Friday, April 24, 2009

A Call for Reform: Universities and Intercollegiate Athletics

By: Matthew Denhart

Last week I had the pleasure of attending the 2009 Scholarly Conference on College Sport hosted by the College Sport Research Institute at UNC-Chapel Hill. The conference addressed many of the issues facing intercollegiate athletics discussed by CCAP in our recent study and Wall Street Journal article. One of the most interesting sessions was the keynote luncheon given by Bernie Mullin who, among many things, was the Athletic Director at the University of Denver and was formerly the President and part-owner of the NBA’s Atlanta Hawks.

Mr. Mullin discussed the many differences between the games of college and professional basketball and argued that the NBA and its players want to see college-aged athletes delay their entrance into the pros as long as possible. Players don’t want to babysit on road-trips while coaches and executives don’t want to have to spend as much time teaching young players basic basketball fundamentals (which he noted are far inferior to our overseas counterparts despite American players being wildly more gifted in athletic ability). For these reasons, in 2005 the NBA instituted an age-limit rule forcing athletes to wait a year after high school to enter the draft. A similar three year rule applies in the NFL.

Dave Ridpath, our friend and former Director of the Drake Group, asked Mr. Mullin what I'm sure he knew to be a na├»ve question: “If the NBA has a vested interest in delaying the age at which kids enter the league, why don’t they establish some type of development league?” Mr. Mullins opined that the NBA has created the National Basketball Development League (NBDL), although he acknowledged that it has failed to really attract much interest. Next, he bluntly stated that there is no real incentive for the NBA to bother because their current arrangement of free-riding off the NCAA has worked pretty well.

The NCAA hasn’t made out too poorly from this arrangement either. Star athletes attract millions of loyal fans, huge contracts, and millions of dollars in revenue. CBS pays around $545 million annually to carry March Madness and last November ESPN signed a $500 million deal with the NCAA for rights to broadcast four of the five BCS football games. Certainly, some of this money trickles down to individual schools, too. So it’s a win-win, right?

Hardly. This interpretation ignores the fact that such a system encourages schools to accept athletes who may not even be qualified for college. The Atlanta Journal Constitution reports that at schools with big-time athletics programs, football and basketball players have SAT scores on average 220 points lower than the institution’s general student body. They strive to increase revenues by winning games which often contributes to the perversion of the core academic mission of a university. What’s more, this revenue is derived off the exploited labor of student athletes who receive very modest compensation in the form of athletic scholarships. Meanwhile, coaches and athletic administrators earn huge salaries off what economist Andrew Zimbalist refers to as a "stilted market." One wonders how long this system can last?

Intercollegiate athletics are in desperate need of reform. On a panel --that Dr. Ridpath graciously invited me to participate on --I discussed another unsustainable trend involving the growing reliance of athletic departments on allocated funds from the wider university. As our study details, only 19 athletic departments in the country realized a net profit in 2006 (and many argue that is a generous figure due to unorthodox accounting standards). Furthermore, between 2004 and 2006 real athletic expenses grew by around 15.6% while generated revenues grew by only 8.3%. Athletic departments are growing increasingly reliant on allocated funds from the wider university. In hard economic times universities are going to be forced to make tough fiscal decisions and growing deficits from athletics are likely to be more highly scrutinized.

Now may now be the time for long-needed reform to come to one of America’s most beloved institutions: college sports.