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Moneyball And The Myth Of The Unpaid Collegiate Athlete

The circularity of many arguments against paying collegiate athletes is enough to make you dizzy. Round and round universities and the NCAA go with their “they shouldn’t be paid because they shouldn’t be paid” arguments.

I don’t know about you, but I get tired of going around and around in circles.  I prefer either stopping and taking a closer look at why we’re going in circles, or making a decision to try something different in order to move forward. 

In our most recent podcast, my husband, Coach John Shoop, and I interviewed Economist Andy Schwarz, an expert on the economics of price fixing, collusion, and anti-trust laws.

If anyone can stop the collegiate sports establishment from continuing their pathological circularity, Andy Schwarz can. He’s someone they might actually listen to, because he is talking about money. And he’s actually got some convincing data on why the current circularity of collegiate sports will cost universities in the long run.  Listen up athletic directors, coaches, and university presidents; Mr. Schwarz is speaking your language. And he’s blowing your cover all at the same time.

I can’t go into all of the many myths that Schwarz busts in his work. Suffice it to say, if you are interested in leaving the collegiate sports echo chamber, his appendices to Joe Nocera’s and Ben Strauss’ new book Indentured is a good place to start.

Let’s just investigate one myth here, and that is that collegiate athletes cannot, by virtue of their status as collegiate athletes, be paid.

The first thing we need to get straight is that collegiate athletes are paid. They just aren’t paid fairly. Here’s where Schwarz’s work is immensely clarifying. Collegiate athletes are already paid, in the form of scholarships and cost of attendance money.  And some athletes already make more than others. Some players have full scholarships and some players are walk-ons in the revenue sports. In the Olympic sports only a select few have full scholarships, others are given partial assistance based on how much a team values their participation on their team. 

According to Schwarz, the realities of scholarships are a revealing one. It is price-fixing through and through. The NCAA and its members institutions are colluding to keep labor costs low for the revenue generating sports. They use scholarships, cost of attendance money, and lavish facilities to attract the best possible labor force they can to their institutions. And their use of scholarships in this exchange keeps wages low and distributes profit to others (like athletic directors and coaches) whose wages continue to rise to more and more exorbitant levels. 

And scholarships represent a smoke screen of perceived value for collegiate athletes. Many schools like to boast that they are spending millions of dollars on revenue athletes to attend their universities.  And these expenditures mean that athletes are getting a “good deal” when they come to play collegiate sports and receive a “free” education. The problem is, the dollar values of those scholarships are distorted in this equation. 

Scholarships are fake money.  They are what economists call “related party transactions.” In other words, you take money from one pocket and put it in another pocket. The true costs of scholarships are a complicated and contextual math problem that includes whether a university is using a spot that would have been a full paying student when they award an athletic scholarship.  And this equation must also take into account what the pay off of the scholarship student will be. In the cast of revenue generating athletes, their capacity to generate revenue, for instance, may far out stretch the actual cost of the scholarship for the university.  So, taking the cost of enrollment at Purdue, for instance, and saying that is the actual cost the university is spending on a scholarship athlete, is disingenuous at best and downright deceitful at worst.

Athletic departments and universities choose how to spend the revenues generated from sports like football and basketball and the cash flow they are allotted from their conferences. The salaries of coaches and athletic directors are going up while the wages for players are fixed.  Expenditures on lavish facilities and the recruiting “arms race” are through the roof.  The money is being spent, but it does not go directly to the ones who are generating the revenue.  And the mythology around the value of this business agreement suggests that everyone should feel the players are “lucky” to get a full ride to school in exchange for the honor of competing for their respective schools.  

In any other economic context in America, this is called collusion and price-fixing and it is against the law.  People even go to jail for it. Collegiate sports has us all enamored of an agreement not many of us would tolerate if we were in the player’s shoes.  Moneyball collegiate style means that players are already paid, they just are not paid fairly. Instead of circling the wagons on honest conversation about that fact, let’s start moving toward ideals we American’s say we value: fairness and true competition. 

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