESPN is going to have to consolidate from 87 channels to 7 channels and these fat TV contracts will be a thing of the past. It’s possible that college athletics will find new revenue streams, but more likely that those new streams won’t be a lucrative as the present TV deals.

What happens when you have a whole ecosystem of college athletes depending on a paycheck from an ever-dwindling revenue stream? I don’t know the answer, but probably not anything good.

chuck martel April 8, 2014 at 2:59 pm

Does a college athlete sign away his personal television rights when he accepts a scholarship? Why aren’t there individual contracts between each of the players and the television outlet? How does a university acquire the right to commercially exploit an athlete’s image?

mavery April 8, 2014 at 3:17 pm

It’s an NCAA thing. You can’t have endorsements or be paid by anyone for anything ever at all if someone says “football” withing 2 miles of you.

PD Shaw April 8, 2014 at 3:38 pm

Don’t professional athletes sign away personal televisions rights when they sign with a team? And by “sign with a team,” I mean forced to sign with a team that selected you as their draft pick. I think the number of professional athletes that get endorsement deals that are not controlled by the team is small.

Chris S April 8, 2014 at 5:12 pm

Yes but they can freely negotiate for their contract on the way in. The point of college kids and TV money is that they never had the opportunity to negotiate.

PK Sully April 8, 2014 at 8:44 pm

That’s not really true. Both the NBA and NFL have rookie salary caps and the first rounders pay is predetermined for at least the first 3 years. They also both effectively require a college apprenticeship of 1 year or greater. There is nothing free market about professional sports in the U.S. and their relationship with college athletics is very cozy.

mavery April 8, 2014 at 3:14 pm

Well, I disagree pretty fundamentally about your model for the future of media. People like immediacy, which sports produces better than, say, hour-long dramas. And given how much is available streaming online these days (everything on ESPN, the whole NCAA tournament, all of MLB (except bullshit blackout stuf), etc. etc.), “cord cutters” will be able to watch sports as much as they do now. I see no reason to expect TV rights for sporting events to turn around in cost. (The possible exception being local broadcast rights to MLB. I’m a big baseball fan, but I’m not bullish on the 20 year outlook of the sport,)

But that’s completely besides the point.

Chris S April 8, 2014 at 5:14 pm

MLB is going nowhere! At least it better not…

And local pro sports online are available to anyone with $200/yr and the wherewithal to set up a location-shifting vpn (for now).

GiT April 8, 2014 at 7:43 pm

Competitive sports strikes me as the place in TV where subscription is *least* likely to ever go away. People want the live feed, both because of gambling and because sports fandom is all about being au courant.

PK Sully April 8, 2014 at 3:42 pm

If there’s anyone in the crowd who understands Title IX, does the following scenario have any chance of passing legal muster, assuming the NLRB ruling on Northwestern Football stands up?
Since its football players are now considered employees, Northwestern does not include those male athletes in its Title IX counts and cuts 70 or so female athletes and their scholarships– no more crew, golf and softball.

JWatts April 8, 2014 at 5:48 pm

Good question. But Title IX isn’t about sports particularly, so I suspect that even paid athletes would still fall under its umbrella.

“No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving federal financial assistance.

In 1969 Bernice Sandler used the executive order to help her fight for her job at the University of Maryland. She used university statistics showing how female employment at the university had plummeted as qualified women were replaced by men. Sandler brought her grievance to the Department of Labor’s Office for Federal Fair Contracts Compliance where she was encouraged to file a formal complaint. Citing inequalities in pay, rank, admissions and much more, Sandler began to file complaints not only against the University of Maryland but numerous other colleges as well. Working in conjunction with NOW and Women’s Equity Action League (WEAL), Sandler filed 269 complaints against colleges and universities.

Title IX applies to an entire school or institution if any part of that school receives federal funds; hence, athletic programs are subject to Title IX, even though there is very little direct federal funding of school sports

http://en.wikipedia.org/wiki/Title_IX

byomtov April 8, 2014 at 5:05 pm

It seems to me that the NCAA should limit coaches’ salaries. I mean, surely $500K a year, say, is plenty to live on. If the coaches don’t like it they can go sell used cars.

PK Sully April 8, 2014 at 8:49 pm

I would think if the universities could replay the hand, they’d want this. It seems like an arms race that a little collusion could have nipped in the bud. The most successful coaches would always be leaving for the higher paying pro jobs but there’s a fixed number of those so the fired NFL coach would be going back to school. (cue Dangerfield imitation)

byomtov April 9, 2014 at 5:11 pm

Actually, I was expecting some negative responses and hoping to able to ask people why coaches are entitled to unlimited salaries and players are not entitled to any?

Misfired.

Benny Lava April 8, 2014 at 6:18 pm

I am surprised that college athletics are more valuable than pro leagues. I wonder if it is due to branding. imagine if the New York Yankees owned a Yankees NBA team and a Yankees NFL team. Would its value exceed the value of the Yankees plus the Knicks (or Nets take your pick) plus the Giants (again or Jets take your pick)?

Benny Lava April 8, 2014 at 7:16 pm

Or is it that football is just a really valuable commodity and NFL teams are worth that much more?

George Munchus April 9, 2014 at 10:36 am

Now we know why some birds sing LOUD.
Peace,George Munchus
Professor of Management

Barry W. Ickes April 9, 2014 at 10:53 am

How can anyone believe this? The revenue of the LA Kings in 2012-2013 was $98 million. So we are to believe that the revenue of all other NHL teams plus all NBA teams was $52 million? This is idiotic. How can you quote this stuff without questioning it. The Lakers have salaries this year of $77 million. How can they pay this if their revenue is non-existent?

If we look at the revenues of all NHL teams it sums to about $2.6 billion which is a lot bigger than $150 million, so I guess all NBA teams must have negative revenue (not negative income) of almost $2 billion. Even the operating income of NHL teams summed to $200 million.

So I do not understand the point of this at all. The Toronto Maple Leafs had greater revenue than Alabama athletics.
If Paul Krugman had written the article you might have been more skeptical, perhaps.

Gabe Harris April 10, 2014 at 12:23 am

Barry failed this reading comprehension test.

cheesetrader April 9, 2014 at 11:42 am

@Barry – you’re reading this wrong – the aggregate from NCAA rev >>>> that of the aggregate for the NHL/NBA – that’s NOT the same as the aggregate for the NBA being less than Bama’s 143 million – just that 25 teams in the NBA had less as individual teams – like the Kings you mentioned

mesaman April 9, 2014 at 4:06 pm

Regardless of the efforts to rationize and justify this, I have a question; how does this translate into more scholarships and funding for legitimate academic programs?

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