Category Archives: It’s Just Bidness

Pay (each other) to play

This article about NCAA economics and the impact of paying student-athletes may be way over your head (hell, it’s way over mine in a lot of spots), but here’s the gist:

Okay, even gistier:

There’s a certain real world logic to that.  If schools have to pay players, they’ll suddenly discover there are a whole lot of less relevant budget items that can be revised downwards, like waterfalls and $10,000 lockers.  And that’s before you get to bloated administrative staffing.  (Which is really what this whole amateurism fight is about now…)

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You know who’s gonna have a great season?

No, Jimmy Sexton isn’t James Franklin’s agent.  But with the current crop of geniuses running athletic departments, ask yourself how much that matters.

By the way, it turns out Bert’s buyout figure is less than half what people thought it was, should he be canned at season’s end.  It’s kind of pathetic that a $5.9 million payout is a cause for celebration, but, hey, that’s the world the SEC lives in these days.

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Filed under It's Just Bidness, Jimmy Sexton is the Nick Saban of agents and is Nick Saban's agent, SEC Football

Forget about taking Econ 101.

What do you get when you ask a bunch of folks who teach Economics what would happen if colleges paid student-athletes?

Really, it shouldn’t be that hard to understand why the NCAA fights to preserve amateurism.

(h/t)

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Worth every penny

For those of you who have a genuine problem understanding why I go on at length about the unfairness of student-athlete compensation because, after all, money coming into the school is for the school’s benefit, let me introduce you to the University of Louisville.

When University of Louisville athletic director Tom Jurich announced a new $160 million, 10-year deal with athletic apparel giant Adidas on Aug. 25, a reporter asked him if some of the proceeds would be shared with the university.

“It’s for the athletic department,” Jurich replied. “It’s for these student-athletes. It’s been earmarked for them.”

In fact, under the current deal with Adidas, which expires July 1, 98 percent of the cash provided by Adidas goes to one person: Rick Pitino, the now-suspended head coach.

In 2015-16, for example, $1.5 million went to Pitino under his personal services agreement with the apparel company while just $25,000 went to the program, according to a contract obtained by the Courier-Journal under the state public records act.

The year before, Pitino also got $1.5 million, while the department banked just $10,000.

Under the existing and new contracts, any money that Adidas pays to University of Louisville coaches under personal service agreements is deducted from what the company gives to the athletic program.

Was it fair for Jurich to say the Adidas money was for student-athletes?

Kenny Klein, the department’s spokesman, said it was.

“Players come here in part because of Coach Pitino. Coaching is part of what we give to student-athletes,” Klein said last month before a bribery scandal prompted the suspensions of Jurich and Pitino.

Those players are such lucky ducks.  Such a deal.

By the way, Jurich was making some pretty sweet bank himself.

Over the past seven years, through a byzantine array of longevity and performance bonuses, base pay raises and tax subsidies, Jurich collected total compensation of $19,279,710, an average of $2.76 million per year.

Last year, his taxable income – enriched by the vesting of a $1.8 million annuity plus $1.6 million from the university to pay his taxes on it – totaled $5.3 million.

Although the annuity was earned over several years and will be paid out in $200,000 installments, his listed income last year was more than the university budgeted for its departments of Biology ($3.3 million), English ($4 million), History ($2.4 million) or Mathematics ($3.5 million).

The topper to all this largesse?  Despite raking in tons of dough, the athletic department needed $7 million per year in subsidies from the university to avoid finishing in the red the past two years.

“There used to be a firewall between athletics and university,” Jurich said. “We wanted to break that down.”

That’s been a success.  And they’ve preserved the firewall between athletics and student-athletes!  Amateurism is a gas, gas, gas, man.

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You know what’s an unfair fight?

Your typical big school athletic director versus the likes of Jimmy Sexton.

Routinely, agents are fleecing big school athletic directors who, once they have zeroed in on their man, drastically overestimate the chance that he is such a wild success that he would be hired away by one of a few programs, while drastically underestimating the chance that the coach fails and will need to be fired.

In addition to the pressure to get the hire made and being far too overconfident in it, athletic directors often have little incentive to push back on large buyout numbers. Why? A football hire is the most important hire an AD will make. And if it fails, the chance that the AD is himself fired is quite high. At that point, the huge buyout is the problem of the next AD.

Additionally, agents are typically much better at negotiating than athletic directors.

Throw in the money flow that’s seemingly on automatic pilot, and there you go… rubes playing with other people’s money.

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“Welcome to the Historical Basketball League”

This appears to be an interesting experiment brewing.

Welcome to the Historical Basketball League, the first national basketball league for college students that will substantially compensate college athletes based on their athletic ability. The HBL is founded on a simple idea: college sports are popular because they are sports played by college students, and that NCAA-style amateurism is a means of excluding athletes from the financial benefits of the league, rather than as a benefit to fans or athletes. The HBL will be also be a financial boon to the Historically Black Colleges and Universities (HBCUs) that will comprise the schools in the league. The HBL hopes to give schools and athletes an option outside of the traditional NCAA model.

There’s a lengthy FAQ section at the website that addresses a ton of issues we’ve raised in the comments here about student-athlete compensation.  The organizers have also just issued a statement about the FBI investigation of college basketball and Title IX that’s worth a read.

I have no idea whether this works out, of course.  Running it through the cash-strapped HCBUs is a sharp idea, but there are a lot of boxes that have to be checked before it’s a viable option — after all, agreeing to pay players is one thing; actually having the financial wherewithal to pay them is entirely another.

Regardless, it’s still an interesting experiment, if only to provide an environment that may answer a bunch of questions that are raised regularly about compensation.  Keep an eye on this.

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Filed under It's Just Bidness, The NCAA

Talk about compensation, a brief history

It’s been around almost as long as college athletics have, which isn’t surprising when you think about it.

The idea of paying college athletes is really old. In 1905, Harper’s Magazine published an editorial (subsequently reprinted in newspapers nationwide) addressing the “Pay of College Athletes.” Harper’s saw the issue as one of visible inequity.  The popularity — and profitability — of college athletics made the problem of “how to make athletes work for nothing” — or to put it another way, “how to keep the athletes from drawing salaries” — increasingly difficult for university administrators to manage. Harper’s concluded that unless a more transparent and fair compensation system arose, college athletes would continue to be paid “surreptitious wages.”

In 1915, the University of Chicago Daily Maroon upended the college football community by pushing the matter further. Given that the editor of the college newspaper and the tuba player in the marching band received compensation from the university, the Maroon argued, why not the college athletes? “They work hard for the university organization known as the football team, which is a money making enterprise, the receipts from football being something like $20,000 [roughly $478,000 today] more than expenditures for the sport. Why not give the players a share of the profits accruing from their hard and faithful labors?”

The University of Chicago was only one year removed from a national championship in football; its voice on the subject mattered.

In 1929, Major W.H. McKellar of the University of the South (Sewanee) proposed that his school’s conference — the Southern Conference — embrace open, above-board payments to college athletes. Actually, the Major preferred universities doing away with charging admission to college football games. But recognizing that this was crazy talk, McKellar argued that “his proposal to openly pay college athletes in the Southern conference” was the only reasonable way forward.

Even the nation’s most beloved humorist at the time — Will Rogers — provided flyby support for the pay-for-play model. He was the John Oliver of his day, just pithier. “There is only one fair way to ever arrange amateur athletics in any line in the country,” Rogers declared, “and that’s let the athletes work on commission of what they draw at the gate then make them pay their own schooling expenses.”

Eh, better we send people to jail for compensating student-athletes than, you know, compensating student-athletes.

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