Athletic Madness

Are college athletes exploited?

With the NCAA Basketball tournament reaching the heights of hype and football players from Northwestern University trying to unionize, it’s a reasonable question. After all, the schools make a lot of money off these sports—TV rights, merchandizing, ticket sales—not to mention the cachet that comes from being a national champion. In an era of branding and name-recognition, it pays to be number one.

So the question is, should these athletes be paid—or paid more, since they do receive scholarships. First, let’s note that we’re talking about football and basketball. Other sports are money-losers for colleges, no matter how we may personally feel about our alma mater’s ski or swim teams. Those sports are part of the educational process, but there aren’t enough gate-receipts to pay for the equipment, trainers, coaches, and facilities necessary for a top track or soccer program.

But football and basketball are big business. And the schools treat them as such, booking tens of billions in revenues. We should note that the professional football and basketball don’t have their own farm systems—they use the NCAA. And the glamour and pressure of a national championship serves a high-visibility try-out for the pros. It did for Michael Jordan and Andrew Luck.

But all the cheating scandals, convoluted NCAA rules, and off-the-books booster outrages are indications that the simplest way to value labor—wages—is being suppressed. And the athletes at Northwestern aren’t necessarily looking for cash; they want scholarship-security and health protection if they suffer career-threatening injuries.

It’s hard to argue that these athletes don’t deserve better compensation. Without their labor, the schools have no TV-rights to sell to ESPN and CBS. Adam Smith noted 238 years ago that businessmen rarely meet together without contriving some scheme against the public. These workers should tell the schools: no pay, no play.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2017-07-17T12:34:20+00:00 March 31st, 2014|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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