I find Barro’s assertion that the NCAA’s cap on student-athlete payments is a highly effective monopoly to be pretty absurd. He contends that “If it weren’t for the NCAA, [a player who is not quite fit for the NBA] might be able to legitimately accumulate a significant amount of cash during a four-year career” (130). It seems that Barro knows nothing about sports or sports financing. First, There are other professional and semi-pro leagues (e.g. Arena League Football, North American League, etc.) that players who do not wish to be restrained by collegiate rules may participate in. Granted, it is unlikely that anyone will amass a “significant amount of cash” this way (non-major sports leagues tend to be pretty unpopular and have low revenues), but hey, that’s the free market. The reason colleges have agreed, by way of the NCAA, not to pay athletes more than a certain amount is that they are primarily academic institutions and do not want to divert resources away from academic programs.
Even when not paying player salaries beyond college expenses, very few collegiate athletic programs are financially self-sustaining. Looking at revenue/expenses data from various college programs, one can easily see that only a small fraction of athletic programs (all of them at large, Division 1 universities) are revenue positive. Of these, the term “revenue positive” may be misleading since many of them receive large amounts of “direct institutional support” (transfer payments from academics to athletics) or alumni/community donations — which almost certainly would not occur if the programs were unaffiliated with academic institutions (For example, University of Oregon and Oklahoma State University received 60% and 48%, respectively, of their 2009-10 athletic revenue from contributions).
Barro seems to think that all of college sports is Division 1 football and basketball, when the truth is that the proportion of NCAA athletes who would command any kind of significant wage in the free market is negligible. An NCAA report on 6 of the most major-league-feeding sports (men’s basketball, men’s football, men’s baseball, men’s hockey, men’s soccer and women’s basketball) shows that only 0.6% of these athletes go professional. If you add in all the other sports programs besides these top six, that percentage would surely drop dramatically. The reality is that, while professional sports are a big market in the U.S., there is a steep drop off in marketability of talents beyond the top tier. Anyone been to a CMS game lately?
Collegiate Athletic Revenue/Expense Data available at:
and
NCAA report:
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