Bent or broken?

In yesterday's online edition of USA Today BIG Ten conference commissioner Dan Beebe said that: "There's a lot of motive to make some fundamental changes . . . more sweeping changes than we've probably seen in the past,", addressing the current NCAA scandals evolving in Football (f.e. Ohio State) or Basketball.

While this is certainly interesting, I wonder what he actually means by that. Are NCAA officials willing to finally change the rules or are they just going to make monitoring and sanctions even more powerful? As economists have pointed out (Brad Humphreys, University of Alberta), the NCAA might have been able to enforce their rules because there was whistleblowing going on among the member universities. If one university violated recruiting rules, a competitor who knew about the violation called NCAA officials. This maight have taken place in the case of USC, Boise State and Ohio State.

Now let us ask the following crucial question: Is it surprising that "scandals" like Ohio State emerge? From an economics point of view it clearly is not. Players will be willing to violate the rules because they know that scholarships are not even close to their marginal product where their salaries should be. Colleges, on the other hand, can raise revenues and success on the field of play by giving players illegal incentives to join their program. By not paying athletes colleges can extract rents and act like a monopoly. Is it really necessary do force players to sell championship memorabilia in order to get a fracture of what they actually deserve in terms of salaries? Is this really a violation worth prosecution?

The NCAA rulebook states that athletes are meant to be "amateurs". Anybody can seen that a collegiate football or basketball player is everything but an amateur. So why not rethink the approach and adjust the rules? It might be time to do so.

BCS - does it comply with the law?

Yesterday's online edition of USA Today featured a short comment on BCS director Bill Hancock's meeting with officials from the Department of Justice on July 30. It quotes Hancock saying "I went into it confident that the BCS complies with the law, and I left the meeting even more confident". So what does that mean for the future of the BCS?

Obviously all major NCAA sports are somewhat suspicious to violate US antitrust law to some extent. The NCAA requirement for athletes to participate without any financial compensation exceeding regulated sports scholarships is a clear sign of a heavily regulated market. Men's Basketball, as well as  College Football are huge sports industries generating substantial TV revenues without paying their athletes market wages. Now the Football is somewhat special: It has introduced the Bowl Championship Series (BCS) and the mechanism that determines each season's champion is somewhat unique. A computer calculated ranking selects the top teams into 5 BCS bowls. The top two teams compete in the BCS championship game. By determining Football conferences who automatically qualify for the BCS system a kind of two-class society of colleges was formed and some face a substantially lower probability to play in a BCS game and benefit from TV revenues because they are in the wrong conference. Put simple: the BCS could be seen as a cartel.

So far the current system has survived all allegations and criticism and pro and con lobbying is continuing. If   Bill Hancock's optimism is justified the BCS might have won another battle. Economic theory would say that consumer welfare might have taken another hit.

Welcome everybody!

I am an economist at the Department of Economics at the University of Linz, Austria. I have done research in welfare economics, empirical economics and economics of sports. This blog was created to discuss news from the world of sports in terms of economics and take a closer and critical look at recent events and developments. I will periodically pick out news bits and comment on them, using the tools of economics and relating day-to-day news to earlier research. There are countless issues in (professional) sports that are worth being discussed on the basis of scientific results and experience. And it does not just give further insights but is also a lot of fun to discuss this issues. The first topic is already on the way....

Feel free to discuss and bring up further topics!