- The Washington Times - Friday, March 30, 2012

From spectacular shots to dramatic finishes, the NCAA men’s basketball tournament — which culminates in Monday night’s championship game — is a thrilling sports spectacle beyond reproach.

Well, unless you’re a free-market conservative.

Here’s the thing about March Madness, and by extension big-time college sports: If you’re a true, markets-know-best believer in the prosperity-creating, All-American double helix of economic opportunity and liberty, you ought to find the whole extravaganza infuriating. Not the dribbling and dunking. The system.

To paraphrase Ronald Reagan: The NCAA is not the solution to the problems of college sports; the NCAA is the problem. More overreaching than any federal bureaucracy. More antithetical to freedom than any convoluted health care legislation. A case study in failed utopianism. The source of the very corruption it purports to police.

Fancy yourself an ideological heir to the proud tradition of Adam Smith, Milton Friedman and, um, Grover Norquist? You can still don a State U. sweatshirt and fill out a bracket. But you absolutely, positively cannot in good conscience condone the college sports status quo.

The NCAA nanny state

True story: Before a game between Syracuse University and Kansas State in this year’s NCAA basketball tournament, Wildcats forward Jamar Samuels was suspended for accepting $200 from his old Amateur Athletic Union coach to buy food on the road. Why the punishment? Because Mr. Samuels’ actions were against NCAA rules — the money part, not (for now) the eating part.

The NCAA has regulations governing whether coaches can serve their players bagels (sometimes) with cream cheese, jelly and other condiments (an “improper benefit” until this year). It has rules that cover when coaches can text message recruits and when Gatorade should be served instead of chocolate milk; rules that prevent rowers from betting their racing shirts against each other and coaches’ wives from sending Christmas cards to new recruits; all of them part of a 434-page (!) rulebook that has existed since the Eisenhower administration — the sacred scrolls of a Kafka-esque culture of bureaucratic irrationality and red tape.

Example: The NCAA put the University of Nebraska on probation because the school’s bookstore was giving athletes not only their required course textbooks, but also the books professors recommended as helpful supplemental reading.

Example: Louisiana State University baseball player Chris Sciambra recently suffered a potentially life-threatening neck injury during a road game and was flown back to Baton Rouge, La. on an Auburn University private jet. But Mr. Sciambra’s father had to drive home separately — because joining his ailing son on the plane might have violated NCAA regulations. Which ones? According to news reports, no one was really sure. But better safe than sorry.

And you thought Obamacare was onerous.

Most of the NCAA’s nit-picky laws exist to safeguard the ideal at the heart of college sports. Amateurism. The notion that athletes should not be paid for their labor, even though it is, in fact, work. Work that generates tremendous economic value. Work that other people are more than willing to pay to watch. Work that is the product of years of self-sacrifice, industriousness and (literal) hustle, things conservatives believe should be encouraged and rewarded.

Wait, you say: College athletes are rewarded. They get scholarships. This is true. And good (even if studies have found that the average difference between athletic scholarships and the actual cost of living is about $3,000 per school year).

Still, scholarships alone are not sufficient justification to impose arbitrary, paternalistic limits on athletes’ earning potential — not in the country that fought a Revolutionary War on the principle of Hey, we’ll decide what we do with our money, thank you very much.

Take Kentucky superstar Anthony Davis. The nation’s best college player is worth a lot more to the top-ranked Wildcats — a basketball program that reportedly grossed about $25 million in 2011 — than the mere value of his scholarship. Yet amateurism punishes his success. If Mr. Davis were to accept a great big bulging sack of gold doubloons from the school, or from a wealthy and grateful alumni booster, or from a Lexington-area car dealership in exchange for appearing in a television commercial — why, exactly, would that be wrong? Because the NCAA says so? Because Mr. Davis is a talented college basketball player, as opposed to a talented college musician, or actor, or, really, any other kind of talented American citizen?

John Galt wouldn’t stand for it. And if you’re a conservative who truly believes in individual economic liberty — and not just a lower income tax bill — neither should you.

The college sports market isn’t free

When it comes to politics, Andy Schwarz is a self-professed liberal Democrat. A Bay Area-based antitrust economist, he’s also a free market devotee. So when Mr. Schwarz was invited to speak at a Washington, D.C. roundtable on the state of college sports held last fall by Rep. Bobby Rush, Illinois Democrat, and Rep. John Conyers, Michigan Democrat, he didn’t mince words.

“I told them the NCAA is like the Politburo,” Mr. Schwarz said. “It’s a classic case of a group of wise people getting together and saying they know better than the market how the money should be allocated.”

Conservative intellectuals agree. Nobel Prize-winning Chicago School economist Gary Becker calls the NCAA “an effective cartel that severely constrains competition.” Writing for Businessweek magazine in 2002, influential economist and Harvard professor Robert J. Barro dubbed the NCAA his Monopoly of the Year — beating out OPEC, Microsoft and the U.S. Postal Service. Federal judge and legal scholar Richard Posner notes that the NCAA is actually a “monopsony” — that is, a cartel that agrees to fix prices for a key input (in this case, scholarship athletes) as opposed to an output (multibillion-dollar television rights).

Why are conservatives so leery of socialized medicine? In part because they don’t trust a health market in which a supreme central authority potentially tells doctors how much they can earn or charge for services, thereby stifling competition, innovation and quality of care.

Substitute “football and basketball” for “health” and “athletes” for “doctors,” and that’s basically college sports. And like any command economy — North Korea, no-bid defense contracts — the NCAA landscape is rife with both inefficiencies and corruption.

Inefficiency: Because the money in the system can’t go to recruiting and compensating talent, it ends up overcompensating coaches, with schools like the University of Texas paying football coach Mack Brown $5 million annually. (In the NFL and NBA, coaching staffs earn about seven percent of team payroll; in college football and basketball, they earn between 200 and 800 percent of team payroll as measured in scholarship values). The money sloshes into athletic departments, where bureaucrats earn more than actual teaching professors. And it sloshes into facilities — state-of-the-art weight rooms and high-tech tutoring areas, stuff that is completely unnecessary to the paying customer’s enjoyment of sports.

Corruption: What do a seemingly endless series of high-profile, pay-for-play college sports scandals — from Reggie Bush’s revoked Heisman Trophy to Ohio State’s TattooGate — have in common? They’re all economic in nature. Amateurism doesn’t squelch the market for athletic talent any more than Prohibition squelched the market for alcohol — it simply forces the market underground, fostering an unnecessary crime problem.

“The NCAA is social engineering, and it’s hard to get what you want out of a market when you start rigging it,” Mr. Schwarz said. “You end up with all the things that conservatives think about bureaucracies in general. Nest-feathering. Gold-plating. It’s pretty cool if you’re an athletic director to have these little empires, I guess.”

Robin Hood in reverse

Former football agent Josh Luchs never did understand it. The NCAA told its athletes — many of them from impoverished backgrounds — that they couldn’t take money from schools, agents or boosters. That would be wrong. They could, however, apply for food stamps, welfare and federal Pell Grants.

“Without NCAA rules, the private market would be more than happy to fill [athletes’ financial needs],” Mr. Luchs said. “Why should we let the NCAA force these kids with good earning potential to apply for a form of taxpayer-funded welfare?”

Conservatives preach bootstrapping self-reliance. Big-time college athletes embody this ethos — working hard to develop their abilities, competing on the basis of measurable merit. Their reward? A reverse wealth transfer with unsettling racial implications.

Let Mr. Becker explain.

“A large fraction of the Division I players in basketball and football, the two big money sports, are recruited from poor families; many of them are African-Americans from inner cities and rural areas,” Mr. Becker has written. “Every restriction on the size of scholarships that can be given to athletes in these sports usually takes money away from poor athletes and their families, and in effect transfers these resources to richer students in the form of lower tuition and cheaper tickets for games.”

Then there’s the free rider problem. College sports are big business: In 2009-2010, the average Southeastern Conference football program earned a $30 million profit; the average Big Ten program cleared $22.6 million; the NCAA’s new basketball tournament television contract is for $11 billion over 14 years. Of course, the federal treasury won’t see a dime of that money. The reason? Amateur sports count as educational endeavors, which means they’re not taxed.

“We have what kind of a deficit in this country, and you have a multibillion-dollar industry that doesn’t pay taxes?” Mr. Luchs said. “Why?”

The market does know best

The NCAA’s defenders argue that the status quo is necessary. Otherwise, athletic departments would make less money and be forced to slash non-revenue producing sports such as lacrosse. Recruiting would become an unseemly free-for-all, with top talent going to the highest bidder and competitive balance suffering as a result. Noble, amateur student-athletes would become paid, professional mercenaries, killing fan interest and the sport’s golden goose. All of this is hogwash.

A college sports system steeped in free market principles would be better. Way better. More fair and rational, to be sure. Far fewer scandals. But also more entertaining.

Fact: There likely would be more competitive balance, not less. The hardest, most expensive way to attract talent is by secondary inducements, like hiring a high-priced coach or building a giant stadium. The easiest and most efficient way — the one favored in the real job market — is by offering a better salary.

“The sixth man on Kentucky’s basketball team might not be worth as much to them as they would be to, say, Ball State,” Mr. Schwarz said. “But right now, price-fixing keeps Ball State from competing. If you let schools use cash, they would at least have a chance.”

Less athletic department revenue doesn’t mean the end of swimming and women’s soccer; it means the end of subsidized swimming and women’s soccer. Plenty of Division II schools make zilch from football and basketball, yet still field lacrosse teams.

LIkewise, paying student athletes would not make them mercenaries. It would make them students with paying jobs. Very well-paying jobs, in the case of college basketball superstars — who would then, of course, have far greater incentive than they now do to stay at, play for, and graduate from their schools. Me? I’d take such “mercenaries.” You can keep today’s one-and-done amateurs who jump to the NBA at the first opportunity.

Think about it: strengthened and lengthened player ties to their schools and, thus, better talent on the floor. That’s supposed to weaken school pride and shrink fan bases?

Come on.

“Imagine a college sports world where you could do what you want, like every other business,” Mr. Schwarz said. “One school might decide to compete by building great practice facilities. Another might promise athletes a share of their revenues. Another might say, ‘When you graduate, we’ll pay you a $100,000 bonus as a thank you.’ And that’s what a free market should look like — different businesses exploring different ways to win.”

No struggling professional sports league has ever tried to boost its popularity by adopting amateurism. Tennis, golf, the Olympics. They all went the other way. The market knows best. And when it comes to the discredited, upside-down economics of college sports, so should conservatives.

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