On Monday millions will watch the BCS Championship game between Alabama and LSU. College sports are incredibly popular. There’s something appealing about young people testing themselves physically.
College sports are also big business. Rick Pitino made $2 ½ million more as head coach of Louisville’s basketball team than he did as head coach of the Celtics. The NCAA earned $770 million from TV rights for the three weeks of March Madness last year—the NBA earned only $160 million more for the entire season. Some estimate that College sports are an $8 billion business.
But there’s a problem. The labor in this industry earns nothing. Sure, the athletes get scholarships, but those don’t even cover the cost of attending school. Their physical training is so intense coaches often prohibit their taking challenging courses. The NCAA has elaborate rules about wining and dining prospects, and complicated formulas about academic progress. So every year there are recruiting scandals, coaching scandals, academic scandals, and so on. There’s a simple solution: pay the athletes.
Instead of sweet-talking recruits, coaches could offer them a contract. There could be salary caps and other limits like professional leagues have, but as long as colleges are the feeder system for pro sports, money will be part of the equation. Better to have it openly negotiated than hidden in brown envelopes.
Some say this would end the appeal of collegiate athletics. But people didn’t stop watching the Olympics after they let the NBA, NHL, and professional tennis stars in. Instead, they got better. It’s likely that would happen here.
Douglas R. Tengdin, CFA
Chief Investment Officer
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