Money Doesn't Talk, It Builds Luxury Boxes

Jon Chait has an interesting piece up regarding the question of paying revenue-generating college athletes.  In response to Taylor Branch and the chorus of writers who have used the Sandusky scandal to attack college sports in general, Chait makes the point that football and basketball players from high-revenue programs are subsidizing non-revenue athletes:

Branch's article, like most arguments for paying college athletes, focuses in great detail on the profits of television networks and apparel companies. But paying players wouldn't affect that revenue – the networks' cut is the networks' cut. The question is how to allocate the money that the university receives in ticket sales and television dollars. The sums are non-trivial: A big-time program like the University of Texas football team can generate more than $90 million a year in revenues, and still have nearly $70 million left after expenses. But even a glance at where the money goes shows the absurdity of this notion. The big-time sports programs that bring in more than they cost (usually football and men’s basketball) use the surplus money to fund sports that don’t (swimming, track, etc.) To the extent that there is “profit” in this arrangement, the man in the top hat and monocle who’s siphoning it off is … the gymnastics squad.

This is an excellent point and one that Branch does not address in his lengthy piece in The Atlantic.  The counter would be that a progressive like Chait should have some misgivings about football and basketball players subsidizing country club sports.  At major schools, the football and basketball players are more likely to be minority students from lower socio-economic strata.  They are also more likely to come from weaker high schools and are therefore less able to take full advantage of the free college educations that they receive in return for their labor.  In constrast, players from non-revenue sports tend to be more like regular college students in terms of their SES.  Thus, college sports resemble state-run lotteries, i.e. a system where poorer individuals subsidize middle class and upper middle class families, albeit through voluntary means.  One doesn't have to be Ron Paul to have an issue with this reality.

Additionally, Chait's explanation as to where the money goes is a little incomplete.  The millions of dollars that players in revenue sports generate do not just go to fund non-revenue sports.  There are at least two other outlets for that revenue other than the pockets of the individuals who generate the money.  The first outlet is coaching salaries.  If you can't pay the players who make the difference between winning and losing, then you pay the coaches who do.  Chait addresses this later in the article and advocates a cap on paying players, a position that Blutarsky notes would present antitrust issues.  (Question: if a cap on coaching salaries violates antitrust law, then why doesn't the prohibition on paying players, as well?)  To me, this seems like piling a second artificial cap on a market that is already distorted by the prohibition on paying players.  We already have a situation where the money generated by revenue sports teams cannot go to the players who are the biggest reason for the revenue.  Thus, the money flows to ancillary locations.  Chait suggestion is that we should divert the money away from one of the most natural ancillary destinations for the revenue. "Let's stick out finger in a second hole in the dyke" is usually just a good way to cause a third and fourth crack.

The second outlet is construction of palatial sports facilities.  Major college sports programs are engaged in a facilities arms race and they are using the revenue that would otherwise go directly to the players.  Now, one can view this as a form of compensation to the players.  Branch complains about players not getting paid, but he doesn't mention the fact that they play in beautiful stadia, they dress in locker rooms that rival anything they'll see in the NFL, they study in buildings specially built for them, they work out in million dollar weight rooms, and they eat at deluxe training tables.  I suspect that the players would rather take the money in their pockets, but it's hard to take the position that players are being exploited when the revenue they generate is used to treat them like royalty.  In the end, I come out pretty close to Chait's position, which is that Branch overstates the plight of revenue athletes, but there are potential reforms that would address the fact that college football and basketball players should see more of the money that they generate.