And, a pony

The athletic director at UC Davis thinks it would be a swell idea if Congress, at the same time it looks into regulating the NIL rights of college athletes, would go ahead and tackle legislation that would limit “excessive spending on salaries and facilities”.

This is needed — I know you’ll be shocked, shocked to hear it — because college athletic directors are inept at negotiations.

Salary market inefficiency is especially apparent when athletics directors and presidents find themselves renegotiating contracts to retain successful coaches. The non-profit structure creates an odd principal-agent dilemma: It is almost always in the personal job-security interest of athletics directors to pay highly popular coaches whatever it takes to retain them, lest they be blamed by influential constituents for allowing a beloved coach to get away. Agents representing coaches understand this negotiating dynamic, and are thus able to extract exceptional value for their clients. Negotiating circumstances are different in professional sports, where management is closely supported by an owner with a personal incentive to optimize financial efficiency and maximize return on investment.

Apparently it’s impossible to say no to Charlie Weis.

But listen to the brave new world that would be ushered in if Congress gave those ADs a backbone!

… it suggests that limits on spending would increase competitive balance in college athletics, thereby protecting long-term fan interest and commercial value. Spending limits (structured appropriately for each level of DI competition) would be in the competitive interest of all schools except the small minority who currently generate the most revenue, and thus ought to be supported by a majority of institutions and their fan bases.

A small minority might object?  Ya’ think?

I can’t come up with anything that would be guaranteed to blow up the current structure of college athletics than putting limits on what P5 schools could spend on staff and infrastructure.

The problem here is the underlying rationale.

The unique non-profit economic system of college sports creates an inefficient salary market, systematically inflating salaries beyond what would reasonably constitute market value in a for-profit environment.

The economic system of college athletics (which can be read about in more detail here) is unique because it consists of non-profit organizations that, unlike in any other American non-profit sector, compete fiercely in a zero-sum game. In other words, a college athletics program can only succeed at its competitive mission (win) if another fails (lose). Non-profit organizations in other sectors – for example, religious organizations, hospitals, and food banks – do not encounter a similar competitive dynamic. The zero-sum nature of competition in college athletics creates an enduring incentive for athletics departments to make investments that drive winning.

Accordingly, rather than seeking profitable operating margins, non-profit athletics departments reinvest all available revenue in priorities that maximize the chance of competitive success – such as attracting and retaining the best coaches. So, when athletics-related revenue grows significantly, as has been the case in major college sports over the past decade, the non-profit nature of its economic system drives corresponding growth in salaries and other competitive spending.

These aren’t non-profit organizations because theirs is a noble calling.  They are the way they are because by being that way, they avoid the tax man.

If you want to remedy the dilemma you’ve constructed, it’s just as easy… hell, it’s easier just to do away with their non-profit status.


That’s not even the most detached from reality part of the piece.  This is:

Nationally enforced limits on competitive spending could help to resolve some of these problems. They would reduce the urgency to generate maximum revenue, since income above the spending limit couldn’t be used for competitive purposes, and thus enable schools to cut back on the number of revenue-maximizing tradeoffs that impact student-athletes and local fans.

Tell you what — write that into your proposed legislation and we can talk.  I won’t be holding my breath, though.

Help them help themselves, Congress.  After all, it takes real courage to create a framework for schools to deny coaches what they’re worth on a free market.




Filed under It's Just Bidness, Political Wankery, The NCAA

25 responses to “And, a pony

  1. gotcowdog

    “Non-profit organizations in other sectors – for example, religious organizations, ……… – do not encounter a similar competitive dynamic.”

    Well, Jimmy Swaggert and Jim Bakker might disagree.
    Apologies, I watched a documentary about church scandals this weekend and that’s the first thing that popped into my head.
    I’ll read the rest of the article now…


  2. Milton Dawg

    Huh…imagine something like that coming out of California…

    Nothing like the government entering a new sector to tell us what is best for us.

    Liked by 1 person

  3. Some programs are doing better than us so let’s lobby to get big gov to bring them down to our level. Sounds about California.

    Liked by 2 people

  4. W Cobb Dawg

    Simply turn the existing funding structure around. Take away student fees and require a big portion of all sports revenue be plowed back into the schools/academics. That’ll neuter those A.D.s.


  5. ASEF

    The pro sports model they describe is mostly fantasy as well.

    Pro sports are driven by TV money and taxpayer subsidies. How can Kliff Kingsbury get fired by Texas Tech and land a coveted NFL head coaching gig? Because the Cardinals are doing the same thing most NFL franchises do – throw money at coaches and 1st round QBs until they hit the lottery.

    The Cardinals make money regardless. So they don’t care.


  6. Al

    One more thing for the government to stick its nose in…smh.


  7. kirkwooderson

    Senator I always thought you were too quick to criticize ADs’ negotiating acumen. Very easy for an agent to see that 1) Schools make a boatload of $$; 2) They can’t pay that $$ to most of the labor; and 3) They can’t keep the $$ as profits.

    Not hard for an agent to negotiate against that. Now imagine changing item #2…and you start to see why coaches are so opposed to paying players.

    *Also as an aside “let’s keep the government out of sports run by…public institutions” sounds like a KEEP YOUR GUBMINT HANDS OFF MY MEDICARE situation lol


  8. Napoleon BonerFart

    This sounds like the perfect situation for Congressional intervention. A market has been made inefficient by legislation and market interference. The only solution to that is … MORE legislation and market interference. And if that only makes the problem worse, we can always try EVEN MORE legislation and market interference.

    Hey, it worked for health care and rent control.

    Liked by 2 people

    • South FL Dawg

      No. I think the gist was to do away with the bad legislation. That’s LESS legislation if you’re still unsure.


  9. spur21

    It’s simple really – pay everyone (and I mean EVERYONE) the same salary regardless of skill or knowledge.

    We can start the payments when a person reaches age 18 and continue until death. What could possibly go wrong – well I suppose someone might fall off their unicorn and become a burden on the rest of us.

    Anybody have John Galt’s number?


  10. The AD at UC Davis is saying what every barely breaking even/losing money D1 AD is thinking. The 270 athletic programs that don’t have the benefit of a Power 5 TV contract have tied down the 70 or so programs that do.

    This is the reason more than anything else for the Power 5 to break away from the NCAA and for their own new organization.


  11. They could solve most of the problem by forcing all coaches to serve their entire contract but for the last year before considering any renegotiation. So either serve the term of the contract or get fired for cause.


  12. Tony Barnfart

    “Don’t touch any of our coaching / admin money because…capitalism. That [1st round draft pick currently unpaid] player should be playing in the bowl game, because Team First !”

    Liked by 2 people

  13. Doug

    I totally understand and appreciate the pressure on athletic directors to spend big to retain “the best coaches.” What I still can’t understand is their willingness to spend big on sub-mediocrities like Charlie Weis, Randy Edsall, and Mike Locksley (to name but a few). The kind of legislation that the UC–Davis guy is calling for might force ADs to spend less on worthless coaches, but it ain’t never gonna stop them from hiring those turds in the first place.


  14. WNCDawg

    Let me get this straight. Ok we are gonna allow a bunch of millionaires in the House and Senate who once elected has their salary for life. Even if they decide to not run or defeated. Most usually decline to run again and are now lobbyist for big medical corporations or insurance companies for house, car and health. Even though they have their own pharmacy and doctor care in office.
    Really who has it better the AD’s, Universities and coaches or our elected officials. Ticket prices, concession’s, student fees and tuition is nothing but a profit made business and taxed as non-profit. You think the people we have elected is gonna make a change. Really go back 4 different administrations and tell me who thinks things and you have seen change and different.
    The further we go the behinder we get.


  15. FlyingPeakDawg

    I’m sorry. I left the room for a moment. Just when did basic Econ 101 get banned?


  16. Gaskilldawg

    I understand the knee jerk, political sound bite responses to the article but at its core he is saying that these non-profit entities should be required to spend more of their revenues on the purposes of the non-profit than on executive salaries and fancy buildings.
    I am sure there is sound bite objection to that but it is too early in the morning to think of it.


  17. Kevin Winkler, DVM, DACVS

    Let’s see, money still coming in… I can’t spend it on coaches or players… I know, we need a new water slide, new stadium, coaches offices…….

    Because legislation will work. Smh 😔