Thursday, August 03, 2006

NCAA Rules and NCAA Ethics

Bob Stoops, coach of preseason’s highly rated Oklahoma Sooners football team, has dismissed two players, including his starting quarterback, from the team for violating NCAA rules. As best I understand it they were paid for hours far in excess of those actually worked during the summer. Mr. Stoops is being praised for enforcing the high ethical rules of the NCAA even at significant cost to his team’s prospects. But those rules turn out to be a little less “ethical” than first thought.

To understand NCAA rules it is critical to realize that the NCAA’s primary role is as the enforcement arm of a cartel – in this case, a cartel of college-athletics programs whose output consumers are willing to pay quite a lot for. Cartels limit competition among sellers of products both for inputs such as labor and with respect to output. For example, the NCAA negotiates the lucrative TV rights for its single biggest event, the NCAA basketball tournament, as it does for all other sports save football. Because of a Supreme Court ruling in the 1980s the NCAA does not control TV football rights, leaving those instead to conferences.

And the NCAA does what cartels typically do in other ways too. It controls entry from potentially new competitors by requiring huge investments in facility upgrades and (from the point of view of fans) marginal sports in order to participate in Division I. Just as OPEC has to negotiate production quotas among its members with conflicting interests, the NCAA has to provide some competitive balance by limiting roster sizes of the richer schools, but it doesn’t require perfect balance, with the result that about 20 schools dominate athletics across the board year after year.

And the most important way the NCAA cartel increases member profits is by restricting competition for labor, i.e. players. Fans are inclined to dismiss the complaints of an athlete who gets free tuition, room and board at a time when the sticker price (which many students do not pay) of a college education is tens of thousands of dollars a year. But the marginal product of some of these athletes is far higher than that. When Jameer Nelson took St. Joseph’s to the Elite Eight, as when Doug Flutie led Boston College to a miraculous win over Miami in a nationally televised game on Thanksgiving Weekend, both those schools reaped significant dividends not just during the year in the form of ticket sales, shirts and the like, but also in terms of significantly higher application rates. (Many schools pursue these rewards futilely over years because intercollegiate athletics is so expensive and yet the rewards for great success are so high, a possible example of the destructive excesses of what the Cornell economist Robert Frank calls the“winner take all society.") The artificial restraint of trade to lower wage competition is immediately dismissed as unethical (and is illegal besides) in most commercial activities, but the NCAA gets away with it by describing it as enforcement of an ethical code, namely that athletes should be “amateurs.” But the history of the amateur code is not a particularly inspiring one. It was originally introduced, according to many historians of sport, to limit competition in England from working-class athletes who couldn’t afford to train full-time unless they were compensated for it. The Olympics, once also a bastion of amateurism, has reconciled itself to professionalism since the demise of the Soviet empire (whose full-time yet somehow “amateur” athletes also benefited from the rule).

The idea that the NCAA promotes the virtues of athletic discipline and competition also vanishes under scrutiny. The roster-size limitations they impose mean that few athletes gain these privileges; if the 85th person on a football team benefits from the training he gets even if he never becomes a profession athlete, why wouldn’t the 86th?

The OU players were presumably hired because those who hired them wanted to help the team succeed, because they got a thrill from routine contact with big-time OU football players, and because they thought their presence would increase sales. The hiring of celebrities to endorse products is common, and it is hard to see why college athletes should not at least partly benefit from the celebrity power they and their university employers jointly produce.

A colleague of mine, shortly after our basketball coach was fired, once suggested that our university should simply hire players, pay them and take on all comers from any university. And I think he was right that the problem with college sports is not that they are too professional, it is that they are not professional enough. Allowing colleges to pay athletes explicitly according to whatever the market would bear would be more just for the players, who if they wished could use their compensation to buy an education from the university (and even take payment in kind). The universities could continue their vocational training of athletes, and the product on the field would probably be better. As long as wages were disclosed, fans could decide for themselves, by their willingness to pay for programs that paid and programs that didn't, how much they like adherence to amateurism if it comes at the cost of winning. But the producers, the university cartel, would suffer, and so the NCAA will never allow it.


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