As AP reports, Rep. John Conyers (Michigan), the top Democrat on the House Judiciary Committee is urging the panel to hold hearings on antitrust in college sports. The hearing should also include other issues, such as the ongoing realignment chaos (sorry I could not avoid that word) in NCAA football.
Although this is not the first time, and I am afraid not the last time, politics have brought up the issue of collegiate sports, maybe now is the time we see some results. From a pure economic standpoint it is hard to find any arguments why the NCAA top-tier football system should comply with the Sherman Act. The latest realignment shows that amateurism is nowhere to be found in this system, as colleges are chasing money and move all across the country to change conferences.
John Conyers is quoted saying "It has become increasingly clear to me that the combination of issues and challenges facing intercollegiate sports have reached a tipping point calling for congressional attention [...]". Sounds true to me. There are simply too many issues to look away any longer: taxation of athletic departments, antitrust violations, pseudo amateurism on the back of uncompensated athletes...
NCAA Division I FBS football has turned into a professional sports league which is protected by the "amateur status". It is time to rethink it and (maybe) change as well as improve it.
Freitag, 21. Oktober 2011
Dienstag, 11. Oktober 2011
Canceled!
Now it is official. David Stern, Commissioner of the National Basketball Association has canceled the first two weeks of the upcoming (or probably not) NBA season. This is the first work-stoppage since the 1998-1999 season. Media sources indicate that the two sides, players and owners, are still far apart in terms of signing a new labor contract.
The recent NFL lockout ended just in time to save the current season. The NBA has not been able to finalize a deal and this will result in losses for players and owners. My bet is that the one side who will suffer the most will give in pretty soon. In the case of the NBA, I think this will be the players. Unlike in the NFL the cost of locking out players are probably lower in the NBA. We will see.
The recent NFL lockout ended just in time to save the current season. The NBA has not been able to finalize a deal and this will result in losses for players and owners. My bet is that the one side who will suffer the most will give in pretty soon. In the case of the NBA, I think this will be the players. Unlike in the NFL the cost of locking out players are probably lower in the NBA. We will see.
Montag, 10. Oktober 2011
Tax'em!
In a recent provocative article in Chicago a sin tax for collegiate athletics was proposed. Although the article was quite controversial, it may have been spot on. However, I do not think a sin tax on consuming collegiate sports would be that good an idea. Consumers cannot be blamed, as college sports in the US have a long tradition and consumer demand has attracted TV networks. Not the other way round. I would tax the NCAA directly, by imposing taxes at least on their cash-cows Basketball and Football.
Impose taxes? Yes, because NCAA athletics are exempted from federal income tax by section 501(c)(3) of the federal tax code. So they can generate their huge revenues (mostly from enormous TV contracts) and hand a substantial share right over to the basketball and football coaches. I would tax colleges on high contracts of coaches, on TV revenues and on all revenues they generate by not granting players right to market themselves. If NFL teams have to pay taxes it is simply not justifiable to let colleges get away. They are every bit as professional about their sporting operations as any professional league in the world. There is no trace of amateurism left in top-tier collegiate Football and Basketball these days.
Colleges often argue in favor of the current system by mentioning scholarships as the reward for players instead of monetary compensation according to the true value of athletes. Here is a recent (following Auburns loss to Arkansas on Saturday) cynical quote by Gene Chizik, head coach of Auburn, who had a total salary of over $ 2 million in 2009:
"Players on game day have to make plays," [...] "They're on scholarship, so they need to make plays."
So that is the ugly truth how coaches who earn enormous wages think about their "amateur" players. If players do not perform on the field why do they might soon be gone. No more "education for sports". And it is true: Any athlete's scholarship can be taken away by colleges. So they get a scholarship only if they bring the appropriate performance on gamedays. Sounds like the perfect description of a professional sports environment with 0 amateurism to me. Only that players have no players' union, no market wage, no job protection...
Just a word: Can the current realignment mess get any worse? More on that soon.
Impose taxes? Yes, because NCAA athletics are exempted from federal income tax by section 501(c)(3) of the federal tax code. So they can generate their huge revenues (mostly from enormous TV contracts) and hand a substantial share right over to the basketball and football coaches. I would tax colleges on high contracts of coaches, on TV revenues and on all revenues they generate by not granting players right to market themselves. If NFL teams have to pay taxes it is simply not justifiable to let colleges get away. They are every bit as professional about their sporting operations as any professional league in the world. There is no trace of amateurism left in top-tier collegiate Football and Basketball these days.
Colleges often argue in favor of the current system by mentioning scholarships as the reward for players instead of monetary compensation according to the true value of athletes. Here is a recent (following Auburns loss to Arkansas on Saturday) cynical quote by Gene Chizik, head coach of Auburn, who had a total salary of over $ 2 million in 2009:
"Players on game day have to make plays," [...] "They're on scholarship, so they need to make plays."
So that is the ugly truth how coaches who earn enormous wages think about their "amateur" players. If players do not perform on the field why do they might soon be gone. No more "education for sports". And it is true: Any athlete's scholarship can be taken away by colleges. So they get a scholarship only if they bring the appropriate performance on gamedays. Sounds like the perfect description of a professional sports environment with 0 amateurism to me. Only that players have no players' union, no market wage, no job protection...
Just a word: Can the current realignment mess get any worse? More on that soon.
Mittwoch, 5. Oktober 2011
Important decision!
Karen Murphy, the owner of the Red, White and Blue pub in Portsmouth, has recently been taken to court by Rupert Murdoch owned BSkyB network because she had purchased a Greek decoder to show English Premier League games at her pub. By doing so, she was able to save money, but it soon caused lots of troubles because BSkyB had the exclusive right for broadcasting Premier League matches in England.
Yesterday, however, the final ruling of the Court of Justice of the European Union on the cases Football Association Premier League and Others v QC Leisure and Others as well as Karen Murphy v Media Protection Services Ltd was issued (press note on the ruling to be found here). The crucial point of the ruling is that judges found that "national legislation which prohibits the import, sale or use of foreign decoder cards is contrary to the freedom to provide services and cannot be justified". The ruling even goes as far as stating that the Football Association Premier League could not claim copyright of Premier League matches as it is not "an author’s own intellectual creation". It was ruled that "a system of exclusive licences is also contrary to European Union competition law if the licence agreements prohibit the supply of decoder cards to television
viewers who wish to watch the broadcasts outside the Member State for which the licence is granted."
This ruling has two major implications:
In terms of Economics my expectation is that the ruling of the Court of Justice of the European Union will open up the market and generate a Europe-wide market for broadcasting of sports events. From what we know about opening up markets, and consequently increasing competition, we might see a sharp decrease in licence prices for broadcasters and consumers. This might go along with a move from several national monopolists towards a European market with a large number of suppliers. The fan at home, or in the pub of course, will be the winner.
Yesterday, however, the final ruling of the Court of Justice of the European Union on the cases Football Association Premier League and Others v QC Leisure and Others as well as Karen Murphy v Media Protection Services Ltd was issued (press note on the ruling to be found here). The crucial point of the ruling is that judges found that "national legislation which prohibits the import, sale or use of foreign decoder cards is contrary to the freedom to provide services and cannot be justified". The ruling even goes as far as stating that the Football Association Premier League could not claim copyright of Premier League matches as it is not "an author’s own intellectual creation". It was ruled that "a system of exclusive licences is also contrary to European Union competition law if the licence agreements prohibit the supply of decoder cards to television
viewers who wish to watch the broadcasts outside the Member State for which the licence is granted."
This ruling has two major implications:
- Leagues cannot claim copyrights for TV broadcasts of matches
- Cross-boarder transfer of broadcasts is allowed, i.e. breaking national monopolies like the one of BSkyB for the English Premier League
In terms of Economics my expectation is that the ruling of the Court of Justice of the European Union will open up the market and generate a Europe-wide market for broadcasting of sports events. From what we know about opening up markets, and consequently increasing competition, we might see a sharp decrease in licence prices for broadcasters and consumers. This might go along with a move from several national monopolists towards a European market with a large number of suppliers. The fan at home, or in the pub of course, will be the winner.
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