The Economics of Sport
  • Sports Economics
  • About
  • Workshop
  • Selected Publications
  • Book Reviews
  • A Primer on Gaelic Games
  • Upcoming Events
  • Media
  • Education
  • Resources & Links
  • Data

Corruption in the National College Association (NCAA)

28/2/2018

 
Picture
By Stephen Brosnan

Recently, I discussed how the rules governing the National Basketball Association (NBA) draft system have contributed to the phenomenon of ‘tanking’ in the NBA. Tanking involves NBA organisations implementing a strategy of losing games on purpose with the aim of securing a high draft pick in the following season’s draft. Last week, another scandal has rocked the NBA with the news that several universities, players, coaches and agents have been implicated in FBI surveillance focused on ‘loans’ paid to NCAA players by agents. The players involved include LA Lakers forward Kyle Kuzma, Dallas Mavericks point guard Dennis Smith Jr., and the Philadelphia 76’s number one overall draft pick, Markelle Fultz.

The scale of the corruption has many commentators questioning the amateur structure of NCAA teams. Under NCAA rules, college players cannot receive any financial compensation for playing college basketball. This is despite the fact the college basketball is a multi-million dollar business which generates revenue for both universities and coaching staff. Louisville coach Rick Pitino is the highest paid NCAA coach in 2018, earning an annual salary of over $7 million. Overall, there are 40 NCAA coaches earning $1 million or more per year. The NCAA tournament, known as March Madness, is an American sports extravaganza which is a single-elimination tournament featuring 68 college basketball teams to determine the national championship. The tournament has grossed $19.6 billion in TV money for the NCAA Tournament over the past 22 years.

The NCAA model has contributed to the creation of what economists call a ‘black market’. A black market is a market characterised by some form of illegality or noncompliance with an institutional set of rules. The NBA requires players entering the draft to be at least 19 years of age which has produced one-and-done players that play college basketball for one year before declaring for the draft. As such, recruiters, agents and managers with an in-depth knowledge of the NCAA market can identify the likely NBA draft picks. Highly coveted college players offer an essentially risk free investment to an agent. Given the salaries earned by players on their rookie contracts is likely to be tens of millions of dollars, the agent will hope to recoup his ‘loan’ as well as a percentage of future earnings.

The latest controversies surrounding payments to NCAA players has led to a number of proposed solutions to:
  1. A reduction in the age limit required to enter the NBA draft which will reduce the number of one-and-done players i.e. those most likely to receive payments.
  2. An introduction of player salaries in college basketball in line with revenues generated through the basketball programs.
  3. Allowing college players to generate their own incomes through sponsorships etc.
  4. Increased regulation in the market for NCAA players with increased punishment for universities and players found in breach of the rules.
The financial implications for universities, advertisers and media companies will likely lead to changes being made in the near future. CBS and Turner, a division of Time Warner, having extended their media rights deal with the NCAA for $8.8 billion over eight years. While previously being considered a safe bet in terms of TV ratings, with the current scandal there is a fear surrounding ratings and advertising dollars for March Madness should star players and teams miss the tournament.


Comments are closed.

    Archives

    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013

    About

    This website was founded in July 2013.

    RSS Feed

    Categories

    All
    American Football
    Athletics
    Baseball
    Basketball
    Behavioural Economics
    Boxing
    Broadcasting
    Competitive Balance
    Cricket
    Cycling
    Darts
    David Butler
    Declan Jordan
    Drugs
    Ed Valentine
    Epl
    Esports
    Expenditure
    F1
    Fifa World Cup
    Finances
    Funding
    Gaa
    Gaelic Games
    Gambling
    Game Theory
    Gary Burns
    Geography
    Golf
    Greyhound Racing
    Guest Posts
    Horse Racing
    Impact Studies
    John Considine
    John Eakins
    League Of Ireland
    Location
    Media
    Mls
    Mma
    Olympics
    Participation
    Paul O'Sullivan
    Premier League
    Regulation
    Research
    Robbie Butler
    Rugby
    Simpsonomics
    Snooker
    Soccer
    Spatial Analysis
    Sporting Bodies
    Stephen Brosnan
    Swimming
    Taxation
    Teaching
    Technology
    Tennis
    Transfers
    Uefa
    Ufc
    World Cup
    Wwe

Related

The website is not formally affiliated to any institution and all of the entries represent the personal views and opinions of an individual contributor. The website operates on a not-for-profit basis. For this reason we decline all advertisement opportunities. 

Contact

To contact us email sportseconomics2013@gmail.com or find us on Twitter @SportEcon.