Yesterday we learned from the Justice Department [SIC] – and NO ONE could have contemplated this – that there is corruption in college athletics. I, myself, am disillusioned beyond words. Luckily, Gary North has several of them. His economic analysis makes more sense than anything else I’ve heard – certainly from the fake news and
The National Collegiate Athletic Association (NCAA) is a cartel. It exists in order to hold down payments to star athletes who are in a position to generate revenues for specific universities. University administrators want to have athletic programs. Major universities in the collegiate sports world, Rogge said, get huge amounts of money from ticket sales. They also get big donations from rich alumni who love collegiate sports. What he said 40 years ago of course applies today, except the amounts of money are so much greater because of televised sports.
Administrators in these sports-focused universities do not want to pay their most valuable athletes a market wage for the privilege of generating money from their performances. So, they collude. This is price fixing, pure and simple.
Unlike almost every other industry, the government allows the NCAA to establish rules forbidding market-based payments to star athletes. The athletes are allowed to receive scholarships, despite the fact that they are not scholars, but that is supposed to be the limit of payments to the athletes.
There is a fundamental rule of economics: unless they are defended by the government, cartels always break down. They can be sustained only by government intervention. The government protects the cartels from members of the cartel who break the rules of the cartel in order to increase market share and thereby increase net income. The government makes cartel-busting a crime. In the case of the movie and also in the case of the latest scandals, net income is really what it is all about.
What we are seeing is the intervention of governments around the country to defend the NCAA’s cartel. If it were not for government intervention to keep coaches from paying full ticket for the valuable services of the best players, major universities would be forced to pay millions of dollars to these players, just as professional sports teams have to pay their players. A free market would prevail.
So, yet again, the very same government that creates the real problems rushes in to punish and prosecute non-issues and side solutions. Neat.
College athletics in America originally started for the most part as student run clubs. Faculty advisers were sought out at some point. Then, as the popularity grew, the schools saw the $$$$$ potential. So they created the racket we now call the National Collegiate Athletic Association. It is a cartel. A racket. It is theft from young, talented athletes for the billion-dollar benefit of the schools, coaches, networks, assorted hangers-on, stadium contractors, and of course, the NCAA.
Auburn University, one of the schools in the DOJ’s case, touted record athletic revenue of $124 Million in 2015. Most of this – a huge percentage – was generated by the football and (men’s) basketball programs alone.
The combined rosters of those two sports total around 115 young men. They gave the university $124 Million.
In return they received “scholarships.” Many were injured. Some very few might have actually learned something. Oh yeah, they get “experience” and “team building” and other buzzword BS. They could get all that on a regular job – along with a pay check.
Let’s just assume the “scholarships” cover everything and that the “scholars” are all from outside Alabama. By that measure and my rough count, the school spent a total of $5,520,000 on labor (assuming full rides at $48,000 per year [out of state estimate]). (And this is likely on the high side). That’s 4% of the total revenues. That’s pitiful.
Paying each “scholar” only $50,000 for the work they perform would raise the expense to about 8%. I’m sure they could live with that, passing the increase on to fans and TV advertisers.
As is, the players get $0 – ZERO – nothing. Only a small handful will ever make money in the NBA or the NFL. The rest are used and discarded in something like a plantation system. (Where are those SJWs???)
Break it up! Independent Institute.
All of this theft of talent and time (and general mockery of academia) is protected by your government. And, if you’re a “die-hard” fan, you’re fostering the problem.
The sports will never return to student organized club activities just for fun. Nor are they likely to go free market, as North suggests, anytime soon. You, your cartel, and its government like the way things are right now.
Take a knee on that.
*Oops, seems I found a few words of my own anyway. Calculator too…
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