Corporate & Securities Law

Hell No, Don’t Let Them Go!

My colleague and fellow UCLA alumnus Thomas Hazlett and I have published an op-ed in the Chicago Tribune proposing a partial solution, partially inspired by the early exit of Kevin Love from our beloved Bruin basketball squad, to the problem of early exit by potential NBA draftees.  We note that the problem is the NCAA cartel, which restricts payments to college players while attempting to maintain the charade of amateurism.  While this restriction on cash payments is not likely to be lifted any time soon, we proposed that universities extend insurance coverage that will allow interested potential draftees to stay in school and insure the risk of draft slippage.   Here’s an excerpt:

So the answer, given that universities cannot pay athletes market wages, is to at least insure them. Were underclassmen to be appraised, via draft rankings, and then offered compensation in the event?post-graduation?they slipped by some increment, they could hedge this very considerable exposure. The NCAA allows players to insure, but the player pays even though it is largely the university (and its fans) that benefits. Moreover, policies can only insure against career-ending injuries, leaving the more common outcomes?less serious injuries and performance-related changes in draft status?terrifying prospects.

The schools should extend broader coverage. The contracts we propose do not fully compensate college athletes for their valuable service, and would thus retain only some of the talent now jumping early to the pros. Yet, the approach would preserve the NCAA’s “amateur” wink, while allowing student-athletes to play college ball until their 21st birthday without risking the family jewels. A slam dunk, really.

Check out the whole thing.

Full post as published by Truth on the Market on May 08, 2008 (boomark / email).