Friday, April 01, 2011

Just pay them... (continued)

The PBS Frontline on Money March Madness is worth watching. And it appears to have caused the NCAA President to at least say he's open to discussion about paying players in some fashion. He wouldn't disclose his salary when interviewed, but the interviewer makes the point that he likely earns more money than he did presiding over the University of Washington, with thousands more employees than what he has now.

The 10-year March Madness deal signed between CBS, Turner Sports, and the NCAA was worth $10.9 billion. The Bowl Championship Series earned $125 million in TV revenue last year. The SEC's 15-year package with ESPN is worth $2.5 billion. Coach Rick Pitino earned over $6 million last year, John Calipari about $4 million-- plus travel, cars, endorsements, etc. The players you turned in to watch, however, earned tuition, books, a university meal plan, and received some apparel--little more. They also signed the rights away to the use of their image, meaning the NCAA makes money off of jerseys with their name and selling their images to EA Sports and old games to ESPN Classic.

Consider student employees of universities-- work study, RAs in the dorms, and graduate students who are researching and teaching. They typically get a tuition remission and some type of stipend or salary. I have one student who has been offered up to $27,000 to attend a particular university as a graduate student. The schools compete for her attendance by offering money. But athletes do not have the same rights, they're expected to perform their work without the stipend. Why?

Michael Lewis, author of The Big Short, The Blindside, and other bestsellers, basically says you only care about athletes getting paid if you have a "weird" desire to see justice done. "Justice" came to mind reading this transcript of HBO Real Sports where several Auburn players allege they received large payments from boosters. That made me happier, they were closer compensated to what they were worth. One player sold his championship rings to keep his sister from being foreclosed on-- another NCAA violation.

The classical theory of wages says that workers are paid according to the marginal product of their labor. If they're producing multi-million dollar profits for performance, then paying them a salary of $0 makes little sense. Not paying for their low-income parents to attend games, for example, seems cruel in light of how much money the NCAA is making off of them. Economist Andrew Zimbalist, who Frontline interviewed, estimates that star quarterbacks are worth around $3 million. But the NCAA operates as a cartel and gets to pay players whatever it chooses.

It's important to understand that while the NCAA is profitable, the schools themselves are LOSING money through athletics. Only 14 out of 120 BCS programs have an operating surplus, the median school lost $10 million last year. One can argue that private donations to athletics necessarily crowd out donations that may otherwise have been made to the university. Shortfalls also have to be offset from a university's general fund.

Sonny Vaccaro and others are currently exploring a lawsuit against the NCAA looking to change things. His summer camps paid a key role in feeding the beast and now he has a guilty conscience about it. I hope they're able to see change happen.

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