A March Madness Underdog: Free EnterpriseThe ESPN analyst and former Duke star on why players should be paid and how to overhaul the ‘exploitive’ NCAA.
By Allysia Finley
Updated March 27, 2015 6:44 p.m. ET
Bristol, Conn.
http://www.wsj.com/articles/allysia-finley-a-march-madness-underdog-free-enterprise-1427493090March Madness—the manic three-week tournament that culminates each college basketball season—may be the most celebrated vernal rite in the U.S. other than Easter. Last year’s games averaged 10.5 million viewers, with more than 21.2 million fans tuning into the championship between the universities of Connecticut and Kentucky.
The National Collegiate Athletic Association (NCAA) will rake in about $800 million from the broadcasting rights to this year’s tournament—a more than 500% increase from two decades ago. Yet this represents a mere sliver of the nearly $12 billion in revenues that flow annually through college athletic programs—principally, men’s football and basketball.
“This is a multibillion-dollar business. It’s professional in every way except in how the athletes are treated,” asserts ESPN’s pre-eminent college basketball analyst, Jay Bilas, who played center for Duke from 1982 to 1986. The straight-shooter doesn’t waste time getting to his point: “When you are profiting off someone else while restricting them from earning a profit, that’s exploitation.”
Decked in a warm-up suit and Los Angeles Dodgers baseball cap (he would change into business attire for “SportsCenter” an hour later), Mr. Bilas sat down with me at ESPN’s headquarters to discuss the future of the NCAA and college basketball. When not calling games or analyzing them, the Duke grad practices commercial law, a background that underlines his views about the governing body of college sports. To wit, the NCAA has become unwieldy and inequitable, to the detriment of basketball. His solution? Make the NCAA operate more like the free market and less like an overfed government bureaucracy.
The chief debate in college sports is whether players should be paid. Current and former college athletes led by ex-UCLA basketball forward Ed O’Bannon have sued the NCAA under the Sherman Antitrust Act for selling the use of their names and likenesses to broadcasters and videogame makers without giving players a cut. Under the pretext of preserving amateurism, the NCAA prohibits college athletes from earning compensation tied to their performance.
Mr. Bilas thinks the rules are hogwash. “No other student on any campus is restricted from earning whatever they can earn in whatever area they can earn it,” he notes. That includes techies, musicians and actresses like Emma Watson, who earned millions for playing Hermione Granger in the “Harry Potter” movies while attending Brown University.
Federal judge Claudia Wilken ruled last August that colleges could put money into trusts for players, payable when they leave the team. But she held that the NCAA could cap the amount at $5,000 per player annually. Last week the Ninth Circuit heard the NCAA’s appeal, though a ruling isn’t expected for at least several weeks.
Mr. Bilas praises Judge Wilken for smacking down the NCAA’s “industrywide wage restriction,” but he says the ruling is “flawed” in some respects and the $5,000 cap “arbitrary.” To be clear, he emphasizes, “I’m not advocating and never have that athletes should be paid. It might be a distinction without a difference to some, but what I’m saying is that it shouldn’t be disallowed.”
Under Mr. Bilas’s ideal system, college athletes would be paid what the market deems them to be worth. They could earn remuneration from the colleges and cash in on endorsement deals like their professional counterparts. Critics of that idea, including the NCAA, argue that this would corrupt college sports. President Obama last weekend weighed in on the debate by declaring that compensating athletes would “ruin the sense of college sports” and create “bidding wars” for players. The fear is that deep-pocketed programs will be able to buy up the best players, which would make smaller colleges less competitive.
Mr. Bilas scoffs: “What they are calling a ‘bidding war,’ the rest of the world calls business,” he says. “What most reasonable economists would say is: ‘No, actually, if these universities could pay, the smaller, lesser universities would have better opportunities. They could marshal their resources.’ ” For example, he says, Wichita State can’t compete for players with the University of Kansas. However, if colleges could pay, Wichita State might be able to offer the Jayhawks’ third recruit a better salary and poach him.
Mr. Bilas argues that schools are, in a sense, already competing like this. There are no restrictions on coaches’ compensation. “Should we not have nicer facilities at the bigger schools because the smaller schools can’t afford them?” he asks. Point taken.
Across the landscape, outlays for coaching and facilities have risen astronomically as revenues have soared. Consider the University of California, Los Angeles, whose athletics department generated $84 million in 2013. The university spent $31 million on coaching staff. Football coach Jim Mora earned $3.25 million, four times what the head coach made in 2006. Last year UCLA completed a $136 million renovation of its Pauley Pavilion basketball stadium. In contrast, only $11.6 million was spent on scholarships—across all sports.
Median revenues at the top 120 NCAA Division I programs doubled to $56 million in 2012 from 2004. More than a dozen college-sports programs gross over $100 million a year. Mr. Bilas predicts that the pot will continue to expand. “Nobody could imagine when I was a kid that people would be paying $100 for a ticket to a college-football game—and they’re doing it,” he says.
But he stresses that his beef isn’t that the raw totals are too high; it’s that the ban on paying players skews the market and misallocates resources. For instance, some college basketball players might not bolt for the NBA after one year if they could get paid. “It’s a huge distortion because they don’t pay their primary revenue drivers, which is the players,” he explains. “The NBA doesn’t pay as much for coaches” or “build the facilities that college builds.”
Further, he argues that the compensation ban encourages rather than deters corruption. Many universities, such as Syracuse and the University of Southern California, have been sanctioned by the NCAA because athletes received money under the table. “Right now a player is prohibited from having an agent,” Mr. Bilas says. “That means the only contact an athlete is going to have is with unethical ones because the ethical agents are on the sidelines.”
Under the Bilas system, colleges and athletes would negotiate contracts that could include a noncompete clause, to induce players to stay for their full college terms, and a behavior clause in case they run afoul of the law. Athletes could unionize if they want, as football players at Northwestern University last year sought the approval of the National Labor Relations Board to do.
“The rest of the world operates in a free market. It’s really not that big of a deal. It’s amazing how we can all handle this free-market system, but the athletes can’t,” Mr. Bilas exclaims. Opponents of paying athletes, he says, act as if “the world is going to spin off its axis, that dogs and cats are going to be living together—all these doomsday scenarios.” The real reason why the NCAA is fighting the free market, he says, is that “they don’t want to lose control of the money.”
This brings us to the structure of the 105-year-old institution, which may be due for a revolution or constitutional convention. “A couple of years ago, the NCAA spoke with such pride about reducing the rule book by a few pages,” Mr. Bilas says, “but it’s still bigger than the phone book”—407 pages for the Division I manual. The result is a bloated and intractable bureaucracy.
Case in point is college basketball, which spectators and analysts including Mr. Bilas have criticized for its slow tempo and low scoring. Teams have averaged 67.1 points this season through Feb. 22—a 60-year nadir, according to Sports Illustrated. Average possessions per 40-minute game have fallen by 6.5% since 2002. Average attendance has been declining for the past seven years and dropped last season to a record low. Broadcasting revenues have increased, but that is in part because there are more televised games.
Mr. Bilas faults the unduly long 35-second shot clock in the college men’s game. In women’s college basketball, the shot clock is 30 seconds. In the NBA and international leagues, players have 24 seconds. “The game is not adapting. Every other game has adapted,” says Mr. Bilas. “The international game just put in a rule that if you get an offensive rebound, the shot clock doesn’t reset to 24. It resets to 14 because you don’t have to bring the ball up.”
College basketball needs a commissioner like the pros have, he says, rather than just sundry committees with diffuse responsibilities. As Alexander Hamilton observed, there is energy in the executive. Mr. Bilas would also bar coaches from sitting on the rules committee. By his telling, the NCAA presents a classic case of regulatory capture, with coaches tailoring the rules to their liking.
He also recommends that the NCAA leave academics alone. “The NCAA is an athletic association. What they should be doing is staying in their lane and administering athletic competition. They’re not an accreditation service,” he says.
OK, but doesn’t the NCAA have an obligation to prevent the kind of egregious, systematic cheating that spanned two decades at the University of North Carolina at Chapel Hill? In 2011, it was revealed that the head of the African and Afro-American Studies department had conspired to give thousands of students, including many athletes at risk of losing eligibility, credit for no-show classes. “Now, there may have been athletic benefits . . . but are we really going to ask coaches to monitor the conduct of academic departments?” Mr. Bilas asks. “Shouldn’t chancellors, presidents and provosts be responsible for that?”
Too often, Mr. Bilas argues, the NCAA plays the name-and-shame game and throws the book at rulebreakers to promote its self-image—which in his opinion is a sham—as a high-minded institution. Earlier this year, Syracuse was punished mainly because athletics department staff members improperly assisted a few basketball players with their course work. The NCAA suspended basketball coach Jim Boeheim for nine games, vacated 108 wins since 2004 and eliminated 12 scholarships over the next four years. “There were clearly rules violations,” says Mr. Bilas, but “the penalties were disproportional.” He likens the episode to “saying I was speeding, and I admit that I was speeding, so we’re going to deem that a felony, and you’re going to spend 10 years in jail.”
As for the argument that colleges are failing to provide students with a marketable education, Mr. Bilas believes that it is “up to each individual to get an education. Where I think the exploitation comes from is when you are running a multibillion-dollar business and everyone gets their fair-market value except the athlete.”
Mr. Bilas’s least controversial opinion may be his prediction that the undefeated Kentucky Wildcats will win the tournament. But like his other views, this pick seems logical.
Ms. Finley is an editorial writer for the Journal.
