Legal Commentary

Against the NCAA Cartel

By Ilya Somin

Most sports fans are currently watching the NCAA basketball championship game. Since my own basketball interests are usually confined to the NBA, I am instead going to take this opportunity to denounce the NCAA?s cartel-like effort to use the power of government to keep its members from paying student athletes for their labor. Economist David Henderson has an excellent summary of the case against the NCAA:

The NCAA runs a tightly controlled cartel whose ?profits? go to colleges and coaches. It?s not simply a private cartel but one backed by government force. Armen Alchian and William Allen, in their 1964 textbook, University Economics, were the first people I know to point this out. They pointed out that those colleges that decided to pay athletes would find their academic accreditation at risk. So why don?t new schools sense a profit to made and then enter and compete players away by paying them? Alchian and Allen answer: ?[N]o new school could get subsidies from the state or major philanthropic foundations without recognition by the present accreditation group.? They add, ?We have finally arrived at the source of the value of membership in the NCAA and related organizations: subsidized education.?

One could argue, ?Well, the student athletes will cash in on their skills later when they go on to become professional athletes.? Not so, as the NCAA admits in its advertising [noting that most players don?t go on to professional careers].

Because so many students are dependent on government-subsidized loans that are only available to accredited schools, few schools are willing to openly buck the NCAA?s restrictions on paying athletes (though of course many do so under the table). Whatever money the school earned from having better sports teams would be outweighed by the loss of government funding.

The traditional NCAA response to such criticism is that the players? are ?scholar-athletes? who get compensated with education. This is probably true for many college athletes in lesser-known sports. In Division I football and basketball however, the players are essentially full-time professionals. Most of them have little time to spend on their studies, and many have academic credentials far weaker than those of the regular students at their schools. Few people can do well academically if placed at an institution where their credentials are far below the norm and they had to work at a demanding full-time job at the same time.

I don?t believe that student athletes are morally entitled to be paid for playing. If no one wants to pay to watch them, I have no objection. The reality, however, is that there is a high demand for their services which is being artificially suppressed by government coercion. Indeed, some schools and boosters pay players under the table despite the threat of severe NCAA sanctions if they get caught.

Another particularly galling element of the NCAA cartel system is the way in which it is surrounded by a veneer of righteousness. The NCAA has managed to persuade the media and most of the public that the real bad guys are actually those schools that try to undermine the cartel and pay their players at something more closely resembling market rates. Few people seem to care that most of the athletes who get shortchanged are poor minorities who are being deprived of a key opportunity to create a nest egg for their future. As Henderson points out, only a small percentage of them go on to make big bucks in the pros.

There is a conceptually simple, though politically difficult, solution to this problem. The government should withdraw its support for the NCAA cartel. Universities will gradually stop pretending that Division I football and basketball players are primarily students, and start treating them as the employees they actually are. The players will get paid for their work, and they and the universities won?t have to waste time and money forcing players to attend bogus classes in order to keep up appearances. Those who have the desire and academic credentials to do real coursework should of course be allowed to do so.

UPDATE: It?s also worth noting that the same universities who loudly condemn the very thought of paying players often pay huge salaries to coaches and athletic administrators. I don?t begrudge these people their riches. But it seems strange to claim that paying players any salary at all will somehow sully the academic ethos, while simultaneously contending that there?s nothing wrong with paying big bucks to Mike Krzyzewski or Jerry Tarkanian.