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Economist Andy Schwartz on blowing up the NCAA: Team Market vs. Team Reform

Discussion in 'Sports and News' started by Double Down, Nov 11, 2014.

  1. Double Down

    Double Down Well-Known Member

    This is really long, but really good.

  2. Baron Scicluna

    Baron Scicluna Well-Known Member

    I got tired of reading it halfway through, but it basically said what I have been saying on here for years. The NCAA can keep this as purely amateur sports all they want. All they have to do is give up their billions of dollars.

    Sounds simple, right? But of course, they don't want to, and who can blame them, with all that money available. But now, they,'re reaping what they have sown, because the athletes in the revenue sports are questioning why the heck everyone else is making money and they're not.
  3. The Big Ragu

    The Big Ragu Moderator Staff Member

    I appreciated that. ... I do think that dividing up two "sides" -- "Team Market" and "Team Reform" -- and simplifying it to whether you believe you the NCCA should have to pay for the costs or inputs for their business (the athletes) is too simplistic.

    If you forced me to discuss it that way, of course, I'd be a member of "Team Market." But I think it ignores the reality that the athletes themselves are not ACTUALLY slaves. They do have choices and they do have leverage -- which I believe they need to exercise better, and have started to (why Schwartz has been able to make money consulting on those class-action lawsuits against the NCAA).

    The way I look at it, the NCAA as it exists, gives a good football or basketball player what is essentially a "take it or leave it" proposition. Yes, the NCAA has a business that earns a ton of money. They need the athletes in order for that business to continue to earn a ton of money. They come to the table offering what is a small amount -- a college scholarship and a few other perks -- of what they earn. And when athletes have tried to negotiate for more, they haven't been successful. My intuitive response when I hear that, though, is, "then you need to negotiate better." If you have leverage and you are not exercising it well, the answer to me is, "Figure out a way to use your leverage so you can get what you want."

    The thing is, the NCAA still isn't hurting for athletes (the inputs). Which means that athletes are choosing to take what we all think is a shitty offer, given how much the NCAA earns. So you kind of have to ask yourself why. And the answer, I'd guess, is that the athletes aren't getting what we'd all say is their "worth," but obviously enough are getting something important enough to them to continue suiting up week after week anyhow. For a lot, the college is worth something. For many, it's a chance to showcase what they do for a chance to go pro. For many, they just find ways to turn playing into a cash-making enterprise anyhow, by violating the NCAA rules.

    I think this hinges on the athletes at this point, because the NCAA really is under no obligation to do anything. The obvious, and easiest way, for the athletes to exercise the leverage they actually have involves the licensing money that they have gone after. The O'Bannon suit was decided 100 correctly, thankfully (always in doubt with the way our tort system has become) -- the NCAA was guilty of infringement; it shouldn't legally be able to use the likenesses of the kids. But that was just the low-hanging fruit. Eventually, if anything is going to change (assuming it isn't dictated by legislation or judicial interference, and then you aren't "Team Market," you are, "Team Dictate"), some sort of collective action is going to have to occur. Those athletes have a ton of leverage. They just aren't using it well. What they can use is a Marvin Miller type who can coordinate it all for them, the way he did it for pro sports. I don't know if that will happen, but imagine if in the middle of the season all of FBS football was cancelled, because the players simply refused to suit up until their grievances were addressed. After a few weeks of that, I suspect the NCAA would be ready to negotiate.

    I know that is not easy to accomplish. But when you actually have leverage, and you are dealing with an entity as short-sighted as the NCAA seems to be, an extreme action is how you have to exercise your actual leverage. I think one reason the NCAA does play hardball is that it banks on that extreme action never occurring. You are talking about a particularly decentralized group that would be hard to organize and get consensus. And on top of it, they are just kids, some not the most sophisticated, and many probably not prepared to handle the public backlash that would result.

    But that is the path to what he says "Team Market" wants. Simply let it be a market. The NCAA is free to say "Take it or leave it." The athletes have to actually "leave it" now, to test whether the NCAA really means it.
  4. JayFarrar

    JayFarrar Well-Known Member

    The problem with team market is for the vast majority of athletes, a scholarship and perks are a pretty good deal.

    not all schools or athletes are created equally. A basketball player at Texas A&M Corpus Christi is not the same as a player at Duke. Or, for that matter, a walk-on QB at Florida state is not the same as Jameis Winston.

    So you are essentially asking the 99 percent to blow up the system for the one percent.
  5. The Big Ragu

    The Big Ragu Moderator Staff Member

    Jay, What you said about not all players being equal -- a walk-on not being the same as Jameis Winston -- doesn't change anything. Peyton Manning isn't the same as Matt Cassel. Does that mean that each can't negotiate his individual worth? In most workplaces, does everyone earn the same amount or can the guy who presumably brings more value to the table, and presumably has more leverage because of it, negotiate his worth?

    If Team Market really is Team Market -- and what you are saying is correct about the scholarship and perks being a pretty good deal that most of the athletes are happy with -- that isn't a problem of any sort. You have a labor market. You are suggesting that both sides -- employers and employees -- have largely settled on an arrangement that satisfies each. If that is the case, "Team Market" should see something that is pretty close to market equilibrium.

    I don't think that is actually the case. I think the vast majority of athletes know they have unused leverage that could be netting them way more. They see how much the NCAA earns from those TV contracts, and they know they are the attraction that people are tuning in to watch. They know that the boosters for a rabid SEC team don't just want generic athletes with the team jersey on them. They want national championships, which means getting great players. They see how much the coaches and athletic directors make, and know that if they are worth what they get, the actual players are probably worth something more than a scholarship and perks.
  6. trifectarich

    trifectarich Well-Known Member

    You make some valid points, but what leverage does the second-team tackle at a middling school really have? No one's buying a ticket to see him play. No one is watching that team on TV because of him? 99 percent of boosters couldn't pick him out of a lineup unless he was wearing his game jersey. Where's this kid's power to say he deserves a piece of the pie?

    I think we're wasting our time trying to fix a system where the disparity between the haves and the have nots is a mile-wide chasm and getting bigger every day.
  7. The Big Ragu

    The Big Ragu Moderator Staff Member

    That second-team tackle at a middling school has as much leverage as he actually has.

    All of us deal with this in life -- whatever we do.

    Maybe that second-team tackle is is only able to negotiate a scholarship from one or two middling schools based on what he brings to the table. While Marcus Mariota has his pick of schools and is able to negotiate way more than that. Even with the way he NCAA is currently, there are plenty of players who would love to play FBS football, but fall just short and get no offers. Do they deserve a piece of the pie, too? Do I deserve a portion of what some of the people in my neighborhood earn, even though I am not able to command what they do based on anything I offer anyone -- simply because there is a disparity in the size of our homes?

    That is the thing about negotiating leverage. We're not talking about charity. What you actually bring to the table is what gives you leverage. If we are really talking about "Team Market," not everyone is going to command the same things. But why is that surprising? Look at pro sports. You have guys who command millions. Guys who command less. Guys who shuttle between a minor league and a major league and maybe command even less. And guys with a dream who fall short. I don't know why this would be any different.

    There are two ways to look at this. From a macro point of view and a micro point of view. The original link is about the macro picture. Currently, I would argue that NCAA athletes in football and basketball don't get what they potentially could because they haven't found a way yet to exercise what I think is considerable leverage. Once you get beyond that macro picture, there is a micro picture. And not all players are equally as valuable -- which gives every player his OWN leverage within that macro picture. That is how the world works, though. The low-level analyst doesn't command as much as the senior portfolio manager when he tries to negotiate a salary.
  8. Baron Scicluna

    Baron Scicluna Well-Known Member

    Which is why it's up to the stars to fight for everyone, not just themselves. You look at baseball, and the stars were pretty much unified in negotiating for everyone. Without stars, there's no game. For the NBA, the stars were worried about their contracts, and eventually got a deal that helped them but hurt the union in the long run.

    You look at Michael Jordan's kid, who refused to wear the sponsor's sneakers. His school shit their pants, and eventually lost their sneaker deal. Now that might have hurt some minor sports, but they seem to have survived. Of course. He also had the leverage of daddy's money. But think about what would happen if Winston covered up logos and wore different sneakers and said he would only use a sponsor's products if he got paid. The schools would be throwing a fit. Too bad.
  9. trifectarich

    trifectarich Well-Known Member

    It's admirable to think that could happen, but in the real world, the BMOC is concerned with what's good for him and couldn't care less about the second-team tackle.
  10. The Big Ragu

    The Big Ragu Moderator Staff Member

    If star players join a collective effort to get the NCAA to open up the purse strings, it won't be because they want to help others. They will do it because they believe it helps themselves.

    It shouldn't take much to convince them of that, actually. In this case, it isn't like how baseball was under the reserve clause when star players actually earned more than scrubs. Because they are limited to just a scholarship, star NCAA players are losing more by not exercising their leverage than average players lose -- conceivably a star player could be worth millions of dollars a year that he isn't getting.

    As I said, there is a macro issue (the NCAA's unwillingness to negotiate) here and a micro issue (how much any individual player might command in a free market if the players got the NCAA to the table). The players (star players AS WELL AS middling players) right now, need to deal with that macro issue -- make the NCAA hurt, to force them to negotiate. It's in the star players' interest to lead, let alone just take part, in an insurrection. If that happened, the middling players would actually benefit from what the star players are doing for themselves, not the other way around.

    When baseball had a reserve clause, players weren't entirely unhappy -- even if they didn't get paid what was likely their true worth. They were psyched just to get paid to play, and star players even earned fairly large salaries -- much greater than the typical player. The star players actually had incentive in that case not to upset the apple cart. But look what happened when Marvin Miller organized the players, and what the star players' willingness to strike along with the average players, did for the ability of EVERYONE, including the star players, to negotiate salaries? They all realized a much greater deal.

    That is the essence of collective action, when you have a group that has ACTUAL leverage. It's to EVERYONE's benefit to organize and threaten to walk.
  11. heyabbott

    heyabbott Well-Known Member

    If college basketball changes so that the players are admittedly more than students and paid beyond their scholarships, does it change the game for the consumer, and therefore change the game for the broadcasters?

    If Kentucky, which would essentially be a D-League team could make the Final Four every season, do we then judge the game by a different standard? It's one thing for a dozen under 20 year old kids make millions in the NBA each year. but another where the income of a freshman RB or PG is greater, scholarship plu$, than the average alumn.

    Will college basketball have the same cache once it is a legitmate semi-pro league?
  12. The Big Ragu

    The Big Ragu Moderator Staff Member

    That is a really good question.

    Whatever college football and basketball are today, something inherently will change if the players find a way to negotiate their actual worth.

    I can only guess. ... but if the NCAA takes on the look of a minor league, and/or the actual teams become less associated with the schools, I think it would work to everyone's detriment -- less interest in the teams, and as a result less revenue, which means the players can realize less. People are less interested in minor leagues than they are with the big leagues.

    But if the only thing that changes is the players finding a way to negotiate part of the income they generate, and the ties to the schools remain the same, I am guessing the popularity stays the same.

    That could be an intractable problem, because the idea of the "student-athlete" itself has never been clean and neat. Let's say you have a market-based NCAA. By hanging onto this notion that it's not only how good you are at basketball or football that determines your worth, but you also have to qualify for the university and be a student as well, you are muddling two things that don't necessarily go hand in hand. But the popularity of NCAA sports -- what generates the money in the first place -- may be predicated on the two things being muddled. Take away the fantasy, and the NCAA might get treated like AAA baseball.
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