College athletes and the NCAA

I submitted the following letter to the WSJ:

I concur with Richard Vedder and Matthew Denhart regarding the exploitation of college athletes. After reading The Blind Side by Michael Lewis about football player Michael Oher and the grief the Touhy family received from the NCAA for taking him off the streets and providing him with the structure he needed to become a star left tackle, I’ve become extremely suspicious of the NCAA’s rules. These rules are sold as being in the best interest of the athletes, though many times they are far from it. To add to the list of pay limits and transfer restrictions given by Messrs Vedder and Denhart, allow me to add what I consider to be just as egregious: rules that not only effectively force athletes to conscribe to the NCAA’s game but also heavily penalizes them if decide to leave early.

The NCAA, for all intents and purposes, is a monopsony, or, one buyer with many sellers. It has achieved this by convincing the NFL and NBA to prevent high school athletes from skipping college by making them ineligible for the professional ranks until they are a year or two removed from high school. In addition to that, the NCAA also discourages players from turning pro early by preventing them from returning to school under many circumstances, such as in the frequent event of an unsuccessful draft night. If they were really looking out for the best interests of the players, the NCAA would not disallow those athletes from returning to college over a youthful mistake, permanently cutting many off from what is likely their only opportunity to obtain a university diploma. Instead, these players would be permitted to come back to school, so they can better prepare themselves for the next level, whether it is professional sports or some other career. I wish it were so that the NCAA was looking out for the athletes, but in many instances it appears that it’s simply looking out for the business of college sports.

Matt Hutchison

The article to which I was responding is here. These are the important paragraphs:

Take Kevin Durant, for instance. After a stunning freshman season with the Texas Longhorns in 2008, Mr. Durant elected to forgo his final three years of college and entered the NBA draft. Selected by the Seattle Supersonics (now the Oklahoma City Thunder), he agreed to a contract paying $3.5 million in the first year. By contrast, his yearly compensation (in the form of room, board, books and tuition fees at Texas) amounted to about $33,120, less than 1% of what was offered by the Supersonics.

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In a competitive market, companies cannot exploit workers in this way for long, as rival firms will hire them away at higher salaries. In basketball, however, the NCAA cartel prevents that, dictating limits on pay (essentially college costs) and even penalizing transfers to other schools. Strict rules also prevent college athletes from signing lucrative endorsement deals or accepting gifts beyond a certain amount. Soon after entering the NBA, Mr. Durant further augmented his earnings by signing a $72 million deal with Nike; he inked other endorsement contracts with Gatorade, EA Sports and Upper Deck.