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Here's how a former D-I AD would propose fixing college sports

It's about more than just NIL and pay-for-play:

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Yesterday marked the first day on the job for Charlie Baker, the new president of the NCAA. He spoke to reporters at Sportico, USA TODAY, The Athletic, SI, and others, outlining what he views are the most important issues his administration will need to address.

You can probably guess what those issues are without clicking on any of those links. Baker consistently referenced the lack of regulation around NIL, the need to treat college athletics at the P5 level differently from the rest of the enterprise, and trying to find regulatory certainty in an uncertain world. The labor status of athletes, how revenues will be distributed and shared, and what ability the NCAA will legally have to craft and enforce policies will all be near the top of the legislative agenda.

And that’s before we even get to anything like TV contracts or gender equity or reforming postseason access.

Those questions are all very important, but Friend of the Newsletter Dr. Kevin Blue argued yesterday that they aren’t actually the most important questions. Blue, the current Golf Canada Chief Sport Officer and former AD at UC Davis, laid out his argument in an open letter he wrote for our sister publication, Athletic Director U:

I sat down with Dr. Blue earlier this week, and if you’d like to hear a longer, more informal conversation about his thesis, the conversation can be found here:

To Dr.Blue, it all comes down to addressing the true root problem in college sports…which isn’t what you might think it is

NIL regulatory chaos, conference realignment decisions that end century-long athletic associations, skyrocketing administrative salaries….Dr. Blue argues that these are in fact proximate causes, and not the root cause, of true dysfunction within the sport.

The big problem, he argues, really comes down to this.

College sports is the only industry in the United States where non-profit organizations engage in fierce zero-sum competition.

In professional sports, for example, if revenue spikes, well, ownership will want to collect some of that revenue as profit. But in college athletics, the entities are organized as non-profits…and that revenue also can’t be directly shared with labor.

That means every school has every incentive to spend every penny they get in order to gain an athletic advantage, even if those gains are superficial. In our follow-up conversation, Dr. Blue described this system as a “technically free market, but a very, very inefficient one.”

These market forces mean, that hypothetically, schools would have every rational reason to spend $8 million on a football coach that is going to finish in last place in the SEC West, or to give their strength coach a $900,000 salary. There is no award for fiscal responsibility. You are competing for prestige, costs be damned.

I asked if maybe the problem is just that the college athletic departments are set up as non-profits. What if we forced everybody to spin their departments into separate LLCs? Would that fix the administrative dysfunction?

He told me that “there was some effort to look at that more closely a few years back,” but that "if you have a for-profit entity that can sustain never-ending losses because it is backed by a major university, that doesn’t really solve the problem. You would be continuing the same dynamic.”

Instead, Dr. Blue argues for a more expansive antitrust protection…one that aims to control all costs, not just NIL

Right now, the NCAA can’t really pass a rule that would put a salary cap on coach compensation, or total athletic department spending. If they did, they would almost certainly lose an antitrust lawsuit (in fact, this already happened once). It’s also entirely possible that eventually, courts will rule that amateurism as a concept violates antitrust laws, as the NCAA will have unlawfully colluded to limit athlete compensation to zero.

Part of the reason the NCAA so badly wants Congress to give them an antitrust exemption is so they can enforce NIL regulations that seek to limit NIL from being used as a recruiting inducement, all without being sued. That’s going to be a tough sell, politically. Dr. Blue argues that if Congress is going to think about doing that, they should also impose restrictions on coach and administrative salaries. Yes, even the salaries of people like the AD at UC Davis.

Via his essay at ADU:

Underlying this decision-making is not greed or stupidity, however, but instead a reflection of the incentives created by an underregulated financial system: Without rules to control spending, our eat-everything-you-can-possibly-kill system motivates schools to push the limits in pursuit of further revenue. Every incremental dollar strengthens a competitive advantage or closes a resource gap, so schools justify trade-offs they would not otherwise consider.

Regulations to control spending would help schools to stop making these harmful revenue-seeking trade-offs because they would establish a finite target for revenue generating efforts. Even relatively high spending limits that don’t markedly reduce current levels of expenditure would allow for more long-term certainty about the ongoing cost of competition. In other words, if UCLA and USC knew that they could sustain budgets that are reasonably near national spending limits, they would not feel the need to jump conferences to keep up financially.

Dr. Blue doesn’t think these limits need to be especially strict in order to be effective. Even if the limit it set comfortably above even the largest athletic budget at the moment, Dr. Blue believes that spending limits would impose a sense of order and cost certainty that would empower leaders to make better decisions. It’s part of why virtually every professional league has some sort of cost control and structure.

Now, is this actually possible? That’s hard to say. The NCAA plans to push for antitrust exemptions, generally, but those are politically unpopular, and it isn’t clear if the NCAA could secure additional legislative support if they show that they’re willing to aim the cost control gun at themselves as well. Dr. Blue acknowledged that he isn’t an expert on Congress and that Americans, broadly speaking, prefer not to have the government engage in regulation that “is limiting, or at least perceived as limiting.”

But desperate times call for desperate measures, and ideological misgivings aside, Dr. Blue told me that he still really believes the vast majority of NCAA membership would benefit from this system.

The battles to define how the money in college sports gets divided up will be constant over the next several years. The courts, federal lawmakers, college administrators, the athlete labor movement and other stakeholders will need to come together to figure out what exactly a college athlete is, what standards should apply to which athletes, and how to keep a disordered and often dysfunctional enterprise going into the 21st Century.

But perhaps Dr. Blue is right, and those biggest fights are still over symptoms, rather than the direct causes.

If there’s one executive who might be able to really diagnose the problem, perhaps it’s somebody who has years of experience in the healthcare industry, like Charlie Baker.

But maybe the patient will decide that the only cures are worse than the disease. It’s tough, after all, to really treat an organization that doesn’t really want to be cured.

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