The NCAA Racket

Sep 16, 2014 by

by Andrew Syrios –

Americans certainly love college sports, particularly football and basketball. After all, what is better than cheering on student athletes competing for the love of the game? Unfortunately, behind this facade the National Collegiate Athletic Association and university athletic programs are simultaneously running two seemingly diametrically opposed rackets; one taking advantage of the players and the other ostensibly giving them unfair benefits.

The NCAA is a tax-exempt, non-profit association that oversees the athletics of just under 1,300 universities. While the NCAA is not technically a government organization, it might as well be. It’s a burdensome bureaucracy that regulates the athletics of public universities, which are substantially funded and strictly regulated by the government. And like any government, the NCAA regulates in an attempt to restrict competition. As Lawrence Kahn noted, “Most economists who have studied the NCAA view it as a cartel that attempts to produce rents by restricting output and limiting payments for inputs such as player compensation.”[1]

And don’t let the term “non-profit” fool you. Some non-profits can be quite profitable. Indeed, the NCAA recently agreed to a $10.8 billion, fourteen-year contract with CBS and Turner Broadcasting to televise games. NCAA chairman Mark Emmert was rewarded for his efforts with a cool $1.7 million last year.

And that’s just scratching the surface of the massive, government-subsidized business known as college sports. It’s not just the NCAA that makes out like a bandit. As Marc Edelman notes,

The college sports industry generates $11 billion in annual revenues. Fifty colleges report annual revenues that exceed $50 million. Meanwhile, five colleges report annual revenues that exceed $100 million. … Head football coaches at the 44 NCAA Bowl Championship Series schools received on average $2.1 million in salaries. The highest paid public employee in 40 of the 50 U.S. states is the state university’s head football or basketball coach.

Yet somehow that’s not enough and these colleges need to soak tuition-paying college students and taxpayers alike. The college game isn’t plagued with quite as much cronyism as the pros, where $32.2 billion in taxpayer money has been spent on stadiums. Still, most universities have to pull money from the students and taxpayers to subsidize their athletic programs. Gregg Easterbrook notes that despite enormous revenues, only around a half dozen college football teams are self-supporting. For example, he notes “The [state supported] University of Maryland charges each … undergraduate $400 a year to subsidize the football team.” Cal-Berkley recently finished a $474 million stadium with most of that money coming from students and taxpayers. Various states also provide tax breaks and subsidies to the NCAA for various events. For example, Texas provided millions of dollars from a taxpayer-supported trust fund to help host the NCAA Final Four in 2013.

One would think that with $10 billion in revenue and massive support from various donors, these programs could actually turn a profit instead of leeching off the taxpayer. And this shortfall is even more ridiculous when you consider the massive salaries of coaches and administrators (Nick Saban, for example, has a base salary of $5,545,852) comes in a rather stark contrast with the players that make this industry possible.

During last year’s NCAA tournament, UConn star Shabazz Napier complained that “there are nights that I go to bed starving.” In other words, state governments, universities and donors can spend untold millions building extravagant facilities that would make Marie Antoinette blush, but can’t pay for a players’ food. And then, to add insult to injury, the NCAA will suspend players for being givenfree tattoos, or receiving $200 from a childhood friend, or getting a $4500 loan or giving out too many signatures.

It’s so ridiculous that not long ago, offering a player a bagel with cream cheese violated NCAA regulations. Offering him the bagel was fine, as was the cream cheese. But offer both and you have crossed the line. Buried away in the NCAA’s myriad of nonsensical rules was a stipulation that snacks could be provided to players, but meals could not be. Bagel = snack. Bagel and cream cheese = meal. Got it?

That rule was fortunately changed, but it highlights the degree of insanity required to suppress paying these players what the free market would bear. Indeed, the NCAA has a gargantuan 500-plus-page manual of illogical and often unenforceable rules.

Not surprisingly, such rules haven’t prevented universities from cheating to get the athletes they recruit to qualify as “student” athletes, and thus, the second racket. In what is almost certainly emblematic of an epidemic amongst this nation’s colleges, the University of North Carolina was caught giving out some rather generous grades to its student athletes. The following term paper, which I will quote in its entirety, was awarded an A minus:

via The NCAA Racket – Andrew Syrios – Mises Daily.

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