A Very American Coup By Michael – Louis Ingram, Editor-in-Chief...
Money, Power, and The NCAA
As a Finance Professor, I can tell you that the amount of money earned from NCAA athletics is simply astonishing (the earn $6 billion dollars from the TV rights to March Madness alone).
They earn revenues along the lines of the NBA, NFL, and NHL, yet they are not required to pay the athletes a wage that goes beyond a college scholarship. I am as big a fan of education as anyone, but I think that many athletes and their families would rather be allowed to negotiate a fair wage and then pay their own tuition.
The words I shared recently with CNN, ESPN, CBS Sports and Bleacher Report are in the article below. I consider this to be a long-term fight and it’s something that I plan to continue pushing after taking a position as a faculty affiliate of The College Sports Research Institute at The University of North Carolina, Chapel Hill.
Although I never want to get too deep into politics, this might even be a fight that has to be taken to Washington.Not only is this an issue of fairness, there is a strong racial component to the discussion of collegiate athletics.
Most anyone who watches college sports knows that many of the top athletes are African American, while most of the head coaches in college football are not black.
The truth is that many universities love to have black men playing on the field and bringing in revenue, but they are simultaneously reluctant to hire black coaches, recruit black professors or even admit black students.
What’s worse is that the NCAA and its activities amount to a nearly $1 billion dollar per year massive wealth extraction from the African American community.
Before he died, Johnny Cochran did a good job of creating racial equity in NFL hiring, and I only wish Johnny were around to deal with the NCAA. But perhaps there is another Johnny Cochran waiting in the wings, there are a lot of attorneys on this list.
To personalize the issue a bit more, I can tell you a quick story (this is not the only one I could tell). There was a kid who attended a university in the south. He was the star of his basketball team and got his team to the Final Four.
His coach’s salary was $2 million dollars per year, and his university got a check for $20 million dollars for winning the national championship. The coach and his family were flown to the game first-class, all expenses paid, and given accomodations in a luxury hotel.
They were even allowed to fly in thebaby-sitter and the family dog.
At the same time, the star athlete’s mother had to go to church to beg for a collection to allow her to buy a bus ticket to get across the country to watch her son play.
The problem was that she could not afford to attend both the championship game and her son’s graduation, so she chose to miss the championship game. To make matters worse, taking up such a collection is an NCAA violation.
In fact, athletes can lose their scholarships for taking a candy bar at the wrong time. That’s how insane the system has become.
I think this is wrong. If this woman’s child is worth $20 million dollars to his university, his mother should not be begging for anything.
The article is below and the coalition to challenge the NCAA can be joined at this link. There is also another informational article and a Q&A for anyone who wants to further understand our position.
I am not fighting for preferential treatment of athletes, I am simply fighting for fairness. I will also continue to bring up this issue once everyone to two months for the rest of my life.
This matter must be resolved.
1) People often say that the opportunity to receive a free education is enough compensation for college athletes. What’s wrong with that argument?
A free education is valuable, no one knows that better than a college professor. The problem is that we can’t assume that $30,000 per year is fair compensation for any job. If Tom Cruise stars in a blockbuster film, he is going to kick your butt if you try to pay him $30,000, even if you throw room and board in with it. In America, you get paid what you’re worth.
I see many athletes who are literally responsible for bringing $20M per year into their campuses, yet their mothers are starving to death or homeless. This should be a shame for us all, since I’ve never seen a D-I college coach’s mother go hungry.
2) If colleges could pay athletes, the wealthier schools would appear to have an advantage. Do you think there would need to be a salary cap or other measures put in place to ensure some parity in college sports?
I am not opposed to the idea of a salary cap, although I haven’t seen a salary cap for coaches. My goal is not to support preferential treatment for athletes, I only endorse fairness. I don’t see why coaches and athletes can’t have the same rules. They are all under the same pressure to win, they are both treated as professionals and expected to produce as professionals. This pressure doesn’t come from the fact that their campuses love sports so much, it’s because CAMPUSES WANT THE MONEY. They are pushing these guys much harder on the court and the field than they do in the classroom, because good grades don’t pay university bills; only big wins bring in big paychecks.
But in terms of a salary cap, I would not be opposed to that. The NCAA is lucky, since they are the only multi-billion sports league that can get away with paying their players 1/100 of what they are worth. Players would be ecstatic to play for $150,000 per year, which is far less than the millions many of them would earn in a fair market system. The money wouldn’t have to come from university budgets, they could start by sharing the money coaches get from shoe deals. After all, the players are the ones we pay to see and they are the ones wearing the shoes. But as a general rule, the Finance and free market capitalist in me doesn’t like the idea of any kind of government regulation restricting wages. I am sure coaches wouldn’t like a cap on their wages either.
3) Do you think that recruits should be offered contracts by schools based on the performance they showed in high school? How would one individual’s contract differ from another?
I don’t think that we know all the answers to these questions, but one thing is true: The market knows ALL ANSWERS to ALL QUESTIONS. In other words, if a player is the next Lebron James, then the schools know what he can do in terms of revenue generation. I say let them bid it out and the highest bidder wins. Seriously, who is to say that Rick Pitino is worth $3 million per year? Nobody says it, there is a negotiation and the price that he gets is what he is worth. The beauty about the free market is that when the market is fair, open, and efficient, no one gets more than what they are truly worth, since no one pays more than the value of the commodity.
What I love about the NCAA (who expends a tremendous amount of money on their propaganda machine) is that they do a good job of making it seem that paying the athletes would be excessively complicated and nearly impossible. The problem is that they find a way to get around the complications when it’s time to bring in a coach for $4M dollars per year. The market works out all complications, because you either get the deal done, or the game doesn’t happen. They have a lot of PhDs working for them, and we are smart enough to help them work out the complications of their contracts.
The reality is that anyone who exploits someone else, whether it’s the NCAA or a pimp on the street, is always going to find a good excuse for keeping their money in their pocket. I say this as a financial expert. I am sure that when Billy Packer or Dick Vitale show up for their multi-million dollar paychecks, they wouldn’t want to hear any reasons that their money isn’t available. For some reason, they expect athletes and their families to accept these excuses.
4) What should be done regarding sports that bring in very little revenue such as golf, tennis, and track? Would the contracts for these athletes be substantially less?
Yes, they would be. That’s the way things work in the real world. I am a professor, and some could argue that educating our youth is far more important than being a Hollywood actor. However, I will always make less money than (and not be attractive enough to date) Angelina Jolie. I accept that.
I find it most ironic that when individuals expect payment equity among young athletes, as well as gender equity, they almost never mention the necessity of such equity among the coaches.
Again, going back to a fair market, if an athlete brings revenue to the university, he/she should have the same rights of negotiation that coaches, administrators, corporate sponsors, and everyone else getting paid from his/her labor. If you simply release the rules and let the market work, you will get the result you are looking for.
5) How would you like to reform the horrendous academic environment in college athletics?
I agree, the environment is horrific. I’ve seen athletes admitted to college with no expectation that they are ever going to consider graduating. Money is a drug, and a drug addiction can make any of us lower our standards. Universities are no different, as many of them abandon their academic missions in exchange for the opportunity to earn a few million dollars off the next superstar from the ghetto.
We must remember that incentives roll downhill. A coach with high graduation rates and a low winning percentage would be fired, while a coach with low graduation rates and a high winning percentage is given a raise and promotion. This shows blatant disregard for the value of academic success. I see universities giving coaches blank checks for controlling every aspect of their players’ lives in order to get them ready to play, but they throw their hands up and negate their responsibility to see to it that these young men and women are getting educated. The excuses are interesting: “We can’t make them study if they don’t want to!” At the same time, the same coach who claims that he can’t make the athletes study miraculously finds a way to get 80 grown men awake at 6 am for intense weight lifting sessions. They are able to motivate the athletes to do what coaches deem to be most important.
I don’t completely blame the coaches for these contradictions, I blame the campus. Coaches understand that they are not going to be rewarded for academic achievement. Winning, however, is key to their job security. Campuses should take the lead in putting oversight in place that insures that academic progress is the most important part of any athletics program. That means that if a player has practice the night before an exam, he/she misses practice. If they have an exam during a game, they miss the game (even if it is a million dollar game on ESPN). THAT, my friend, is the life of a student athlete. Right now, college athletes live the lives of professionals.
6) If you were named President of the NCAA, what other changes might you make other than compensating athletes?
I am hesitant to be an armchair quarterback on the NCAA, primarily because I believe that many of the administrators in the NCAA know that what they are doing is wrong. In fact, Walter Byers, the former executive director of the NCAA has reversed his position and stated that athletes should be paid. Honestly, anyone with common sense realizes that if you earn millions for someone else, you deserve more than a college scholarship.
I believe that Myles Brand, in spite of the propaganda exercise performed by he and CBS Sports last year (in an attempt to refute my analysis), knows that he would never allow himself or his coaches to operate under the same constraints, penalties and exploitation placed on athletes and their families (especially if his mother were getting evicted, as many of these players come from poverty). In fact, I found it quite ironic that nearly every participant in the CBS sports special was earning at least a few hundred thousand dollars per year while simultaneously explaining to athletes and their families why they shouldn’t get any of that money.
Beyond paying the athletes, I would make a decision: either the NCAA is going to be a professional organization or an amateur one. It’s not going to be a hybrid. A truly amateur organization doesn’t have coaches earning as much as $4M dollars per year. Coaches earn no more than, say, $80,000 per year.
An amateur organization doesn’t fire losing coaches with high graduation rates and reward winning coaches with low graduation rates — any coach hired by the NCAA is expected to not only teach at the university, he/she is expected to ensure that academic achievement is first and foremost in the life of each athlete.
The rules should disappear: why can’t players transfer to other schools without being penalized? Coaches leave in the middle of the season all the time. Why is it illegal for athletes to receive compensation from outside entities? Coaches take money from whomever they please. Athletes are given the same responsibilities as adults, told to behave as adults, yet we put rules in place that treat them like children.
Again, anyone who exploits another human being, whether it’s the NCAA or a corrupt warlord in a third world country, is going to place constraints on you and then guise his/her motivations by claiming that the rules are in place for your protection. That is the consistent theme of the NCAA’s justification for controlling their student athletes. But their desire to protect the athlete goes out the window when an athlete gets into trouble, loses his/her eligibility or loses his/her scholarship for not being able to perform on the field.
The NCAA needs to redefine its mission and be honest with the world. Right now, it is an elephant with bunny ears, swearing that it’s nothing but a harmless little rabbit. The truth is that the NCAA is exactly what it appears to be: a professional sports league.
So, rather than allowing me to become the head of the NCAA, I would rather be the head of the House Ways and Means Committee, which initiated an investigation into the NCAA and began to question its non-profit status. A bureaucratic beast that has grown so deformed with contradictions needs to be deconstructed and rebuilt in a model of fairness. As it stands, the NCAA exists in stark contrast to the values most of us embrace as Americans.
I’ve seen it up close over the past 15 years and it bothers the heck out of me.