A Point-by-Point Evisceration of the Myths Preventing NCAA Athletes From Getting Paid

The stadium scene.
Jan. 6 2014 2:43 PM

But Nobody Even Makes Any Money on College Sports

A point-by-point evisceration of the ridiculous myths that prevent NCAA athletes from getting paid.

Tre Mason
Tre Mason, No. 21, of the Auburn Tigers celebrates his fourth quarter touchdown during the SEC Championship Game at Georgia Dome on Dec. 7, 2013.

Photo by Kevin C. Cox/Getty Images

On Monday night, millions will tune in to watch Florida State play Auburn in the last BCS title game. The schools’ conferences, the SEC and ACC, will each receive more than $20 million, which they will distribute to their member universities. Seminoles coach Jimbo Fisher and the Tigers’ Gus Malzahn both got hefty raises for leading their teams to the championship game. ESPN will profit through extensive advertising. Everyone involved will have their compensation set at market rates except for the players on the field, the ones we’re actually tuning in to see. They’ll be entertaining us for far below their market value, as a result of price-fixing by an economic cartel.

I am hopeful that college athletes will soon participate in the same market economy as the rest of the college sports industry. A huge impediment to that better tomorrow are a set of myths that we allow ourselves to believe—that fans care about schools more than players, that a free market would make college football and basketball less competitive, that it would drive schools to bankruptcy, and that it’s all probably illegal under Title IX. Each of these ideas is wrong.

Myth No. 1: Fans don’t care about the name on the back of the jersey.

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In a motion filed as part of the Ed O’Bannon case, Big 12 commissioner Bob Bowlsby testified that college sports exist “to promote the name on the front of the jersey, as opposed to promoting the names of individuals on the backs of the jerseys.” (Disclosure: I’ve consulted for plaintiffs suing the NCAA, including in the O’Bannon case, an antitrust suit challenging the NCAA’s use of athletes’ images.)

If athletes themselves had no bearing on the economic success or failure of college sports, then the market rate for an incoming freshman wouldn’t be much higher than the current maximum scholarship (some argue it would be lower!). Instead, we see that losing scholarships can hurt a program, and we all know that if the NCAA allowed its athletes to be paid in cash, they would be. That shows that players matter a whole lot.

Florida State went 7–6 in 2009, and the fans yawned. This year, they finished the regular season 13–0 and have a chance to win the national championship and merchandise is flying off the shelves. Think Heisman-winning quarterback Jameis Winston might have something to do with that? Down the road in Gainesville, the Florida Gators went from an 11–1 regular season in 2012 to a 4–8 record in 2013. If fans only care about the name on the front of the jersey, why did so many fewer people tune in to watch the less-successful 2013 Gators?

Even among alumni, the intensity of fan interest varies greatly based on the quality of the team, which is driven primarily by the quality of the players. I went to Stanford and always want the Cardinal to do well. But I attended a lot more games when Andrew Luck was under center than when Stanford was 1–11 in 2006. In the wake of Johnny Manziel’s Heisman Trophy season, Texas A&M demolished its previous fundraising records, raising $740 million in one year. What did the Aggies credit? “Euphoria” over the football team’s successful entry into the SEC, fueled by Johnny Football.

To go one layer deeper into the data, economist Chad McEvoy and my business partner Daniel Rascher modified an NFL study done by Scott Tainsky and analyzed the importance of player quality on college game attendance and television ratings. The evidence was overwhelming: College football ticket sales and television ratings vary far more based on quality than in the NFL. The data show that fans want to win, and you can't win without big names on the backs of all those jerseys.

Myth No. 2: Paying college athletes will destroy competition on the field.

As an academic discipline, sports economics is almost 60 years old, launched with Simon Rottenberg’s 1956 paper “The Baseball Players’ Labor Market.” Rottenberg theorized that regardless of the pay rules, talent generally ends up wherever talent is valued most.

Rottenberg’s theory has been shown repeatedly to be correct. Ronald Coase broadened it and won a Nobel Prize. But despite the consistent evidence that free agency does not harm competitive balance, the people who keep the profits (team owners in pro sports, university poobahs in the college game) still argue that the more free agency you have, the bigger the “Yankees problem”—the situation where all of the best talent gravitates to the richest teams and fans lose interest in the sport. These aren’t theoretical arguments. Both of these claims—that competitive balance will be destroyed and that fans will lose interest in college sports if players are paid—are at the core of some of the NCAA’s recent legal claims.

About that supposed “Yankees problem.” Consider that in the 16 years from 1949 to 1964, the New York Yankees won the American League pennant 14 times, and won nine of those 14 World Series, all before free agency. In the 37 years since the advent of free agency, by contrast, the Yankees have made the World Series 11 times and won seven—half as many championships in more than double the time. And even during the last big Yankees streak at the turn of the millennium, baseball’s popularity was never in jeopardy, with revenue growing every year.

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