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Solving the Coaching Pay Problem

This last weekend Adrian Wojnarowski penned a column examining the salaries of college coaches. In this column is the following statement: “NCAA president Myles Brand threw up his hands this week and said that the NCAA could do nothing to stop the runaway salaries (of coaches) in his sport.”

Certainly, with a bit of thought, I think we can figure out how to solve Brand’s problem. Let me start by noting that in many states the highest paid state employee is a college basketball or football coach. It’s now unsurprising to find a college coach making 5 to 10 times (or more) what a university president makes. What is surprising is that college coaches are now being paid salaries similar to what the pros pay.

Why is this surprising? In discussing the salary Nick Saban is scheduled to be paid by the University of Alabama, Andrew Zimbalist observed the following: “The average I-A football team earns about $15 million a year in revenue; the average N.F.L. team earns about $160 million. How can a college coach create as much value as an N.F.L. coach?”

Where does the money come from to pay the college coach? The salary cap in the N.F.L. has now passed $100 million. An average N.B.A. team pays more than $60 million to its players. This gives us some idea how much a professional team incurs in labor costs. An NCAA football or basketball team, though, does not have this cost. Consequently, although the revenues are less, because colleges are not fully compensating their workers, these institutions are able to pay coaches a salary that compares with what the pros pay.

So what can the NCAA do? The NCAA made an effort to restrict salaries for assistant coaches only to learn that this is illegal. One suspects that similar restrictions on the pay to head coaches would also be challenged in court.

Given that the NCAA cannot pass a rule to restrict salaries, they must look elsewhere for a solution. And looking around, the answer should suddenly be obvious. It’s time to pay the players. The research of Robert Brown and Todd Jewell indicates that a future NBA first round draft choice will generate more than $1 million in revenue each year in college (and this was based on data from 1996, so the $1 million figure understates the revenue generation occurring today). Clearly this sum greatly exceeds the cost of a scholarship. Because the NCAA does not compensate the players for the money being generated, this money has to go elsewhere. It seems reasonable that much of this money is currently flowing into the pockets of the coaches. But if the players were paid, the money would not be available to the coaches, and consequently wages paid to coaches would decrease.

It’s important to remember that we were not watching the coaches during the Final Four. The Final Four was about players like Greg Oden and Joakim Noah. Yet if these players stay in school, the revenue they generate will continue to go to their coaches and universities. (Well, in Noah’s case, it might not c0ntinue to go to his coach. Billy Donovan may indeed be going himself, to a program like Kentucky – where the grass may be greener and the piles of money just a bit higher.)

The NCAA needs to stop pretending that the revenue sports like football and basketball are primarily about education. Coaches do not get fired because the education of their players is suffering. And Billy Donovan is not being recruited by Kentucky because of his impact on graduation rates. Coaches are hired and fired because of wins. And these wins, and the corresponding revenue wins generate, come from the players. If the NCAA simply did what every other business has to do – i.e. pay its workers – the salaries of coaches would fall, the players would keep the money they generate, and the NCAA’s futile quest to enforce rules that everyone has an incentive to break could be ended.

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