With the college football bowl season ending and the national championship game upon us, it’s time to say goodbye to the much maligned Bowl Championship Series and to welcome its eagerly anticipated successor: the College Football Playoff.
The new system will be better in almost every conceivable way. Regular-season games will matter more. In addition to the title game, we’ll be given two high-stakes semifinals. The national champion will truly be the national champion. And let’s not forget about the money. More games mean more revenue—a lot more revenue—for the schools and the NCAA. The playoff series will generate on the order of $480 million a year, compared with a meager $170 million for the BCS.
Everybody wins! Or, almost everybody. The athletes who are going to make college football more popular and lucrative than it has ever been won’t earn a penny more than they did under the BCS system.
As a culture, we abhor price fixing and artificially suppressed wages. Yet for many years we have accepted them as a given when it comes to college sports, never questioning the NCAA’s policy against paying athletes, even as the schools that effectively employ them are making millions off their talents.
The edifice of this system is finally crumbling. An antitrust lawsuit filed in 2009 by a former University of California at Los Angeles basketball player, Ed O’Bannon, who didn’t appreciate the NCAA using his image in video games and not sharing the profits, is working its way through the courts, shattering a lot of myths along the way. We are learning to think twice when an NCAA “scandal” breaks and to redirect our outrage at the rules rather than the rule breakers. Why exactly is it wrong for a college football player to get paid for signing autographs? Or for a prospective college athlete to pay a “street agent” to help him get into the right program? Isn’t that precisely what high-priced college admissions consultants do?
It’s all but inevitable that athletes will start getting paid—the only questions are how and how much. In recent years, we’ve seen a lot of ideas floated, from the introduction of small stipends to the creation of a tightly regulated intercollegiate system with strict salary caps. But there’s another possibility: The best plan might very well be no plan at all. Or, if you prefer, it’s a plan called the free market.
How would such a system work? Colleges could simply bid for the services of high school recruits. Contracts could be negotiated individually, like the contracts for coaches and athletic administrators. Some might include no-transfer clauses; others might include retention or graduation bonuses. Once the NCAA monopoly has been broken, the various conferences would be free to write rules for their respective members. Some conferences might even experiment with salary caps and see how the market reacts. As long as they weren’t colluding to fix prices—as they are doing now—the market would find an equilibrium.
It’s easy to imagine the doom-saying that would follow. In fact, it would probably closely resemble the doom-saying that accompanied Major League Baseball’s efforts to prevent the arrival of free agency in the 1970s. If players were permitted to test the open market for their services, the MLB warned, “professional baseball would simply cease to exist.” Not quite. Four decades later, major league baseball generates about $8 billion in revenue a year.
In resisting the idea of paying college athletes, the NCAA often argues that most universities are already trapped in an expensive arms race for coaches and athletic facilities. Many universities claim they lose money on big-time sports. Think of how much greater the financial burden would be if colleges had to get into unchecked bidding wars for quarterbacks and point guards, too.
There are gaping holes in this argument. In one of the filings in the O’Bannon case, the plaintiffs detail how schools use accounting tricks to obscure the profitability of their football and basketball programs. Hundreds of thousands of U.S. businesses figure out how much to pay workers without going broke; more to the point, college presidents seem perfectly capable of running institutions with 9- or even 10-figure budgets. They can handle market competition when it comes to recruiting engineering professors, but they’re somehow incapable of making rational decisions when the recruits in question are athletes? If the NCAA is right and its members really are broke, the market rate for athletes isn’t likely to rise very much. But then that makes you wonder why they are fighting so hard to prevent that outcome in the first place.
If a free market system were introduced at the collegiate level, wouldn’t the biggest, richest athletic departments simply buy all of the best college athletes? The reality is that they already do. Only instead of attracting athletes with cash, schools lure them with big-name coaches, five-star players-only dormitories, and state-of-the-art athletic facilities. (How many high school football stars who are recruited by the University of Alabama choose the University of Nevada instead?)
The schools that can—and want to—spend the money on sports are already doing it. They’re just not spending it on talent. By preventing athletes from getting paid, all we’re really doing is transferring money from young men—the majority of whom are neither white nor wealthy—to coaches, athletic directors, architects, and construction companies.
Fixed stipends might help remedy this imbalance, but a system unconstrained by price would go much further toward offering a solution. If there were no artificial limits on spending, star talent would invariably become very expensive, which would discourage schools from stockpiling coveted recruits. Instead, the best athletes would be distributed more evenly throughout the various schools and conferences. The free market would also allow schools to build in academic incentives, such as financial bonuses for athletes who graduate on time—or even come back and finish their degrees after their NFL or NBA careers.
The bottom line is that once we got past the collective freakout, we would start evolving toward a more rational, fairer system. We can’t say exactly what form it would take; that’s the nature of the free market. Economist and collegiate-sport free marketeer Andy Schwarz has suggested some possibilities: Maybe the University of Kentucky’s John Calipari would abandon “one and done” and start offering basketball recruits a bigger payday if they stayed at the school for their sophomore season. Maybe the next Cam Newton, whose father reportedly offered his son’s services to Mississippi State University for $180,000 under the table (which he denied), will actually get $180,000—above the table. Or maybe he’ll get $90,000, and the school will set aside another $90,000 to help it meet its Title IX requirements to fund nonrevenue-generating sports. If the competition gets too intense, the NCAA might ask college athletes to form a union and collectively bargain for nationwide salary caps, which, of course, we effectively have now—except the cap will be fairly bargained between professional teams and players rather than imposed from above.
Some schools might decide to drop football or basketball. More would likely opt for a level of talent that better fits their budget. Would this affect anyone’s allegiance to his or her alma mater? I don’t see why. What’s more, the quality of the overall product would be higher. College football and basketball wouldn’t simply limp along; they would almost certainly become even more popular.
Before long, we would realize that college sports’ transition to capitalism was actually just the process of our economy absorbing a class of Americans who were being denied access to a market (and not just any market; a market that they themselves created). In a generation, it would come as a shock to remember that our nation once allowed a private cartel to dictate the terms of a public policy that prevented young men from capitalizing on what may have been the four best earnings years of their lives.
Mahler is a Bloomberg View columnist.
