With the college football season coming around the corner the question keeps coming up of whether college athletes should be paid. According to the NCAA for the 2010-2011 the total revenue collected was $757 million. What is really interesting however is that the expenses were the exact same. I find this somewhat ironic.
At the end of last year I watched Pony Excess a documentary about how players for SMU were being paid by boosters (people who fundraise for the school) enormous sums of money to entice players to come to SMU. However, it wasn’t just SMU that was paying players to come to their school it was nearly everyone in college football. SMU was the only school however to get the death penalty which shut down their season and I would argue since then has tarnished their football program ever since then.
Somehow people in America have t he romantic idea that athletes are at any university to get a good education in addition to playing sports. People tend to argue about the high rates of graduation from colleges with sports programs. There are exceptions like Vanderbilt who apparently have a graduation rate of over 90%. However, I would mention some programs with this claim. The first is that college athletes in general don’t always pick the most demanding majors. This would make sense though since their primary role is to play sports. Also professors are pretty aware of who the athletes are since they get notices if there is a “school-sponsored” trip. Professors also don’t usually require the same amount of work from athletics that is required of regular students. This only perpetuates the notion of athletes spending more time on the field than studying or in class.
If we want to be honest though the role of college athletes is somewhat of a minor league or farm league for majors sports teams. Nearly everyone on the field is making money except for athletes. Camera men, refs, and even ball boys are making more than athletes. The highest paid people on the field are usually the coaches. Most people are not aware that college coaches are paid more than professors, deans, and presidents of colleges. The argument is that since sports exposes the school to the nation if the coach is good and keeps winning the school will spread to states and cities where the school is not well known or entice people to apply to that school. John Calipari who is the basketball coach the University of Kentucky is paid $4 million per year. Nick Saban who coaches the University of Alabama football team makes on average around $4 million. However, college coaches are underpaid compared to professional coaches. Bill Belichick is paid $7 million per year to coach the New England Patriots. LA Lakers coach Phil Jackson makes $10.3 million per year. Professional athletes make much more than their coaches however which is how it should be in college sports. The athletes themselves collectively determine the outcome of a game than any coach on the field yet they are not paid. Statistics from NCAA, the odds of an NCCA basketball player getting drafted are 1.2%.Don’t forget to get the odds of just playing basketball in the NCAA are 3.1%. For football the odds are a little better with 1.7% of NCAA senior football players getting drafted into the NFL. So if over 98% of college athletes will not go pro why don’t colleges at least pay them for their time on the field? Colleges could also establish relationships with professional sports teams in order to recruit NCAA players.
Paying athletes would not put money in the pockets of college kids, but also reduce the corruption of college sports. The reason we have the scandals is because it is illegal to pay athletes which in economic terms suggest they are not getting paid their market value. Allow players to be paid any amount by the school or have donors endow positions with their own money and we would have a better system. The NCAA wants to try to convince people that they are trying to promote young men and women playing a sport and getting a degree in the process. People should never look at the intentions of any program they should look at the outcomes are results as the true test of anything.
Showing posts with label sports. Show all posts
Showing posts with label sports. Show all posts
Monday, July 18, 2011
Saturday, July 9, 2011
NFL = Nationalized Football League
If you have been following sports news recently you might be aware of the possible shut down of the 2011-2012 NFL football season. I blogged previously about the struggles with the NBA and it looks like the NFL could be having issues.
The main problem is fighting over revenue. I find it interesting that the MLB, NBA, and NFL all use words like “revenue sharing” when their owners who are usually billionaires are more accustomed to profit sharing. The league could have even hundreds of billions in revenues by if the cost to maintain the league is just one dollar above the cost then there is no profit. Right now the NFL has $9.4 billion in revenue. Yet I think the more interesting question is how much profit the league makes. Also considering how much public money sports stadiums get it’s pretty clear that the taxpayers in the cities where NFL franchises are located are losing. I would be in favor of more corporate sponsorship. Citigroup and Barclays paid $20 million ever year for 20 years just to get the naming rights for stadiums. Clearly, if we have more of this there would be less of a burden on taxpayers who don’t even go to a single game.
What is also interesting is the idea of salary gap. In 2009 the salary gap for a team in the NFL was $123 million. This is a large increase from 1994 when the salary cap was close to $35 million. Since each NFL team is only allowed to have 53 players the average annual salary a player would make is $2.3 million. Last year the highest paid player in the NFL was Phillip Rivers who made over $25 million and is quarterback for the San Diego Chargers. Just paying the quarterback would consume 20% of the salary cap and we haven’t even filled the roster for the rest of the offense or defense.
Another problem with NFL contracts is that high prospect rookies are guaranteed millions of dollars even before they step on the gridiron. Could you imagine a Fortune 500 company hiring a CEO and saying, “Well we have heard great things about you so here is $20 million no matter what happens”? Matt Stafford comes to mind when I think about this. Stafford was a very hot prospect who was quarterback and drafted by the Detroit Lions. The team guaranteed him $41.7 million. His stats for the 2010 season were nothing to write home about as he had more interceptions than touchdowns. Sam Bradford signed a six year deal worth $78 million of which $50 million is guaranteed. His performance last season was better than Stafford’s but still not Pro-Bowl material. Agents often sign multiyear contracts for players because agent’s get paid based off the contract value. Agents try to convince everyone that because their client had one good year they should be rewarded with a long term high paying contract. I think there are few if any other compensation packages that work like this. Imagine you are working at a company and have a very productive year and exceed expectations. The company calls you in and tells you they want to reward you with a large multiple of your current salary and a guaranteed bonus so you don’t leave. If companies had a compensation system like this workers would slack and decrease productivity especially when they have guaranteed money coming to them. Although, players and agents would be opposed to it a one or even two year contract would make more sense than multi-year deals on a short period of time. The players that were consistent and productive would actually get paid more and the players that were just a flash in the pan would be the most hurt.
Something else that might help the NFL is to allow teams to issue stock. Selling off the ownership to individuals would allow teams to be more run like a business. Shares could be traded on the financial markets and the value of the stock would be derived off wins, losses, attendance, and factors that would affect the team valuation. Sports fans could actually have as they say a piece of the action which would be great for them and teams wouldn’t have to rely on funding from one individual investor but could be supported by millions of fans across America.
The main problem is fighting over revenue. I find it interesting that the MLB, NBA, and NFL all use words like “revenue sharing” when their owners who are usually billionaires are more accustomed to profit sharing. The league could have even hundreds of billions in revenues by if the cost to maintain the league is just one dollar above the cost then there is no profit. Right now the NFL has $9.4 billion in revenue. Yet I think the more interesting question is how much profit the league makes. Also considering how much public money sports stadiums get it’s pretty clear that the taxpayers in the cities where NFL franchises are located are losing. I would be in favor of more corporate sponsorship. Citigroup and Barclays paid $20 million ever year for 20 years just to get the naming rights for stadiums. Clearly, if we have more of this there would be less of a burden on taxpayers who don’t even go to a single game.
What is also interesting is the idea of salary gap. In 2009 the salary gap for a team in the NFL was $123 million. This is a large increase from 1994 when the salary cap was close to $35 million. Since each NFL team is only allowed to have 53 players the average annual salary a player would make is $2.3 million. Last year the highest paid player in the NFL was Phillip Rivers who made over $25 million and is quarterback for the San Diego Chargers. Just paying the quarterback would consume 20% of the salary cap and we haven’t even filled the roster for the rest of the offense or defense.
Another problem with NFL contracts is that high prospect rookies are guaranteed millions of dollars even before they step on the gridiron. Could you imagine a Fortune 500 company hiring a CEO and saying, “Well we have heard great things about you so here is $20 million no matter what happens”? Matt Stafford comes to mind when I think about this. Stafford was a very hot prospect who was quarterback and drafted by the Detroit Lions. The team guaranteed him $41.7 million. His stats for the 2010 season were nothing to write home about as he had more interceptions than touchdowns. Sam Bradford signed a six year deal worth $78 million of which $50 million is guaranteed. His performance last season was better than Stafford’s but still not Pro-Bowl material. Agents often sign multiyear contracts for players because agent’s get paid based off the contract value. Agents try to convince everyone that because their client had one good year they should be rewarded with a long term high paying contract. I think there are few if any other compensation packages that work like this. Imagine you are working at a company and have a very productive year and exceed expectations. The company calls you in and tells you they want to reward you with a large multiple of your current salary and a guaranteed bonus so you don’t leave. If companies had a compensation system like this workers would slack and decrease productivity especially when they have guaranteed money coming to them. Although, players and agents would be opposed to it a one or even two year contract would make more sense than multi-year deals on a short period of time. The players that were consistent and productive would actually get paid more and the players that were just a flash in the pan would be the most hurt.
Something else that might help the NFL is to allow teams to issue stock. Selling off the ownership to individuals would allow teams to be more run like a business. Shares could be traded on the financial markets and the value of the stock would be derived off wins, losses, attendance, and factors that would affect the team valuation. Sports fans could actually have as they say a piece of the action which would be great for them and teams wouldn’t have to rely on funding from one individual investor but could be supported by millions of fans across America.
Subscribe to:
Posts (Atom)
