Let Them Test the Market, Mark

[umhurricano]

on average, only 10.2% of the revenue is used to fund the scholarships for the athletes

Of course, NONE of that revenue is actually used on scholarships. Don´t believe me? Then riddle me this: who gives this money to whom?

The universities....ummmmhhh....give themselves the money. It´s an accounting trick for non-profit-status reasons, but colleges don´t actually spend a cent on schollys.


Edit:

Start Minor league football for 18-21 year olds if you don't like the current system.

This is the only part of your post that really makes sense.

I know. The 10.2% is probably calculated by taking the average in COA that a normal student would pay and deducting it

Most of university costs are fixed overhead, so that is the appropriate way to account for it. Paying themselves has nothing to do with taxes since the athletic department is also tax-exempt.

There are also significant overhead costs for running an athletic department that allows the university to generate that revenue. The NCAA is part of that administrative cost. If you look at any business model, cost of labor is rarely the vast majority unless you are in a pure service industry. Football, in a weird way, is actually fairly asset intensive.

 

[umhurricano]

I enjoyed the article, thanks for writing. My primary issue with it is that you assume that if someone generates significant revenue for an enterprise (even a non-profit) and don't receive a large cut of that profit that they are being exploited. It happens all the time in the business environment. In my industry, private equity, which is pure capitalism at its finest, someone lower down can directly generate hundreds of millions of dollars in deals and make in the low six-figures.

To say that it is a categorical imperative that anyone who causes a large amount of money to be generated is owed that money is a stretch because it ignores the external factors necessary for that opportunity (fan base, infrastructure, etc...). I also think a Kant reference in a sports article is a bit of a stretch.

Additionally, the very few athletes who cause incremental revenue jumps don't stay for four years, they are free to leave (except for freshmen) immediately after the season which allowed them to cause that revenue jump and cash in on their success in the nfl. In that case, like the business world, the firm reaping the profits for their success does so because they have given them the platform for being successful. Look at the Dutch soccer clubs who invest millions developing young players across the country and then immediately sell them to Spain, Italy, and England when they take off. It's good business for everyone. A similar thing happens in banking, you have a few good years while being an indentured servant and eventually a hedge-fund comes calling and you make real money.

Market value is a tough thing to determine. There are business who make a lot of money based on workers who are key to the business but don't make a lot of money. I would agree that athletes should be compensated in the form of a reasonable stipend because they work extremely hard. Even on only full scholarship, however, their market value is not grossly overstated except for the small percentage who will go pro. Those players are free to do so if they want true market value (except the incredibly rare freshman who could be an nfl player, which is a straw-man argument).

 

[CaneFan79]

Bottom line: ultimately there needs to be a minor league for football. That is the only true way that football players can "test the market." As it is, CFB is working within a model that is untenable in the long run.

The inherit problem with Minor-league football is obvious: It isn't the moneymaker that college football is...

Remember the WLAF (derisively labeled the "LAF league")?

There has never been a true minor league system for football. CFB has always existed in the landscape of football, and has always siphoned off the top prospects. It has long been the primary feeder for the NFL...without playing ball in college, there is virtually no chance a player will be seen by NFL scouts, which means no chance that players outside the realm of CFB will make it to the NFL.

Without CFB as we know it (or with a greatly reduced CFB that relied only on students who could feasibly get into and make it though college without the need for remedial courses and a system that encourages cheating and cutting corners in the classroom so one can devote time to on-the-field activities), there would be an increased need for a feeder system, and the top players would be able to shop their wares in the market in much the same way baseball players do.

Don't think we would see "NFL D League Gameday" in Wichita, Kansas for the Wichita Riveters vs. the Mobile Shipfitters. Better hope they include the goofy mascots that are the lifeblood of minor league baseball (Full disclosure: I have partial minor league baseball season tickets). College football players are pampered compared to minor leaguers; they would be in for a shock.

Do MLF teams draft from high schools?

Finally, with so much $$$ in college athletics at the big boy schools (O$Uck, Texas, Nike U), who is going to take on these big wheels in public?

 

[wherrera8]

Good job Kyle.

I will say, in regards to your point about jersey's, the guy at All Canes told me that starting next season, jersey numbers will be the number of the year of the season. So the football jersey this upcoming season will be 15, but it's not because of Kaaya. It will work out for us like that, but that's a coincidence.

 

[CaneInHeelCountry]

Bottom line: ultimately there needs to be a minor league for football. That is the only true way that football players can "test the market." As it is, CFB is working within a model that is untenable in the long run.

The inherit problem with Minor-league football is obvious: It isn't the moneymaker that college football is...

Remember the WLAF (derisively labeled the "LAF league")?

There has never been a true minor league system for football. CFB has always existed in the landscape of football, and has always siphoned off the top prospects. It has long been the primary feeder for the NFL...without playing ball in college, there is virtually no chance a player will be seen by NFL scouts, which means no chance that players outside the realm of CFB will make it to the NFL.

Without CFB as we know it (or with a greatly reduced CFB that relied only on students who could feasibly get into and make it though college without the need for remedial courses and a system that encourages cheating and cutting corners in the classroom so one can devote time to on-the-field activities), there would be an increased need for a feeder system, and the top players would be able to shop their wares in the market in much the same way baseball players do.

Don't think we would see "NFL D League Gameday" in Wichita, Kansas for the Wichita Riveters vs. the Mobile Shipfitters. Better hope they include the goofy mascots that are the lifeblood of minor league baseball (Full disclosure: I have partial minor league baseball season tickets). College football players are pampered compared to minor leaguers; they would be in for a shock.

Do MLF teams draft from high schools?

Finally, with so much $$$ in college athletics at the big boy schools (O$Uck, Texas, Nike U), who is going to take on these big wheels in public?

Meh, Gameday only focuses on the top schools as is. We don't see Gameday at Furman or Akron or Wisconsin-Whitewater; they stick to Bama, FSU, Michigan, etc, with the exception of maybe one FCS game per year where some coach is going for a record.

To be sure, it'd take a lot of time to build rivalries in a minor league system, and it'd take some major long-term marketing efforts...but potential partnerships with local NFL teams would generate a fan base over time. And the on-the-field talent would be on par with FBS-level football now.

Keep in mind, I don't think this will happen any time soon. I think we'll keep putting lipstick on the pig. I think we'll keep hearing about "shocking" incidents of academic fraud like at UNC and FSU. I think we'll keep graduating players who can just barely write a complete sentence, and who ultimately get very little out of their college education. I think we'll keep hearing about players getting new cars and houses for their families and wads of cash on the low.

But the truth is that CFB is broken; the NCAA itself is broken, specifically because it cant handle the massive boondoggle of CFB. The only way that players will truly be able to "test the market" is to dissolve CFB as we know it and build up a minor league system.

 

[CaneFan79]

Bottom line: ultimately there needs to be a minor league for football. That is the only true way that football players can "test the market." As it is, CFB is working within a model that is untenable in the long run.

The inherit problem with Minor-league football is obvious: It isn't the moneymaker that college football is...

Remember the WLAF (derisively labeled the "LAF league")?

There has never been a true minor league system for football. CFB has always existed in the landscape of football, and has always siphoned off the top prospects. It has long been the primary feeder for the NFL...without playing ball in college, there is virtually no chance a player will be seen by NFL scouts, which means no chance that players outside the realm of CFB will make it to the NFL.

Without CFB as we know it (or with a greatly reduced CFB that relied only on students who could feasibly get into and make it though college without the need for remedial courses and a system that encourages cheating and cutting corners in the classroom so one can devote time to on-the-field activities), there would be an increased need for a feeder system, and the top players would be able to shop their wares in the market in much the same way baseball players do.

Don't think we would see "NFL D League Gameday" in Wichita, Kansas for the Wichita Riveters vs. the Mobile Shipfitters. Better hope they include the goofy mascots that are the lifeblood of minor league baseball (Full disclosure: I have partial minor league baseball season tickets). College football players are pampered compared to minor leaguers; they would be in for a shock.

Do MLF teams draft from high schools?

Finally, with so much $$$ in college athletics at the big boy schools (O$Uck, Texas, Nike U), who is going to take on these big wheels in public?

Meh, Gameday only focuses on the top schools as is. We don't see Gameday at Furman or Akron or Wisconsin-Whitewater; they stick to Bama, FSU, Michigan, etc, with the exception of maybe one FCS game per year where some coach is going for a record.

To be sure, it'd take a lot of time to build rivalries in a minor league system, and it'd take some major long-term marketing efforts...but potential partnerships with local NFL teams would generate a fan base over time. And the on-the-field talent would be on par with FBS-level football now.

Keep in mind, I don't think this will happen any time soon. I think we'll keep putting lipstick on the pig. I think we'll keep hearing about "shocking" incidents of academic fraud like at UNC and FSU. I think we'll keep graduating players who can just barely write a complete sentence, and who ultimately get very little out of their college education. I think we'll keep hearing about players getting new cars and houses for their families and wads of cash on the low.

But the truth is that CFB is broken; the NCAA itself is broken, specifically because it cant handle the massive boondoggle of CFB. The only way that players will truly be able to "test the market" is to dissolve CFB as we know it and build up a minor league system.

https://www.canesinsight.com/threads/81505-Peak-College-Football?highlight=peak+college+football

Been there...

 

[tokengator]

I enjoyed the article, thanks for writing. My primary issue with it is that you assume that if someone generates significant revenue for an enterprise (even a non-profit) and don't receive a large cut of that profit that they are being exploited. It happens all the time in the business environment. In my industry, private equity, which is pure capitalism at its finest, someone lower down can directly generate hundreds of millions of dollars in deals and make in the low six-figures.

To say that it is a categorical imperative that anyone who causes a large amount of money to be generated is owed that money is a stretch because it ignores the external factors necessary for that opportunity (fan base, infrastructure, etc...). I also think a Kant reference in a sports article is a bit of a stretch.

Additionally, the very few athletes who cause incremental revenue jumps don't stay for four years, they are free to leave (except for freshmen) immediately after the season which allowed them to cause that revenue jump and cash in on their success in the nfl. In that case, like the business world, the firm reaping the profits for their success does so because they have given them the platform for being successful. Look at the Dutch soccer clubs who invest millions developing young players across the country and then immediately sell them to Spain, Italy, and England when they take off. It's good business for everyone. A similar thing happens in banking, you have a few good years while being an indentured servant and eventually a hedge-fund comes calling and you make real money.

Market value is a tough thing to determine. There are business who make a lot of money based on workers who are key to the business but don't make a lot of money. I would agree that athletes should be compensated in the form of a reasonable stipend because they work extremely hard. Even on only full scholarship, however, their market value is not grossly overstated except for the small percentage who will go pro. Those players are free to do so if they want true market value (except the incredibly rare freshman who could be an nfl player, which is a straw-man argument).

Honestly this sounds like a bunch of excuses. You said market value is hard to determine? No it isnt, open it up and it will seek its own level. Boom. It is determined.

You said athletes cause few incremental revenue jumps...what the **** does this matter? Is an athlete part of a team generating substantial income, yes or no?

You are over complicating the matter.

And you ignore the biggest issue (at least for me) and what Athletes should be allowed to capitalize on AWAY from the school. It is ******* criminal that the NCAA doesn't allow a kid to go do a commercial, **** the restrictions just getting a job are ridiculous.

if DUke Johnson is worth 25K to Arrigo Dodge to do their commercial, the NCAA has no ******* right to say he can't do that or lose his eligibility. They may think they do and I am sure they have a team of lawyers that will make an argument that they do, but it should leave a bad taste in the mouth of every american.

Meanwhile the NCAA is capitalizing on the likeness of those players (most recently lost a case regarding sports games) with jersey sales, the nfl is getting free marketing (marketing they have to pay NFL players for when they get there) etc.

 

[User-4525]

Hit on a lot of the same points

@dennisdoddcbs: Before the ball tips tonight, watch this from HBO's John Oliver. Required viewing. https://t.co/hdpKWzaF3k

 

[AzorianCane]

I enjoyed the article, thanks for writing. My primary issue with it is that you assume that if someone generates significant revenue for an enterprise (even a non-profit) and don't receive a large cut of that profit that they are being exploited. It happens all the time in the business environment. In my industry, private equity, which is pure capitalism at its finest, someone lower down can directly generate hundreds of millions of dollars in deals and make in the low six-figures.

To say that it is a categorical imperative that anyone who causes a large amount of money to be generated is owed that money is a stretch because it ignores the external factors necessary for that opportunity (fan base, infrastructure, etc...). I also think a Kant reference in a sports article is a bit of a stretch.

Additionally, the very few athletes who cause incremental revenue jumps don't stay for four years, they are free to leave (except for freshmen) immediately after the season which allowed them to cause that revenue jump and cash in on their success in the nfl. In that case, like the business world, the firm reaping the profits for their success does so because they have given them the platform for being successful. Look at the Dutch soccer clubs who invest millions developing young players across the country and then immediately sell them to Spain, Italy, and England when they take off. It's good business for everyone. A similar thing happens in banking, you have a few good years while being an indentured servant and eventually a hedge-fund comes calling and you make real money.

Market value is a tough thing to determine. There are business who make a lot of money based on workers who are key to the business but don't make a lot of money. I would agree that athletes should be compensated in the form of a reasonable stipend because they work extremely hard. Even on only full scholarship, however, their market value is not grossly overstated except for the small percentage who will go pro. Those players are free to do so if they want true market value (except the incredibly rare freshman who could be an nfl player, which is a straw-man argument).

I wanted to take the time thank you for a cogent, intelligent, articulate and overall excellent post. Well done.

 

[User-4525]

I enjoyed the article, thanks for writing. My primary issue with it is that you assume that if someone generates significant revenue for an enterprise (even a non-profit) and don't receive a large cut of that profit that they are being exploited. It happens all the time in the business environment. In my industry, private equity, which is pure capitalism at its finest, someone lower down can directly generate hundreds of millions of dollars in deals and make in the low six-figures.

To say that it is a categorical imperative that anyone who causes a large amount of money to be generated is owed that money is a stretch because it ignores the external factors necessary for that opportunity (fan base, infrastructure, etc...). I also think a Kant reference in a sports article is a bit of a stretch.

Additionally, the very few athletes who cause incremental revenue jumps don't stay for four years, they are free to leave (except for freshmen) immediately after the season which allowed them to cause that revenue jump and cash in on their success in the nfl. In that case, like the business world, the firm reaping the profits for their success does so because they have given them the platform for being successful. Look at the Dutch soccer clubs who invest millions developing young players across the country and then immediately sell them to Spain, Italy, and England when they take off. It's good business for everyone. A similar thing happens in banking, you have a few good years while being an indentured servant and eventually a hedge-fund comes calling and you make real money.

Market value is a tough thing to determine. There are business who make a lot of money based on workers who are key to the business but don't make a lot of money. I would agree that athletes should be compensated in the form of a reasonable stipend because they work extremely hard. Even on only full scholarship, however, their market value is not grossly overstated except for the small percentage who will go pro. Those players are free to do so if they want true market value (except the incredibly rare freshman who could be an nfl player, which is a straw-man argument).

First it's not just someone it's all the student athletes that making money for their school. I used specific examples but there are hundreds of athletes at each school. Second, they are not receiving anything in return. In your example the person is still getting back 6 figures. Over the next month 1020 student athletes are going to generate over 1 billion dollars (much larger than your example) and receive NONE.

Also only basketball players are free to leave after one year. In addition to that I completely disagree that only freshman cause big bumps in revenue. Look at Grant from Notre dame, WCS from Kentucky, Frank K from Wisconsin, Shabazz Napier from UCONN, Kemba walker from UCONN, JJ reddick from Duke, adam Morrison from gonzaga, Marcus Paige from UNC, shane Larkin from UM, Tyler Hansbrough from UNC, Blake Griffin from OU, and so on. And since an athlete causes an revenue jump for 3 years instead of four is more acceptable now? Furthermore, besides the revenue jump, these athletes are giving numerous amounts of long term benefits to the school after they leave. Football and baseball players have to stay for three years.

I really don't believe your comparisions to professional leagues are fit because the student athletes receive nothing while less than 2% of them go pro. We need to protect both the athletes that will go pro and the ones that spend their 4 years working hard at the university. I really don't believe my Kant reference was a huge stretch and I think you misrepresented in your post. As I stated multiple times, there is untapped promotion, advertising, gaming licensing, and much more that current student athletes would be allowed to receive if they weren't stricted by the NCAAs rules. That untapped money has nothing to do with the current pool. And in order to keep their "amateurism" the ncaa could keep players from receiving that money earned till post-graduation or only see a portion of it (cost of living) in school. But that current pool is also being generated completely off all of the players personality rights and outstanding abilities.

We do agree on the stipends and I thank you for reading my article. I believe stipends, reduced education for their kids (conferences or even the power 5 or the whole ncaa could set up a plan where if an athlete goes their for X amount of years their kids receive reduced tuition), extended healthcare is necessary as seen in the video I linked above, etc. While the ones with pro potential are obviously being exploited more than others, I want to protect all the students athletes.

 

[umhurricano]

1. There are hundreds of athletes at each school just like there are hundreds of workers in most businesses generating similar revenues and profits to a typical athletic department. If you look at many medium sized businesses that generate in the tens to hundreds of millions of dollars, most of the workers earn under $50k a year, yet the company revenue would not be generated without those workers. The cost of a private school education is generally higher than $50k/year, if you include room and board, so their reimbursement is on par if not above what someone in the working world would receive.

2. I did not say only freshman cause incremental revenue bumps, but think about the guys who are truly special, enough to generate substantially more revenue for a program. They typically (but not always) declare as underclassman. If they choose to forgo nfl money, that is on them and has nothing to do with the fairness of the system. Your example of non-freshman stars augment my point in the sense that they benefited greatly from the college system. None of them were worth much to pro franchises before getting to play for a few years, but were valuable after going through the system. Should they have been paid a large sum before anyone thought they were good?

3. I also acknowledged that freshman are not free to leave in college football, but they can in college baseball, which means in 2 of the 3 big revenue sports you can cash in immediately. Football seems like a bit of a straw man because very few freshman football players are pro-ready, so crafting a system around a handful of athletes out of tens of thousands is not tenable. Other than the draft, what system would you propose for identifying and valuing those players? I can think of a recent SEC player of the year, and a less recent Heismann trophy winner who were valuable to their schools but no professional franchise wanted.

4. To you and token gator's point about making money off the images of high profile student athletes: I agree that it appears unfair on its face. The problem is, however, that there is too much opportunity for boosters to exploit that channel of income. How do you draw a line that says allowing Duke Johnson to be a spokesman for Morooney atuo is permissible, while every car dealer in Alabama can't sign a similar contract with each incoming Alabama freshman? The field of competition would tilt even further in favor of high donor base schools who could afford to pay every player, which would destroy the system. I stand by my point that universities allow an athlete to raise his profile and the time that athlete is limited from cashing in on that success is so limited (many times it is only the duration of one season, and would be deferred rather than foregone income (i.e., Duke can now sign the same spokesman deals)), except by personal choice, that allowing that kind of monetization would be of marginal benefit to the athlete and create a serious line-drawing problem for collegiate athletics.

Ironically, I think it is the athlete who are just below elite who are hurt the most, because their profiles are highest while in college and they quickly fade into obscurity if they don't make an nfl team.

All that being said, we definitely agree that athletes should receive greater benefits for profit generating sports. It is less clear to me that it should be the case for others. I know several athletes for whom the benefit of a free ride and relaxed admission rigor was well worth what they put in to their collegiate athletic careers without taking a greater risk than their peers took playing intramurals.

I appreciate the time you took to respond and enjoyed the dialogue.

 

[RickDerris]

 

[User-4525]

Agreed about the dialogue UmH.


Also saw this today