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04/03/2011

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Joshua Blumenkopf

I am not so concerned about "lower quality" in sports teams. To my mind all that matters is the relative quality of the teams playing; the entertainment value of sports would not increase if, for example, everyone's free throw average increased. By the way, has anyone actually done a rigorous study of the value of the distortions created by taxes? It would be of great use in cost/benefit studies of public works.

J$

I dont know what to say. This blog is fantastic. Thats not really a huge statement, but its all I could come up with after reading this. You know so much about this subject. So much so that you made me want to learn more about it. Your blog is my stepping stone, my friend. Thanks for the heads up on this subject.

mike davis

I have a strong impression that most of the rents generated by the NCAA cartel are not captured by the University but instead go to those involved in the athletic programs. Successful college coaches typically earn more than $1 million and often several million per year. The elaborate training facilities, specialized assistants, such as massage therapists, and so forth take more of the money. What’s left goes to the non revenue generating sports (swimming, track etc.), providing employment for friends of the athletic administrators. If I’m correct, ending the NCAA cartel would not directly impact the non athletic aspects of the university.

There is, however, one interesting unknown (unknown at least to me). Would a college team made up of partially paid players--essentially, a team that looks like semi-pro teams in other sports—engender the same loyalty and school spirit as an amateur team? This is more than just a question of contributions from alums (which, again, I think are mostly captured by the athletic department). Not every school, but some very good schools, center much of their social life around the teams. The teams don’t necessarily have to be good (although it does help if they are competitive) but the community does have to be emotionally involved in the team. Does a college team with millionaire coaches and minimum wage players engender more loyalty than the alternative?

NEH

"Monopsony" My, that word is a mouthful. I had to look it up to figure out what the issue was and is. The issue of athletics on campus has always been problematic. Such as the distinction between the "Student-Scholar Athlete and the Professional Athlete in Training" and which model the College or University ought to follow and the issue between purely Academic scholarships versus Athletic scholarships. Is this the reason the UofC dropped out of the Big Ten back when?

dean wermer

Forget about direct university payments to athletes - merely let student athletes benefit from third party payments (i.e., not from the university or its boosters) for things such as bona fide endorsement deals, publicity rights, etc. Arguably, universities may be currently violating "right to publicity" statutes and the like. Such a revision to the NCAA rules would let the premier performers (across all college sports, male and female) benefit from the value they create, while also, perhaps, not implicating Title IX or jeopardizing non-profit status. Students who generate IP/valuable startups/etc. are, for the most part, able to exploit the value of their creations. Why should it be different for student athletes who create value in their personas?

NEH

dean wermer, Ever heard of Double Secret Probation or the value of cucumbers? ;) I guess you're not familiar with the truly possible corruptible influences of some Alumni and Associations... BTW, that "persona" is actually the creation and property of the University or College in question, the other, a form of intellectual property. Perhaps and then perhaps not the property of the student/s or the Institution, depending on where and how the idea originated (some stuff at various Institutions goes way beyond simple plagarism), not too mention, the involvement of certain contractual obligations.

meyer

Its quite odd to argue that the rich universities will be made poorer by breaking up the cartel, causing a reduction of resources available causing education to suffer. So the solution is to allow the rich universities to prosper on the backs of mostly poor, undereducated, minorities. I am as far from a bleeding heart liberal as it gets BUT come on that is a little much to bear.

Pepe Fenjul Jr.

I guess you're not familiar with the truly possible corruptible influences of some Alumni and Associations... BTW, that "persona" is actually the creation and property of the University or College in question, the other, a form of intellectual property.

Pepe Fanjul

The elaborate training facilities, specialized assistants, such as massage therapists, and so forth take more of the money. What’s left goes to the non revenue generating sports (swimming, track etc.), providing employment for friends of the athletic administrators.

Jim

"Higher education" is, pure and simple a big business. its customers are students and families willing to buy a increasingly useless product for very high prices. One of its product lines is athletics. No one should be surprised at the corporate shenanigans. After all, the NCAA is a trade organization. I did get a big kick out of Joseph Epstein's recent piece in a weekly which was titled "Lower Education; Northwestern University's recent after school sex show".

Isn't there something about power corrupting? nm

Posted by: Jim | 04/05/2011 at 08:56 AM

dean wermer

@NEH: Name and likeness are not creations of the universities/colleges where the student athletes perform in their sports (admittedly, some aspects, perhaps, such as jersey numbers might be a closer call). Prohibit boosters and alumni associations from entering into bogus licensing agreements (i.e., disguised payments), but allow bona fide endorsement and related agreements from third parties operating legitimate businesses: allow a female soccer player to endorse athletic equipment, fitness products, Reebok, Dove, health and nutrition products, etc.; allow a male athlete to endorse Louisville Slugger, Wilson rackets, Nike, etc. The NCAA and its member institutions should not be in the business of restricting endorsement and licensing income derived from the personas of its students. The NCAA and its member institutions currently do so, in large part (if not for the most part), to protect their own licensing income streams (jerseys, video games, merchandise, apparel/equipment deals, etc.), which in recent decades have become substantial revenue generators.

david

great article.. insightful and makes me think again. you really know how to win him back.

NEH

dean wermer, Fine... Go play for someone else, like Podunk U... Now what about that individual "Persona"?

Faraz Jamshid

If the Supreme Court found that this type of thing is a monopsony, what would stop it from outlawing salary caps for pro sports teams? I think one of the good things about league sports is that it is socialistic, so the teams can stay competitive.

Jack

Hard to suggest anything on this topic as the whole thing is a policy construct. As Posner wonders, if you give college men's B-B and F-ball a piece of the commercial action, how on women's BB? or rowing, ping pong? Cheerleaders?

Open the doors of our quiet, reflective institutes of learning to the "market forces" of the bazaar? There's already the problem of coaches being paid vast multiples of those mere Profs trying to teach the less glamorous micro-biology, physics, English lit........ and Econ.

But the profiteers have long had long had their toe in the door.... what next?

Nike Zoom Kobe VI

Article 29 minutes when LiWei frontcourt ball, the opposing players bring down by referee foul called. Article 31 minutes ZhengZheng backcourt foul,

Nike Free Run

they will get free kick ball onto the box, then be defensive player ejection.

Jack

OT but WOW! A 100 - 0 vote took place today in the Senate!!

With all agreeing that those over $1 million in prior year's income, along with some who collected after a $10 million prior year should not be eligible for unemployment bennies. Geez! the unanimity on a vote taking $100 million in bennies from the rich!

Mebbe we CAN afford to fund Big Bird in rural towns?

Jim Rose

Why is it assumed that member colleges and universities of the National Collegiate Athletic Association are separate firms for the purposes of college athletics?

Would not it be more accurate to see the member colleges and universities as franchisees or divisions of the same firm where employees contribute capital?

Franchises have many rules constraining intra-brand competition.

Salary bands, financial and staff budgets, staff caps, and personnel policies and other rules are routine constraints on managers of the profit centres within a large company.

The problem with monopsony models is they assume long-run undissipated rents. What is the barrier to entry? Both buyers and sellers find it easier and more efficient to make adjustments the longer the period of time that elapses after a wage change, both the supply of and demand for labor.

A monopsony for the purchase of labor would have to encompass all of the entrepreneurs in the society. If it did not, then labor, a non-specific factor, could move into other firms and other industries.

Sports labour markets are one of many career labour markets.

There is great competition in occupational choices at the start of careers and career changes are not uncommon.

An example of strong competition for sporting talent is the West Indian cricket team which was the strongest in the world in the 1980s. The West Indian cricket team is now perennially a weak team because the sporting youth in the Caribbean islands now prefer to invest in trying out for North American basketball as their path to riches.

There are a great many professional sports around the globe offering rich rewards rather than just a few a few decades ago. Olympic sports are but one example.

Why did the Olympic monopsony collapse? Did the Olympic movement and its Olympic host cities ever make any money? Is a loss making monopsonist a contradiction?

Jack

Jim. Ha! depends on who "WE" is! Anchorage made a strong bid for Winter Olympics. While "WE" the taxpayer would have built and owned new facilities there was a GOOD chance we'd be bagholders. Meanwhile the established hotels et al would have cashed in. As this was before we became so often in the news....... those in the tourism biz might have enjoyed a long tail on the immediate windfall.

It seems something of the model for lots of sports, doesn't it? Taxpayers get bamboozled into supplying stadiums....... and the free broadcast airwaves that really makes TV so profitable, while clubs, owners and players cash in.

Jim

Well, one way to look at it is what would the American people do without organized athletics. What would college kids do without the spectacle. Even the Romans had their NCAA and money was made. Better gladiators were well paid (or at least their sponsors were). WE often discuss the details of our cultural flaws but hardly ever the flaws themselves. It would seem that humans never learn, or least not enough of them to change direction.

NEH

Monospony: "One buyer many sellers". One would think that this would drive prices down. But in College athletics the reverse seems to be true. Has anyone priced tickets lately for any Big Ten Game? Or the paraphenalia marketed to Fans? Actually, NCAA football seems to function more as a Monopoly. All college teams seem to function on the enthusiasm of Alumnus and various Hangers on of the University. Of all the sports paraphenalia bought sold and worn enmasse today, ask anyone who's wearing such fashion whether they graduated, or attended the Instituiton in question. Probably 95 percent will answer in the negative. Ahh, Sports Fans!

Having attended a Big Ten School, as students we used to get free tickets to the Home games. Then on Saturday morning we would go down to the stadium and scalp them to Alumnus and the Hangers on. Which provided us pocket money for the week. Not anymore, ticket prices are way to steep and dear for the Institution to hand them out, gratis to students. When I was in school, most of us students were too busy trying to keep from being flunked out to take any notice of sports and so we didn't really care and most still don't. But the Alumnus did and still do...

Max Furniture

There are a great many professional sports around the globe offering rich rewards rather than just a few a few decades ago. Olympic sports are but one example.

Bathroom Living

The problem with monopsony models is they assume long-run undissipated rents. What is the barrier to entry? Both buyers and sellers find it easier and more efficient to make adjustments the longer the period of time that elapses after a wage change, both the supply of and demand for labor.

Condo Target

WE often discuss the details of our cultural flaws but hardly ever the flaws themselves. It would seem that humans never learn, or least not enough of them to change direction.

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