The latest scandal in college sports involves Johnny Manziel of Texas A&M. ESPN has reported that the 2012 Heisman Trophy winner was paid to autograph hundreds of items. If this is true, then Manziel has violated the NCAA rule that prohibits the payment of student athletes. As a consequence, Manziel could be ruled ineligible to play college football.
It seems odd that Manziel could be banned from playing football for earning thousands of dollars. After all, as Michele Steele of ESPN reported last December, schools can earn millions of dollars from one of their players winning the Heisman. If the schools can earn millions, why can’t “Johnny Heisman” take home thousands?
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The NCAA often defends this odd arrangement in the name of competitive balance. If players are paid, the richest schools will end up with all of the top talent. And when that happens, the outcomes of games will be more certain and far less interesting. But the data shows that a small number of schools dominate year after year anyway with the ban in place, according to a 2007 study by economist Jim Peach. For example, in college football from 1950 to 2005, just 10 schools held 45% of all the top-eight slots in the final Associated Press rankings.
Essentially the same story was told in men’s basketball, where 45% of all Final Four spots from 1950 to 2005 again went to just 10 schools. The same pattern held true in baseball, men’s volleyball, women’s basketball, women’s volleyball and softball. Competition is unbalanced because the poorest schools are not competing, and if we apply some basic economics, we can see that the NCAA’s prohibition on paying players is part of the problem.
A competitive market uses prices to allocate resources. But if price increases are not allowed, then nonprice issues will dictate the allocation of resources. To see which nonprice issue matters in college sports, consider the 2013 recruiting class of the men’s basketball team at the University of Kentucky. ESPN.com reports that of the top nine high school recruits, five signed with Kentucky. And Kentucky also added another player ranked in the top 25.
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Kentucky’s recruiting class in 2013 suggest that high school stars are looking at whether or not their college team will win in choosing which school to attend. This choice doesn’t simply reflect a preference for winning over losing. In the NBA draft, academic research shows, players from Final Four teams are 10 times more likely to be chosen than players who did not advance to the Final Four. How does a player increase the odds he can get to the Final Four? Go to teams that recruit other top talents. And who recruits top talents? Teams that historically went to the Final Four. It’s a vicious cycle that helps the top schools remain on top year after year.
If players were paid, market forces would work against this tendency. The University of Kentucky would offer top money to a few recruits, but only five can take the court at any one time. As Kentucky tries to keep adding top talent, the value of each additional player to Kentucky must decline. And consequently, another school — even one with less money — will be able to make an offer that will top what Kentucky would be willing to pay.
Of course, some might lament the intrusion of money into the sanctity of college sports. But the vast sums already going to the schools makes it clear that money has already intruded. If some of this money were to go to the players, the Manziel scandal would be a nonstory. And maybe the NCAA would actually be able to offer a more competitively balanced product.
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