Sunday, August 20, 2017

How The Economics Of College Sports Might Be Distorted

See Stop Giving College Athletes Million-Dollar Locker Rooms: Start Paying Them Big-time college sports programs pour money into absurdly luxurious amenities because compensating players is off the table by Jason Gay of The WSJ.

The part about schools competing to get the best players by having things like the best locker rooms because you can't pay player sounds like what happened with health care during WWII. There were wage and price controls so firms offered to pay for health insurance to get the best workers. The government allowed this to be tax exempt, causing more employer funded health insurance to exist and maybe distorting health care markets as people spent less and less of their own money on it.

"Colleges “spend money on everything but what a normal market would have to spend money on, which is the players,” says Andrew Zimbalist, a professor of economics at Smith College and the author, along with Gurney and Donna Lopiano, of “Unwinding Madness: What Went Wrong With College Sports and How to Fix It.” “It just seems like a no-brainer that [this is] what’s going on.”
Let me beat you to it: College athletes can get scholarships, and that isn’t a small thing when a full ride at a four-year school can be worth well over $200,000.
But in an era in which networks pay close to $1 billion a year to televise March Madness, college football is expanding into lucrative playoffs, and coaches with shoe deals scoot through the clouds in private jets, the notion of scholarships as fair trade starts to feel quaint. It’s comical to watch the NCAA and its membership try to justify this arrangement in the legal system and the court of public opinion. Schools that tout their futuristic performance complexes and celebrity coaches suddenly sound like they’re back on a crab grass field in the late 19th century, rhapsodizing about gentlemen amateurs and the flying wedge.

Because make no mistake: These luxe locker rooms and performance centers are a form of compensation, directly correlated to the nonpayment of athletes. With no obligation to share revenue with talented players but eager to attract them to campus, schools simply channel money into other forms of seduction.

Rodney Fort, a professor of sports management at the University of Michigan, calls the current environment a “wonderful example of what happens when a market is restricted from doing its job and people still need to move things economically to their highest-valued use.”

“You can’t pay the players directly, at least not aboveboard,” says Allen Sanderson, an economist at the University of Chicago. “So you overdose in complementary recruiting devices, and that includes building the biggest, most luxurious facilities.”"

Consider the reaction earlier this summer when Josh Rosen, a quarterback at UCLA and an economics major, deigned to suggest in an interview that playing a major college sport today isn’t wildly compatible with a well-rounded academic life.

“Football and school don’t go together,” Rosen told Bleacher Report’s Matt Hayes. “They just don’t. Trying to do both is like doing two full-time jobs. There are guys who have no business being in school, but they’re here because this is the path to the NFL.”

“Any time [a] player puts into school will take away from the time they could put into football,” Rosen continued. “They don’t realize that they’re getting screwed until it’s too late. You have a bunch of people at the universities who are supposed to help you out, and they’re more interested in helping you stay eligible. At some point, universities have to do more to prepare players for university life and help them succeed beyond football.”"

"Rosen was pilloried by the college sports establishment—as lazy, as an ingrate, as a spoiled brat unable to balance his academics and the carefree life of a major college quarterback. Never mind that, as CNBC’s Jake Novak pointed out, the National Labor Relations Board has found that current college players are spending between 40 and 50 hours a week on football in season—a full-time job by any standard. Never mind that college athletic departments have been criticized for steering student-athletes to easy course loads—or, terrifyingly, nonexistent, fabricated ones. Never mind the invisible hand of the NFL and NBA in perpetuating the system—fat and happy pro leagues, waiting to cherry pick what is effectively an unpaid minor league."

"the University of Chicago’s Sanderson says it may be simpler than I think: “The right solution is to simply pay the kids. Let the market work. If it results in ‘only’ 50 Division I football schools, because the other schools can’t afford a quarterback, that’s fine; the rest can be programs where the ‘student-athlete’ is actually a student.”"

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