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Paying Collegiate Athletes: Part 3

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One of the biggest stories of the fall has been the possibility of college athletes being allowed to receive compensation for the use of their images and likenesses. In the first two podcast episodes, we discussed the potential impact of the legislative initiatives (part 1) and took a broad look at the long-term controversy of paying the players (part 2).

In Part 3, I take a deeper dive into what happens next. Specifically, I consider the issue of competitive balance in college football (and basketball). Most of the attention paid to the player compensation issue has been focused on the fairness of the system. My discussion is focused on the health of the game. These are related perspectives because a healthy game will attract the fans that will support the various stakeholders.

I start from the premise that allowing players to sell their "brands" will provide a competitive advantage to elite, high profile teams, I also conjecture that the current 4 team playoff has also created an environment that favors the powerful teams. While the playoff system has not been part of the "image and likeness" debate, the things are linked because they each potentially influence competitive balance levels.

How do leagues manage competitive balance? The rules of how pro leagues operate are defined in the collective bargaining agreements signed between player's organizations and owners. These agreements often include structures designed to maintain a level of competitive balance that maintains fan interest. Some key elements of these CBAs are amateur drafts, salary caps, free agency systems and revenue sharing. Which if any of these can be a solution for college sports?

1. Amateur Drafts

In major professional leagues the worst teams get the first picks of the next generation of talent. The idea of a draft of high school players seems wrong to even think about. Of course, on some level it also seems strange to force a college standout from a school in California or Florida to play in Buffalo or Cleveland.

Why is college different? Because college players play two roles - students and athletes. Any type of system that limits player choice runs afoul of the individual's ability to select a desired or appropriate educational program.

2. Salary Caps

Given that the current direction is to allow players to profit from their images rather than for players to be paid by schools, a salary intervention would have to take an alternative form. Rather than limit the overall payroll or a constraint on maximum salaries a school could offer, any "salary cap" mechanism would need to limit an athlete's ability to profit from outside opportunities. This would be a strange type of salary cap. The agreement would somehow need to limit max "outside" earning deals and maybe reallocate the excess earning to other union members (other college athletes).

I don't think this could possibly work. The athletes with the greatest earning potential (i.e. Zion) would have no incentive to join a union. And how can union membership be required for a student-athlete?

3. Free Agency System

The NCAA system of regulating transfers has been under stress for the past few years. In particular, many fans have doubts about the NCAA's decisions regarding who gets immediate eligibility and who has to wait a year. The professional analog to transfers is free agency. Free agency restrictions are a core part of collective bargaining agreements. The concern with free agency has always been that stars would head to big markets for greater pay and greater marketing opportunities.

Allowing players to profit from names and likeness likely will put more pressure on the NCAA transfer system. If players can earn incremental dollars by switching schools, would the transfer rules have to be further relaxed?

4. Revenue Sharing

There is already some revenue sharing in college sports. This revenue sharing has largely been driven by the payouts from the major conferences' cable television deals. However, even within the top conferences there are significant differences in spending. Can revenue sharing be increased? I think it could, but there would need to be some incentive for schools like Ohio States, Alabama and Texas to participate.

If allowing players to earn "marketing" dollars and the very limited playoff structure does harm competitive balance, I could see increased revenue sharing within conferences as a viable path forward. But what about across conferences? Or to non-power 5 schools. This seems like more of a uphill battle.

A Short Proposal

A traditional competitive balance maintaining collective bargaining agreement seems incredibly difficult or impossible at the college level. Any traditional CBA would seem to unduly limit student-athlete rights. With this in mind, I suggest two paths forward for the college game. The first, sort of obvious and very doable. The second, would be a much tougher sell.

1. Expand the Playoff System

Make the playoff system 8 or 12 teams. This will open up the playoff to the UCFs or Boise States and provide opportunities for a few more power 5 conference members. This would partially mitigate concerns about the recruiting advantages of the elite teams and would increase the marketing opportunities for players at non-top ten programs.

What about the issue of players playing too many games? Given that we are now adopting a semi-professional model, I think this is less of an issue. On the downside, expansion of the playoff would further degrade the bowl system. However, given that the bowl system is now mostly about marketing and sponsorship opportunities, and a few incremental practices for teams, this is a minor problem.

2. A Salary Cap on Coaching Staffs

If we want to reduce the ability of a small group of schools to consistently dominate the support then the best path forward is to reduce the ability of schools to outspend each other. In professional sports, salary caps and max salaries are common. Why can't a similar system be used in college? At this point, there is no call for schools to start paying players. The compensation that schools offer players is a probably best viewed in terms of career opportunities. In addition to educational opportunities, schools also provide training and exposure that helps players reach the professional ranks. One path forward is to reduce the differences in this type of training.

How about a salary cap on coaching staffs? Since the players do not get paid, it seems like the best way to create an even playing field is to limit the ability of schools to pay for top coaching talent. Coaches vary in terms of teaching skills, game planning and recruiting ability. Limiting coaching payrolls would mean that schools would have to invest more strategically. How much should be allocated to a star head coach versus to dynamic young position coaches? Creating max coaching deals would also limit the instances of an upcoming coach building a program and then moving to a historical power. This would allow more schools to develop brand equity.

Obviously the coaching fraternity would not be in favor of this idea. Historically, there has been a free market for coaching talent. But most sports labor markets have never operated as free markets. The proposal would not necessarily reduce coaching salaries. The overall pool could remain the same, but limits would be placed on extreme salaries and extreme payrolls.



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