When I recently wrote about the Gold-Plating of College Sports -- and how amateurism makes things like $1 million athletic director salaries possible -- I expected feedback.
Boy, did I get it.
Tweets. Comments. Emails. Some of you had questions; others had bones to pick. Either way, your responses called for a follow-up. So here goes:
If college athletics is such a bad racket for SAs (student-athletes), why are there so many willing to participate?
- The Winthrop University compliance office
If Foxconn's Chinese electronics factories and the Cambodian sweatshops that allegedly made Dallas Cowboys gear are such a bad racket for their workers, then why are so many willing to participate?
Let's remember that no student-athlete is forced to play in college. Can seek "market value" elsewhere #NBADL
- Ryan Squire, associate athletic director for compliance at the University of Illinois
I guess I missed where anyone was being kidnapped, thrown into the back of a van, and forced to participate in any activities against his own free will.
- Phil Poirier
Sigh. In repeatedly arguing against college sports amateurism, I've never asserted that young athletes are forced to participate in a rigged, unfair system. There are no roadside abductions, and stupid recruiting letters are not a gun to the head.
To the contrary, I'm simply arguing that from an economic perspective, the collegiate system is rigged and unfair. Rigged and unfair because while athletes get something in exchange for their labor -- an athletic scholarship -- they are prevented from getting both actual money and a free-market level of said money because a cartel has agreed a) not to compete for their services with offers of money; b) not to allow them to accept any money that anyone might want to provide them.
Whether the current college sports system is a bad or good racket isn't the point. The point is that it's a racket. A racket based on collusion among schools and price-fixing for talent. The fact that athletes choose to participate -- or choose not to participate in the NBDL -- doesn't make it any less of one. Arguing otherwise is a red herring.
Let's go back to my sweatshop analogy. Am I saying that playing basketball for Winthrop University is exactly as awful and inhumane as working in an overseas sweatshop? No. That's why it's an analogy, and not an equivalence. Here's how the two things are alike: People work in sweatshops for the same reason revenue sport athletes accept the college sports system -- because it's the best deal they individually can get within a system that is set up to ensure they have no power or ability to negotiate a better deal. They are presented with a Hobson's Choice, which is no choice at all.
Faced with that reality, college athletes are acting rationally. Participation beats non-participation. If you were living in Soviet Russia, joining the Communist Party made a lot more sense than not, because the former was a good way to get rewards, and the latter was a good way to get thrown in a Siberian prison. Does that mean communism was a just and fair way to order the political and economic system of an entire country?
Let's stay on topic.
The Division-I athlete gets taken care of. Should be no complaints. More selfishness if they want to get paid. Do we forget that they get school, housing, athletic clothing and top-notch training facilities for free as [a student-athlete]?
- Adam Ledyard, East Texas Baptist University sports information director
Jay Paterno wrote a piece a while back that touched on this a little: Jay Paterno: Pay Student-Athletes? They're Already Getting a Great Deal
- Kristi Dosh, BusinessofCollegeSports.com
I'll admit it: For me, an article written by Jay Paterno and republished on the NCAA's official website is about as credible as Colin Powell warning the United Nations about Iraqi weapons of mass destruction. But those are my personal biases. In the interest of fairness, here's what Paterno wrote:
Let me start the argument by making a proposal to parents and students alike. I am going to ask you to work no more than 20 hours a week for 21 weeks -- with at least one mandatory day off every week. For another 23 weeks you'll work no more than eight hours a week. You'll get eight weeks off. (These are all NCAA-mandated time limits).
You will receive fall, spring and both summer sessions of education, plus room, board and all fees paid. For the 604 hours you put in, you'll get an education valued at $33,976 in state and $50,286 out of state (using last year's numbers from Penn State, the latest available). Keep in mind that number does not include several hundred dollars per semester for books and supplies, which are covered under the NCAA scholarship.
At those rates, the student-athlete on full scholarship to Penn State will earn $56.25 per hour if he is an in-state student and $83.25 per hour if he is an out-of-state student.
As a bonus, this full scholarship allows you access to tutors and computer labs and player lounges -- all free to you, the student-athlete. Any medical costs incurred beyond your insurance are covered. You can be flown home at the school's expense for funerals or family emergencies. There can be bowl gifts of several hundred dollars as well.
If you and your family have financial difficulties, this scholarship also allows you to receive any Pell Grant money you are qualified for up to the federal maximum of $5,550 per year. There's also a needy student fund allowing for several hundred dollars a year to buy clothes.
When it comes right down to it, this pay package looks pretty good to most of America. An opportunity to attend some of the top universities in the country and graduate with no student loans to pay off looks good when you consider the average college student in this country starts off with $24,000 in debt the day they graduate.
Paterno is right: This would look pretty good to most of America. Thing is, most of America can't play linebacker for Penn State. Definitely not the way LaVar Arrington did. In discussing the essential unfairness of the college sports system, I'm not talking about the average kid who is average at sports, whom no one outside his or her parents wants to watch. I'm talking about the exceptional kid with elite sports talent, living in a country with a voracious appetite for elite sports entertainment and a willingness to pay lots and lots of money in order to feast.
Again: Getting a scholarship and some perks (like bowl gifts of SEVERAL HUNDRED DOLLARS!) is not the same as being allowed to realize your value in a competitive marketplace for your talent. The college sports system is unfair because some athletes could be getting a much better deal than the one Paterno outlines, and the only reason they aren't is because they are constrained by a bogus philosophy and arbitrary set of economic rules that we don't allow in any other walk of American life.
In my original article on the gold-plating of college sports, I noted that University of Texas athletic director DeLoss Dodds was paid roughly $1.1 million last year, making him one of nine athletic directors making $1 million or more. According to USA TODAY Sports, athletic directors at FBS schools are paid an average of $515,000 annually, an increase of more than 14 percent over the last two years. How did Texas A&M President R. Bowen Loftin explain the large -- and rising -- salaries? By telling USA TODAY Sports that "it's a marketplace out there."
Right. A market. Now imagine if it wasn't:
OFFICE OF UNIVERSITY OF TEXAS PRESIDENT BILL POWERS - MORNING
DELOSS DODDS enters and sits across from BILL POWERS' desk.
DODDS: I'm here to interview for the athletic director job.
POWERS: I think you mean student-athletic director.
POWERS: And hold on a second. Did you say "job?"
DODDS: I did. I'll be working, right?
DODDS: Well, being an athletic director requires overseeing a large budget and dozens of teams, making coach hiring and firing decisions, negotiating rights and sponsorship deals, glad-handing with alumni and boosters, complying with NCAA rules and lots of other tasks both at and away from my desk. Vanderbilt's David Williams says that to be an athletic director, you should "go spend a year in law school, a year in business school and a year over in the college of education, and then take some communications stuff. And then get yourself a big old box of aspirin." That sure sounds like work to me.
POWERS: Nope. Working is for professional athletic directors. As a student-athletic director, you're an amateur.
DODDS: What's an amateur?
POWERS: An amateur is someone who is not an employee, and therefore not entitled to things like workers' compensation.
DODDS: I guess I could use my salary to pay my medical bills if I ever get hurt on the job.
POWERS: Don't worry about that. [Laughs]. There's no job for you to get hurt on!
DODDS: But there's a salary, right?
POWERS: Of course not! Salaries are for employees. [More laughter]. Dodds, let me ask you something: Do you know how much this athletic department made last year?
DODDS: I do. About $163 million. Very impressive. One of the main reasons I wanted to work -- excuse me -- be a student-athlete director here.
POWERS: And do you know where that money goes? To people who work for it. Like our starting quarterback. Look out the window. See him? He's practicing right now. Working. If we make the Cotton Bowl this season, he gets a $60,000 bonus. Worth every penny, too. Kid is damn good at throwing the football. Heisman candidate. On TV almost every day. Alums love him. Boosters love him. I can't tell you exactly how much money he's made for us, but the marketing folks tell me it's a whole lot. Millions. And get this: We landed him for a $150,000 signing bonus. LSU offered only $75,000 and a new car. They must be kicking themselves.
DODDS: Speaking of signing bonuses, I'd like to talk about one.
POWERS: [Laughs.] You are a persistent son of a gun. I'll give you that. I already told you that there's no salary. No signing bonus, either. That would be against NCAA rules. Are you sure you have previous sports administration experience?
DODDS: So what do I receive if I sign on here?
POWERS: You get a hell of a deal, is what you get! Ask Jay Paterno. Room and board, all paid for. A free year of tuition for every year you serve. The opportunity to train to become a more valuable professional job candidate someday. Access to administrative assistants, university computers and faculty lounges -- all free to you, the student-athletic director. Any medical costs incurred beyond your personal insurance are covered. If you have a death or emergency in the family, we may fly you home. And back, even. You're also free to receive federal grants up to $5,550 a year -- I didn't ask, do you have kids? -- and are allowed to tap into our needy student-athletic director fund for several hundred dollars a year to buy suits. Plus, football box seats, 50-yard line, gratis. And all the locker room access you want. You know, the opportunity to have a roof over your head, eat prepared meals, work out at our swanky new gym and watch one of the most popular college football teams in the country for free looks pretty good when you consider the average American has to work all day just to pay for all of those things, doesn't it?
DODDS: I'd still like a salary. I think I'll go apply at Texas A&M.
POWERS: OK, but they offer the same deal.
DODDS: Texas Tech?
DODDS: Baylor? Rice? SMU? Houston?
POWERS: Yep. Every college in the country offers the same deal. We've agreed on that. Room, board, perks. No salary.
DODDS: Is that legal?
POWERS: It is for amateurs.
DODDS: Can't you make an exception for me?
POWERS: We could, but then all of the other schools would boycott us.
DODDS: [Low whistle.] That's a hell of a catch.
POWERS: The best there is. Look, if you want more than what I'm offering, I suggest you apply for a team president job with the NFL or the NBA.
DODDS: But … there are only about 32 jobs in each of those leagues, and 347 Division-I athletic director jobs. I'm pretty good at what I do, but not good enough for the NFL and NBA.
POWERS: In that case, you should go to Europe. Or Mexico. Japan? Perhaps there's a youth sports academy job for you there. Anyway, nobody is holding a gun to your head and saying you need to be an athletic director. You're free to go sell life insurance. Or work at Arby's. We have one on campus. I hear they're hiring.
DODDS: That seems unfair.
POWERS: Unfair? Trust me, you can live on a food and housing allowance -- if you do the math, it's better than what we pay the people who wash dishes at the Faculty Club, and you don't hear them complaining.
DODDS furrows his brow. POWERS places a national letter of intent and a flat-brimmed Texas hat on his desk.
POWERS: So, are you in?
DODDS: I need a day to think about it.
POWERS: Great! Before you make up your mind, you should check out our weight room. It's not as nice as Alabama's, but it's pretty darn impressive.
Is a million dollars an outrageous salary for someone who runs an extremely visible $100 million-a-year business? Personally, I would suggest that it isn't, and that [athletic director] salaries are more or less in line with what similar top executives make at similarly-sized businesses in the sports and media industries, which is really the business these guys are in.
I don't agree that a sharp reduction in AD pay would make a meaningful difference in a school's ability to compensate athletes. Your own chart demonstrates that even if Dodds were to work for nothing, the money saved would not provide fair market value to even two [Texas] football players.
Good points. Let's address them one at a time:
1. College athletic departments are considered non-profit educational enterprises, much like the schools they are attached to. If that's the case, a $1 million executive salary seems a bit high -- as I pointed out in my previous piece, American Red Cross president and CEO Gail McGovern earns a base salary of $500,000.
However, if college athletic departments are actually businesses -- and specifically in the sports and media business -- then sure, $1 million for the head of a $100 million company isn't particularly noteworthy.
(Note: I'd actually argue that college athletic departments amount to giant marketing departments for universities, in that they exist to attract students, encourage alumni giving and increase school name recognition and brand awareness. But that's a column for another time.)
1a. The notion that college athletic departments are not businesses is traditionally what has allowed them to get away with instituting and enforcing across-the-board amateurism, which in turn caps athlete compensation in football and men's basketball -- and probably particular athletes in other sports as well -- at below-market rates. If you think that's not the case, try a quick thought experiment: Without amateurism, how much cash would Duke have to offer Jabari Parker to beat out Kentucky for his services?
1b. Thanks to the above compensation cap, athletic departments have more money to spend on other things. And since they have no profit motive, they do so. Hence gold-plating, which I believe extends to athletic director salaries. Lower on-field labor costs means higher executive compensation.
Now, I could be wrong. Perhaps athletic directors have an undistorted market value of $500,000-plus annually. Perhaps schools paying competitive prices for players would continue to compete just as hard -- and lucratively -- for administrators. Maybe those schools would simply cut corners in other areas of their athletic budgets, or find ways to make even more money. Hello, corporate sponsor patches on college jerseys!
Of course, the only way to find out for sure is to dump amateurism. The fact that athletic directors are in no hurry to do so ought to tell you something.
2. I think you have things backwards. I never asserted that reducing athletic director pay would make a meaningful difference in a school's ability to compensate athletes; as explained above, I simply argued that compensating athletes would result in a meaningful reduction of athletic director pay. In fact, compensating athletes would result in less money for athletic departments in general -- which might not be as apocalyptic as people like Big Ten commissioner Jim Delany predict.
Again, consider this chart from antitrust economists Dan Rascher and Andy Schwarz, which shows average spending difference Division I schools with major football teams (like Alabama) and those without (like Georgetown) various non-revenue college sports in 2009-10 and 2010-11.
Given that many FCS schools manage to field competitive Division I non-revenue teams -- such as Brown's 2011 championship rowing team or Georgetown's NCAA runner-up men's soccer squad -- for less money, is the extra FBS spending really necessary?
Your screed [on] Sports on Earth neglected to mention the thorny issue that no one who advocates paying college athletes is willing to address. How do you decide who gets paid what?
Your article quotes one study that each Texas football player is worth more than $500K. That's not true. That would suggest that the starting quarterback is worth the same as the guy standing on the bench waving a towel. They don't have the same value!
How do you value a recruit? What do you do when an underpaid player outperforms his salary? What happens when an overpaid player underperforms?
- Brian Simon
Great questions. The temptation here is to come up with some sort of one-size-fits-most plan that covers the majority of athletes and schools. Joe Nocera of The New York Times has a thoughtful proposal that combines free-market recruiting and a per-team salary cap for football and men's basketball. Sports Illustrated presented a detailed scheme that would pay all campus athletes a stipend. As a thought exercise, "Wages of Wins" author Dave Berri calculated how basketball players could be paid according to their Wins Produced statistics. (Berri estimates that Indiana star Victor Oladipo would have made $737,129 this season, while teammate Taylor Wayer would have pocketed $2,138.) The plaintiffs in the ongoing, potentially landmark Ed O'Bannon antitrust case -- if you're unfamiliar, Sports Illustrated's Andy Staples has a great summary here -- have a plan to split television revenues between schools and athletes, similar to the way professional football splits TV money between owners and players.
Personally, I prefer a hands-off approach. No plan. No universal solution. Let the market figure itself out, the same way it does in other lines of work. On Schwarz's blog, he puts it like this:
There is no need for a central committee to make this decision. Since 1776, with the publication of Adam Smith's "The Wealth of Nations," we've understood that markets generally find their way to efficient outcomes without the need for a committee, NCAA or otherwise, acting as a wage politburo. No centralized commission or study group is needed to decide what we should pay the athletes. Let schools make offers, and let incoming high school athletes and their parents decide which to accept. Competition is a wonderful thing, on the playing field and in the marketplace. This is how salaries are set across the world. This is probably how your pay was set.
At first it might be a little messy, just as when a firm prices its stock in an IPO. The initial price may end up higher or lower than the right value, but the company picks a price, sells its stock, and then the market adjusts. For example, Linked In went public on May 19, 2011 and closed up 107% from its initial offering after two days of trading. The following month, Pandora went public but closed down 20% two days after its launch. Opening up the market for student-athletes would not be much different. At first, many schools might continue to offer the Grant in Aid ("GIA") package without additional cash. A few programs might want to set the gold standard and offer $10,000 stipends. A few up-and-comers might make a play for some talent and offer $25,000 to see if they could jump-start their programs at a higher level. The following year, maybe a few more schools would up the ante, and maybe some of the Old Guard might start matching offers to avoid losing talent. Just as water finds its own level, so too do prices in a liquid market. A decade in, everyone would have a great sense of what a blue chipper is worth to a program and what it takes to land him. Problem solved.
One more thing to consider: collective bargaining. It's quite likely some form of it would take place between teams and athletic departments, or between the NCAA and a national college player's union. As much as I rail against the sheer moral odiousness of amateurism, the fact remains: Schools generate a good chunk of the value in college sports. Put Louisville and Duke's basketball squads in street clothes in a high school gym, and they won't command nearly as much television revenue as they do in the NCAA tournament. Both sides of the college sports labor-management equation deserve a piece of the pie; one side should not be allowed to dictate slice sizes via fiat.
One more thought that is often ignored. I have a degree from the University of Texas. It does NOT have the same value as if I had played football at the University of Texas (even if I failed to get a degree). Aside from the opportunities to pursue professional sports, a former player [has] a cachet that has significant value in the business world. My friend once took an appointment on a cold call because the salesman was the punter on the Texas national championship team. Playing college football has value beyond the traditional play-for-your-tuition model suggests.
- Brian Simon
Sure. Lots of things have intangible value. A degree from Harvard probably has more cachet than a degree from Florida Gulf Coast. Does that mean a talented collegiate actor shouldn't be allowed to make money while participating in Harvard's student theater program?
Rich keep getting richer. Mid-majors cannot keep up with the Big Boys. Being paid by boosters can be dangerous [and] bigger schools have more to offer than mid-majors #dangerousroad
- Adam Ledyard
Amateurism caps salaries. It does not ensure equal talent distribution. Because rich schools can't hand out cash to attract talent, they do things like build $9 million, 37,000-square foot athlete weight rooms and $7 million basketball dormitories featuring private chefs. These are secondary recruiting inducements, and while they might be economically inefficient, they are still effective.
To wit: Rascher and Schwarz examined where the top 100 high school basketball prospect over a 10-year-period went to school. Take a look.
More than 99 percent chose the Big Boys. The #dangerousroad already exists, and it is a freshly paved superhighway. If anything, amateurism hurts competitive balance. The hardest, most expensive way to attract top high school athletes is to hire high-priced coaches, build tricked-out facilities and spend countless man-hours on recruiting. By contrast, the cheapest, most efficient way to land talent -- not coincidentally, the method employed in the actual job market -- is to offer a better salary. As an economist explained to me last year: "The sixth man on Kentucky's basketball team might not be worth as much to them as they would be to, say, Ball State. But right now, price-fixing keeps Ball State from competing. If you let schools use cash, they would at least have a chance."
The hurdles with Title IX and nonprofit laws and [regulations] make it much harder to contemplate pay-for-play than most realize. You make it sound like it's simple to decide to pay [student-athletes]. Maybe morally, but not in reality.
- Kristi Dosh
Ah. Title IX and nonprofit laws. The great bogeymen of college sports economic overhaul. Both are reasons to maintain the status quo. Are they compelling reasons?
I think not.
Consider a college sports Olympic model, in which athletes would be allowed to sign individual endorsement deals and receive booster money handshakes without sanction. Said transactions would be matters for the IRS; Title IX and nonprofit laws wouldn't apply. As for direct pay-for-play? Dosh has a point. Title IX could make it more difficult for schools to pay football and men's basketball players. On the other hand, it might not. The same goes for nonprofit laws and their application to campus athletic departments.
Also remember: We're talking about laws. Human laws. Not the laws of thermodynamics. Laws that we collectively agree to as a society; laws that are subject to interpretation and re-interpretation; laws that can be changed. All change takes is political will. If Congress wants to pass a law taxing revenue-producing college sports but not taxing universities otherwise, it can do that; if Congress wants to amend or reword Title IX so that athletes in revenue-producing sports can be paid without having to pay non-revenue athletes, it can do that, too. Trust me. I live in Washington, D.C. I know all about federal loopholes.
Look, change is never easy. It always brings complications. But since when is comfort a good reason to perpetuate injustice? Amateurism isn't a condition. It's a choice. A system we can choose to dismantle.