Memo to the NCAA: Let Markets Work for College Athletes

Back in the early 1990s, my uncle, then a senior dean at Northeastern University  in Boston, tried to argue that the price fixing he and his colleagues pioneered  through the sharing of scholarship award data for undergraduate students (see Economic Scene: Fixing price’s for Virtue’s Sake, NY Times May 13, 1992) was for the good of the students.

Paraphrasing: “We want to make sure the student chooses the right place for him or her without considering the cost influences.”

Bizarre, indeed.

In the end, the Ivies and 15 other Universities abandoned the idea under the threat of a U.S. Justice Department series of suits. Schools now compete on pricing as well as academic reputation, and whatever else a prospective applicant might find germane—and we are all better for it.

In fact, this week's papers discuss the disarray in University admissions offices this spring, as pricing has become more competitive, with certain Universities opening the endowment purse strings for the first time for middle and upper income students.

How can anyone believe that this pricing transparency has not benefited consumers enormously—in this case, potential students?

As such, why must today’s undergraduate athletes labor under similarly misquided opaque pricing?

It makes no sense to me. Let’s pay the athletes what they are worth and let the fun begin.

You would probably need to develop University—athlete contracts of some sort to make this a reality. Perhaps if an athlete agrees to attend a certain institution, he/she  must commit to staying a certain amount of time for a certain amount of money—that sort of thing.

I am a Duke alum and lifelong Tobacco Road hoops fan. If Duke were to decide it could no longer compete in  ACC basketball because it valued potential athletes at less than the market price to garner a top recruiting class, so be it.

This might be the mechanism to realign the universities into national leagues that made more sense anyway, sport by sport.

For example: Stanford, Rice, Duke, Northwestern, and the like might play football in a brand new league because they have similar team based academic requirements, are only willing to pay so much to a prospective athlete, and will require that the athlete stay for at least three years.

In essence, this is instituting the Ivy league concepts sport by sport. A University could always elect to participate at a higher, more expensive level, if it served the purposes of the institution.

Perhaps Hopkins would elect to pay its lacrosse players at the market rate to compete in a conference with Princeton and Navy, because the institution believed it mattered for its success, but would not do the same for its football or track athletes.

And maybe the hockey players of the Beanpot trio in Boston would be paid the same as those at Wisconsin and Michigan, since the local colleges in New England need something entertaining for the students during the long cold winter months.

Only the institutions themselves can understand what sport and what price demands investment and at what level. These trustee-level decisions would be no different than deciding that a new building or department should be formed or expanded…or shut down, best I can tell.

Markets always deliver a better product more cheaply, assuming adequate transparency. It sure would be entertaining to see what transpired among these Universities and Colleges with the NCAA shackles a part of quaint historical lore.