The Great Player Union Debate

As writers and commentators churn out seemingly endless speculation and opinion about player unions and paying players it is hard to notice that the arguments all fail to address two fallacies that underlie the debate.

Fallacy #1
100% of revenue is attributable to the players

Simple exercise. How many people wearing the jersey of the superstar player at Bama go out and buy a new version of his jersey if he transfers to Auburn? The number is somewhere between 0 and the number of relatives and truly close friends he has.

The schools have created the brand that people buy. Players enhance the brand when they are successful but take 170 Los Angeles high school players, put 85 in USC uniforms and 85 in UCLA uniforms and tell everyone USC and UCLA are playing tonight and it will draw a crowd.

Schools protect the brand of players because the NCAA says you must, they protect their own brand because it is money.

The majority of people donating, buying tickets and purchasing merchandise were buying from the school before anyone at Scout, Rivals, or 247 had heard of the kids on the team, generally before their junior high coach met them.

Revenue truly generated by current players is a fraction of revenue. ESPN and Fox have signed long-term contracts and they are promising to pay the conferences to telecast games of players who aren't in junior high yet.

That fits the O'Bannon lawsuit (to be paid for use of player likeness) storyline better than the Northwestern player union storyline because the TV value is determined by the network's projections of future value based on the past performance of players no longer in school.

Fallacy #2
Pretending intercollegiate athletics is a free market economy

USA Today consistently finds that around five schools operate their program exclusively on self-generated income. Even if an athletic department is operating annually on current self-generated revene that ignores the decades when those programs operated out of the university budget.

In a market economy the owner/investor will tolerate financial losses and cash calls for only a limited time. Many athletic departments have operated for more than 100 years and are still making cash calls and taking financial losses. That doesn't happen in a free market economy.

In most cases, the athletic department does have its facilities on land purchased by the athletic department. The land was acquired by the university and the athletic department operates the facilities there but does not own the land. In many cases the athletic department did not even pay for the facilities or the early facilities. Remember LSU's stadium was a dormitory with sloping sides that "happened" to accomodate bleachers. Razorback Stadium was initially built as a Federal WPA project.

Athletics is not profit-driven, it is revenue driven. Rather than attempting to achieve the greatest return on investment for investors, the system is driven to maximize revenue in order to increase expenses. An employer in a collective bargaining system hopes to suppress wages to maximize profit.

No profit motive exists, rather the driving force behind the "compensation" structure employed by colleges is driven more by a desire to prevent competitors from gaining undue advantage. Oregon State is going to "compensate" players at any level that is within their budget capability that is allowed by the rules, their concern is Oregon compensating their players at a higher rate than they do throwing the competitive balance between them further out of kilter.

Intercollegiate athletics operates in a strange world of regulation. If all you want to do is sign 85 football players and 13 basketball players and play at the top level, you are required to offer at least 14 additional sports and award an additional 102 athletic scholarships just to participate. You cannot even enter that particular marketplace unless you are an accreditted four year college and you must demonstrate sufficient oversight by the academic institution to be permitted to operate.

The solution needed is not pounding a square peg into a round hole by utilizing a framework designed to balance power between an employer driven by profit maximization and employees seeking not just better wages but job security over their working lifetime.

Any solution has to be unique to this unusual marketplace. It has to recognize that the brand developed by the college is the primary driver of revenue production and that the student-athlete is in reality far more often student than minor league athlete than the cynics want to claim and recognizes that student-athletes have before them an opportunity to change their career opportunities and life-time earnings whether they are among the few to advance to professional athlete status or not. There is a need for a solution that greater respects their student status and provides them with more stability than some programs choose to offer. But there will be no solution until the parties take a realistic view of the enterprise.