The article was originally published on Freakonomics.com
When we think of money and college sports, we tend to think only about basketball and football. In fact, defenders of the excesses we see in those sports -- with respect to salaries to coaches and university expenditures -- argue that these sports are necessary to support all the other teams universities field. People often argue that outside of football and basketball, athletes in other sports don't generate enough revenue to justify their scholarships.
A recent paper by Leo Kahane (editor of the Journal of Sports Economics) challenges this line of thinking. Kahane's paper looks at college hockey, which will hold the Frozen Four this week in Tampa, Florida (really, Tampa). This is college hockey's championship, an event which doesn't get quite the same attention as the NCAA Final Four for men and women. (Perhaps also because people don't associate hockey with Tampa?)
Before I get to Kahane's study, let me just note a few items from the first paragraph of it -- which I think captures the essence of the college sports business:
I would add that in many states one suspects the highest paid state worker is a coach of a college team.
How is this possible? As Kahane notes, the compensation of the people who generate this revenue -- student-athletes -- is heavily restricted. The restrictions -- as past research has indicated -- result in the underpayment of some student athletes (i.e. many are paid less than what they receive in compensation) and much higher salaries for other state employees.
Previous studies have already found evidence for underpayment in college football, men's college basketball and women's college basketball. Robert Brown, who pioneered this line of research, recently updated his study of college football in a paper presented at the 2011 meeting of the North American Association of Sports Economists. Brown's update indicated that in 2005, players eventually drafted into the NFL generated revenues for their respective colleges that ranged from $187,760 to $2.59 million.
Kahane's work applies this same approach to the study of college hockey. Specifically, Kahane's study examines how the revenue generated by college hockey teams is impacted by players who eventually are drafted by the National Hockey League (controlling for factors such as schools size, conference and team quality).
And here is what Kahane found:
Empirical results... showed that top-flight college hockey players generate between $131,000 and $165,000 in added revenues to schools. The NCAA reports that the average value of an athletic scholarship for 2008 is between $14,000 for in-state public schools to $32,000 for private schools (National Collegiate Athletic Association, 2010). This implies that a premium college hockey player generates rents in excess of $100,000 per year for the typical institution.
To put this result in perspective, Brown and Todd Jewell -- in the Journal Industrial Relations -- found that a future WNBA player generated between $38,000 and $400,000 for her respective college team. So it's not just football or men's basketball where we see athletes generating substantial revenues for their schools.
As Kahane notes, these revenues tend to find their way into the pockets of the coaches. To illustrate, Nick Saban -- head football coach at the University of Alabama -- recently signed an extension that will give him $5.62 million per season. Saban just led his team to the BCS championship. New York Giants coach Tom Coughlin also just led a football team to a major championship (the Super Bowl). He is finishing a contract that paid him $21 million across four years (signed after he won his first Super Bowl title), so Saban's contract with Alabama is comparable to the upper echelons of NFL coaching.
As sports economist Andrew Zimbalist has noted in the past, this doesn't make a great deal of sense. The NFL only has 32 teams sharing at least twice the revenue generated by all NCAA sports (the NFL generated about $9 billion in revenue in 2010, about twice what Kahane reports the entire NCAA generated in 2008). Not only does college football generate less revenue, there are far more teams claiming a piece of the pie (there are more than 100 FBS schools). So the revenue per team in the NFL dwarfs what we see at the college ranks. And yet, the salaries of top coaches in both places are similar.
How is this possible? Coughlin's players face far fewer salary restrictions. Consequently, Coughlin's pay -- as a share of organizational revenues -- is far less than Saban's salary.
And this should be remembered next time you hear someone with the NCAA tell us they cannot afford to pay the players. The coaches and administrators all financially benefit from this current arrangement. Given that people respond to incentives, we should not expect coaches or administrators to voluntarily give up their pay to compensate the people who make that pay possible.
Let's Start Paying College Athletes - NYTimes.com
What is worse is when a teams Head Coach is caught breaking the rules, the school gets hit with sanctions keeping the team out of post season play, while the coach just moves on to another school, leaving the kids screwed.
All I wanted was some good competition, all they wanted was to stay on the team and the scholarships.
so they asked me after a while not to attend practices.
I cannot blame them
things are so competitive and the money, even for fencing, are good
It would be better for higher education if sports programs were simply closed down - they add nothing to learning.
The small percentage of people that can succeed in sports or acting are just too small to actually give people a way out of poverty.
If the kids are not learning academics while pushing the competitive nature of sports, they will not have that skills that would let them work even with a college degree.
After all, if they couldn't make the grade to get into college, shafting academics won't all of a sudden teach them and bring them to a level that is acceptable for a college graduate.
Sports are a distraction and keep people down. If your only hope is "I'm going to go to college to be a basketball player" than this system won't work.
If you think you are right, I'd love to see some statistics on the matter. What is the employment stats for people who got buy on an athletic scholarship?
It's all part of the same paradigm that brought us such stark extremes in income inequality over the last 30 years. It also generated the worst economic collapse in over 80 years, massive dot.com and housing bubbles and the current economic malaise we are currently living through.
It can all be traced to the rise of the neo-liberal economic ideology (aka Reaganomics, trickle-down, supply-side, Friedman, Chicago school) where the market is everything.
The cult of the CEO/Head coach who is mysteriously solely responsible for generating such wealth for the investor class that he/she should be showered with riches at the expense of the working class.
Schools BofRegents are populated with the 1% business class who cannot see the world in any other way, promote this behaviour and the belief that the most valued person in school / State is a head coach.
Universities have become an extension of the private-market paradigm, as such it is the same reason higher education is over 6 times more expensive today than it was 30 years ago in (adjusted for inflation, i.e. real terms). There is over a $trillion in student loans to prove it.
Its the same with every discipline, you think so much in singular terms that the interconnectivity of life is ignored.
I mean, how else did economists come up with the idea that people are necessarily rational being looking for self interest, and therefore the neoliberal system is going to work with an invisible hand?
I mean, those are claims about psychology, philosophy, sociology, etc. Why do they think they can make claims like that?
They cannot, all they can do is talk numbers. Arguing about human nature is BEYOND their scope as economists. Hell, advertising and marketing folk have a better understanding of the irrationality of human nature than economists do because they work directly in the field that unites business and psychology.
So no, I wouldn't trust economists to consider the socital benefits of government backed loans.
I point this out because varsity D-1 athletes do not have the same college experience that other students do. While they may receive the same degree, they spend exorbitant amount of time practicing, training, lifting, traveling, etc.; tutoring does not make up for all of that. Their degree is then--in comparison to students able to thrive in college, pursue extracurricular activities and leadership, take internships and study abroad--worth less. Athletes sacrifice a great part of their college experience to work without adequate compensation.
Plus, the author leaves out a few things about the compensation they receive, such as room and board, free meals and all the tutoring they need. Plus, the education they are supposed to be receiving will reap them benefits in increased salaries for the rest of their lives.
When the 1% has the most success and pay for the poorer people to live, that is normal.
When they whine that they are the most attacked but contribute the most, we tell them to suck it up.
You get the same, suck it up.
If basketball does better than say rowing, than basketball is going to pay for rowing and the rowers will look down on the basketball team because they feel neglected by their success (as in, even with the equalization through tax they are still shafted in terms of attention and recruitment).