Sportsgeekonomics

My actual talk today veered from these prepared remark more than usual, but here is the version I prepared in advance:

I’d like to start my talk out today with a question: since we are on the topic of NIL, how many of you think it’s morally wrong for a college football athlete to choose his university, at least in part, on the basis of financial considerations, such as how much better off he and his family will be if he chooses School A over School B?

So is it fair to say a number of you think this is a real problem – that it’s wrong to choose a university based on financial considerations? 

Ok, so let’s explore that – do you feel the same way about that for FBS as FCS?  If an FCS athlete is choosing between two schools and factoring cash flow into the decision, is that wrong on some deep level?

Is it the same for FCS as D2?  D2 as D3?

What about for other sports?  What about for a women’s rower?  If a women’s rower is factoring in her financial benefit from attending one college versus another, is that problematic in any way to any of you?

Are there any of you out there who would agree that money should never be part of the college choice process?

Now what if I told you the women’s rower is a walk-on and the financial decision is whether to go to a state school that is offering an in-state academic scholarship that won’t cost the family anything versus an out-of-state private scholarship that will put the family in debt $50,000 a year for the 5 years it will take her to finish her pre-med degree?  If the family tells the young woman she has to go to the state school over the private for financial reasons, are they committing a moral offense?

If there are any of you out there who answered yes when I was asking about the football player, when you thought the flow of money was outward from the university, but who have changed your mind now that I’ve contextualized it as a women’s rower where the flow of money is outward from the family, I would challenge you to rethink your moral code.    

I believe it is totally appropriate for that young woman and her family to weigh the financial toll her education choice may take on her family’s financial health.    The burden she might impose on her family from $250,000 of debt might very well outweigh any of the benefits of that elite private school education, and it absolutely needs to be factored into the decision.

Moreover, if a product or service like education is being sold in the marketplace now, with schools putting a price on it, so that they are asking families to choose among options with different financial impacts, then flipping the script and asking the school to pay them instead is morally identical.  It is just a negotiation over which party ultimately values the agreement more.  Unless you think there is something morally wrong with a family choosing not to bankrupt itself by selecting a less expensive college for their child, I posit that there is nothing wrong with making that same decision when the flow of money to the family is positive.

Treating Education as a Unit of Exchange is simply part of the economic system that our society has chosen – putting a price on education is not a moral crisis, it’s just a consequence of living in capitalism.  Politically, I can tell you that I would prefer to change our country so that education were either taken out of the economic decision space altogether for families or at least far more heavily subsidized, to go back to the days where the University of California was free for all qualified Californians, but if we choose as a nation to adopt a system where schools charge tuition, then selecting which college to attend is always partially an economic choice.  Your salary is funded by asking students to make that choice, so for your moral consciences I sure hope you agree with me that money and education are compatible.

But the thing is, the morality of a commercial exchange doesn’t change when you switch who is paying and who is receiving.  When the flow of money changes direction so a school pays a family instead of the other way around, it does not suddenly become a moral travesty, where moments ago it was just a business decision.

Ok, another check in.  Am I right that everyone here is ok with a full athletic scholarship, also known as a GIA?  A Full GIA is sort of the halfway point, because essentially you’re offering a talented athlete a discount of 100% to attend your university.  You are offering a financial inducement, but just enough to make the transaction cash-flow neutral to both parties.  But that is a huge net outflow from the university relative to the status quo, so to an economist, that represents a payment, it’s just one we don’t see because it’s only a payment relative to a status quo that didn’t happen.

Am I also right that most of you have gotten okay with Cost of Attendance stipends, which turns the corner just a bit, i.e., paying a small positive amount to the athlete?  How about if your school now offers so-called Alston Awards of around $6,000 a year.  Now your athletes are being paid above and beyond any semblance of what it costs to attend school simply because they bring value to your institution. 

Was this the bridge too far? 

Or perhaps it was the fact that Athletes are being paid for their NIL now.

Have you sworn off college sports now as having been forever ruined?  Are the athletes now corrupt?  How many of you have watched a college football game this year?  Was it palpably different?  Did you hate it?  Or was it the same game as ever?  Did the fans seem just as jazzed as ever?  To my eyes, people simply don’t factor in Alston Awards or NIL compensation when they watch sports.  Anyone telling me otherwise really needs to show me some tangible evidence because ratings are at their highest since about 2017, and I was told that if athletes got paid more than a scholarship, no one would watch.  Yet people still watch.

You may think I am exaggerating about the “no one will watch” part, but I am not.  Let’s stop for a moment and review some of the very intelligent people who have made these sorts of claims.

In O’Bannon, my former boss, Professor Daniel Rubinfeld of NYU and UC Berkeley, former Chief Economist of the Department of Justice, stated under penalty of perjury that college sports WOULD NOT EXIST without the rules in place as of 2013, which prohibited any NIL compensation and didn’t even allow Full COA scholarships.  Slide 1 please.

Four years later, Professor Kenneth Elzinga of the University of Virginia submitted, again under penalty of perjury, the claim that COA was a bright line, so that even a penny of pay unrelated to COA, like Alston Awards or NIL, would put consumer interest in college sports at risk.  Slide 2 please.

What these claims have in common is that they were extremely definitive statements about consumer conduct, based entirely on fiction.  Paying athletes more makes no sense if you know that by paying more your costs will go up and your revenues will go down.  This would be the equivalent of Starbucks asking customers if they would like some plutonium in their coffee, having customers say no, then Starbucks spending money to add in plutonium anyway, right in front of their customers, knowing sales will decline as a result.  It’s not how businesses behave if they know their customers’ preferences as well as the NCAA claims.  If paying athletes is really poisonous to consumer demand, you really don’t need a rule against it – just like the Coffee Retailers Association of America has never needed an antitrust exemption to ban its members from adding plutonium to coffee.  Firms do not need to collude to avoid adding expensive demand-decreasing features to their products.  They only need to collude to avoid adding expensive demand-INCREASING features.  And this is how I know that the NCAA actually knows that fans will flock to games if athletes are paid, because they collude to prevent it.

The very fact that the NCAA NEEDS to ban schools from paying their players, is strong economic evidence that the theory that paying players will hurt business is false.  Quick; ask yourself what would happen if the rules went away and schools could offer money to athletes.  Would LSU say, well gosh, my fans would hate it if we paid players so we’ll stay out of that market and let the other SEC teams commit business suicide, while we stay amateur and reap the commercial benefits of that decision.  Or would they assess their fan base and decide to compete using pay?

I think most of you would agree with me that they would look out at what their fanbase wanted and decide to do it, NOT to damage their business prospects but because they foresaw a business ADVANTAGE from paying money.

But it hasn’t just been pointy-headed economists who have said silly things under oath.  There were also the people who run college sports.  There’s Mark Emmert – still NCAA President at least as of last time I checked – who testified under oath that receiving NIL money would render an athlete forever unable to be part of an academic environment.  Slide 3, please.

And of course, who could forget former Big Ten Commissioner Jim Delany, who said if the Big Ten had to give any more money to athletes than they were giving in 2013, pre-COA, pre-Alston Awards, pre-NIL, the Big Ten would leave D1 for D3 out of principle. Slide 4, please.

Back in 2013 or 2017 when these statements were made, they were unfalsifiable, because the NCAA rules in place meant they were, as Jim Delany said, entirely hypothetical.  There would never be a way to test whether the cockamamy demand curves of Professors Rubinfeld and Elzinga existed or not, or whether an athlete could do a commercial for an HVAC company and still go to English class like Mark Emmert said was impossible because under the rules that existed no one was able to pay athletes for their NIL or give them academic payments above COA.  But the cool thing about the state NIL law experiment that I asked Nancy Skinner to let us get started in California is now we get to test all these claims.    Slide 5 Please.

Everyone knows NIL is unrelated to education.  NIL is above COA.  NIL is about raw, crass commerce.  Mark Emmert’s shills and pitchmen are now Big Men and Women on Campus.

But that’s the thing, those athletes with NIL deals are still on campus, going to class as much or as little or on UNC paper as before, majoring in majors just as real or fake as before.  This theory of demand concocted by the NCAA wilted at first contact with a market test.  It’s bogus.  It always was but now you have to be willful to ignore the truth, not just unimaginative.

Fans haven’t lost interest.  Boosters haven’t lost interest.  TV networks definitely haven’t lost interest.  Just ask Kevin Warren and he’ll give you one billion examples per year of how network demand for college sports has not decreased in the era of NIL.  Last weekend’s news that the value of the Big 12 rights grew despite losing Texas and Oklahoma should tell you that NIL has not decreased demand for college sports broadcast rights.

The economic justification for the cap in the first place, the “if we don’t fix prices, we’ll ruin the product and consumers will flee like we’re selling plutonium-laced coffee” excuse turns out to make as much sense as the plutonium example I concocted.  There has never been a product whose consumers have boycotted it because the workers make Too MUCH money.  Maybe they would boycott if you underpaid them, but can you imagine a protest outside of a garment factory with outraged consumers saying they won’t buy another Polo shirt until Ralph Lauren agrees to pay his immigrant seamstresses a LOWER wage?

This is why I think that if Courts were fully rational, the current Collegiate Model would be gone already.  Conservatives like Justice Kavanaugh have certainly seen through the charade – amateurism is just price fixing dressed up in the language of morality.  Isn’t it just a matter of time before the other conservatives on the court see it that way too?  And as for the shrinking liberal wing of the court, the fact that amateurism’s price fixing taxes poor black athletes and redirects the money to mostly white male coaches can’t possibly be on their list of deserving targets for economic redistribution.  Do we think Justices Samuel Alito and Ketanji Brown Jackson are likely to find a consensus to support the idea that keeping Najee Harris poor so that Nick Saban can earn $10 million was the one spot where affirmative action was still needed in America?

But I do think the fact that amateurism redistributes wealth away from young black men is a reason why a Republican take over of Congress is the NCAA’s best bet.  Because rhetoric aside, nothing is more consistent with the party of Trump and McConnell than making sure that Gen X and Baby Boomer coaches keep earning millions while Gen Z athlete pay is fixed at less than market rate.  So for the next two years, I think your business model is probably safe.  

But let’s assume at some point in the next decade Congress finally wakes up and recognizes that being paid to play D1 college football is no more or less moral than paying a school to play D3 college football or being paid to play NFL football.  In which case, taking the next step and offering FBS athletes a market rate becomes a business decision just like charging a women’s rower a market rate, no more of a moral outrage than sending a chemistry major a tuition bill at the start of every semester. 

Hence, the current worry about whether NIL payments might possibly be used as so-called inducements to encourage an athlete, especially a football or women’s or men’s basketball athlete, to enroll as a freshman at, or transfer to, a school miss the mark completely.  I’m even less worried about whether a payment prevents an athlete from transferring or leaving college altogether.   If I told you that college sports had found a way to lower the incidence of athletic transfers and to prevent athletes from leaving school early for a dubious shot at going pro before they are ready, wouldn’t you normally cheer that?  What is it about an NIL deal that makes a longer college tenure suddenly a sin?

Paying someone to play football is not an outrage.  Taking away a right that the rest of us enjoy, simply because colleges don’t want to have to pay market rates for valuable services is an outrage.  We need to stop confusing the two.

Speaking of outrages, I’d like to take a look at the current NCAA Interim Policy on NIL.  Even as modified last week it’s still trying to legislate a moral line where none actually exists.  The policy’s big picture take away is (and now I am quoting) Slide 6 Please

“The NCAA is committed to ensuring that its rules, and its enforcement of those rules, protect and enhance student-athlete well-being and maintain national standards for recruiting. Those goals are consistent with the NCAA’s foundational prohibitions on pay-for-play and impermissible recruiting inducements, which remain essential to collegiate athletics.”

So there we go, the NCAA has “foundational prohibitions” on recruiting inducements.  Luring someone to your school with financial benefits is prohibited.  Well, except it’s not, right?  Because a GIA is a financial inducement.  If one school wants me to be a walk-on and another offers me a GIA, that’s a recruiting inducement.   If you look closely, the NCAA is not banning recruiting inducements, but only “impermissible” ones. 

To the NCAA, it does matter whether the flow of money is into the university or out of the university.  A cynic will not be shocked that the NCAA, an organization made up primarily of colleges and universities, finds it to be totally appropriate if a transaction results in cash flowing into a school and “foundationally” wrong if a transaction results in too much cash leaving one of its member schools.   So is all of this moral outrage just a veneer to paper over naked price fixing?  I think that’s a lot closer to the truth than most people want to admit.

Let me offer up a better bright line for a new version of the collegiate model.  College Athletes should go to college.  Period.  Beyond that requirement that college athletes be college students, then there is no need for them to follow any specific rule, restriction, limitation, etc., that is not also applied to the coach or the Athletic Director, at least not without a valid negotiation with an empowered athlete representative body. 

Now, to be fair, there are other approaches than what I believe in.  Andy Zimbalist here, unless I am being unfair to his view of things, has proposed the other version of my “If it’s good for the coaches, it should be good for the athletes” rule, which is not to free up schools to compete for athletes, but instead to allow schools to collude to cap coaches pay too.  And presumably Athletic Director pay, though I have trouble imagining successful cartel meetings when the ADs get together to suppress their own pay.    So yes, a different solution is not to start treating athletes like adults, but to start treating coaches like children too, thus growing the list of second-class citizens disempowered by collusive conduct of the NCAA.

I’ve heard this justified as a way to let schools devote more of their resources to academics, but I would submit (with due respect to Andy and anyone else here in favor of this plan), that while treating professors as having superior rights to coaches may feel like some sort of high school revenge fantasy for all the times we intellectuals got shoved into lockers by the future football coaches of America, it’s still an injustice to tell one group of people they deserve fewer rights than others.  Coaches are people too! 

Just to be practical for a moment, unlike with athletes, the Courts have actually recognized that fixing prices for coaches pay is illegal, so to get to this outcome, we would need congressional intervention.  Do we really think Senator Tommy Tuberville is going to support a legalized wage cap on his former colleagues pay, just to support the priorities of a bunch of liberal college professors who think too much money is being spent on football?  Call me a pessimist, but I think you’ve got a tough slog ahead on that one when we can’t even get Kristen Sinema to support a tax on Hedge Fund managers.

I’ve also heard it justified by the fact that the NCAA and schools do a great deal of good with the wealth they extract from athletes by means of their collusive conduct.  I call this they “yes, we robbed the bank, but we donated most of the money to Maria Theresa’s orphanage” defense.  Its all fine and good to do good works, but if you’ve engaged in wrongful conduct to take the fruits of someone else’s labor to get that money in the first place, the good works do not erase the original sin of theft.

So, with the five minutes still allotted to me, perhaps I should actually address the question of the future of the collegiate model.  I’ve told you I think the current model rests on a false claim of moral superiority, namely that the current practice of preventing athletes from being induced to attend a specific university with some forms of money, but allowing them to be induced with other forms of money, isn’t a moral distinction, it’s just price fixing in fancy wrapping paper.  I think ultimately my understanding is going to become Federal law, either through the Courts or through Congress.  It will stop being legal to get together here in Indianapolis and decide as a national body on the maximum amount an FBS school can offer to an athlete, just like it’s currently illegal to agree among schools on how much to offer to coaches.

What will happen next?  Within minutes, the earth will spin out of its orbit, crash into Mars, and humanity will cease to exist.  “See,” Wally Renfro will scream from his retirement home in Arizona, “I told you so!” 

No, what will actually happen is that the negative impacts of amateurism depicted on Slide 7 will slowly unwind. Slide 7 Please.

Player compensation will normalize so that quarterbacks will get paid about the same as what offensive coordinators get paid today, but that money will come from a sharp deceleration in the rate of coaching pay. 

That pay may not decrease right away, but it will flatten out, and maybe even start to decline, as boosters realize it’s easier to just pay the players directly than to pay the coach in hopes he can recruit the players. 

Spending on lavish facilities whose primary purpose is to recruit players will decline rapidly.  This is already happening.  Take a look at Auburn University, where a new practice facility for the men’s basketball team was approved by the Board of Trustees, but recently head coach Bruce Pearl announced it was being mothballed because he wanted donors to redirect their portion of the money needed to fund the facility into a collective that would pay recruits directly instead.   Slide 8 please.

This is great news for those of us who have been saying that the so-called “arms race” in facilities was just a symptom of the price-fixing in player salaries to begin with, and it’s evidence that if the price fixing stops, we can redirect the excess spending from benefiting the shareholders of large construction firms to go instead to the talented young men and women who actually drive the value of college sports.

I’ll even go one step further.  Asking for a level of professionalism among people representing our universities is a good thing.  I’ve never been comfortable with the idea of glorifying an amateur operation; an amateur hour is not a positive thing.  This is the future of the collegiate model: that collegiate no longer is confused with amateur.  You are all professional professors yet nothing could be more collegiate.  Your best graduate students are university employees.  The undergraduates on work-study are university employees.  We ask all of them to be professional in their conduct, and to represent the university as collegiate employees in one aspect of their lives, but they still go to class as students.  College athletes will interact with the system in the same way.   This will be the collegiate model.  Like the old joke about a Mullet being all business in the front, all party in the back, college athletes will be all College in the classroom and all business on the field and in the marketplace.   

And people will love college sports identically to today.  Sports will change because of the changes in how society consumes sports generally, not because of how college athletes are compensated.  Mark Emmert will pontificate his way into retirement, but his erroneous predictions, and all of the other self-serving and highly compensated opinions of defense experts will all turn out to have been so obviously false everyone will wonder who would have been so gullible to have believed it.  Certainly, none of YOU fell for it, right?

https://www.youtube.com/watch?v=cAUOHIrViTM

Sportsgeekonomics turned 10 today!

Please answer to the following problem, and please show your work and/or lay out your reasoning.

You are a college Athletic Director and you currently provide $10 million of financial assistance to your athletes, $5,500,000 to men in aggregate and $4,500,000 to women. School lawyers tell you this puts you perfectly in compliance with Title IX regulations requiring financial assistance to be substantially proportionate to male/female participation rates.

Imagine the NCAA ends all restrictions on compensation and Congress declares that financial assistance rules of Title IX differ.

Your President tells you that you are authorized to spend an additional $1 million on pay to athletes, on top of the existing level of financial assistance.

Question 1) Within 1%, how much can you pay men, in aggregate, and how much can you pay women, in aggregate, without falling out of compliance with the financial proportionality rules your lawyers say you must continue to follow.

Question 2) If you were to spend all $1 million on male athletes, how much money would you need to raise to pay women athletes, and what are some possible sources for that money?

This is an important historical document and I am not sure it is easily findable online, so for your research assistance and reading enjoyment I present: The Carnegie Foundation for the Advancement of Teaching’s 1929 masterpiece “American College Athletics”

My favorite quotation from the report is on how some athletes were being paid so much in cash, beyond a scholarship, that they could graduate with enough money to start their own business.

You can read the full Hartford Athletics report I released on Friday morning here:

Analysis and Suggested Revisions to the University of Hartford Athletics Feasibility Study

I am going to try to keep my SCOTUS commentary in this thread and try to be factual (albeit sarcastic, when warranted). Stay tuned. 

And we’re up with Roberts introducing the case and asking Seth Waxman to start. Bang… we’re off.

Keep reading

Previously, I laid out a summary of the pro-athlete amicus briefs in Alston.  At the request of several folks, I reluctantly agreed to summarize the other side’s amici as well.  At first it was my goal to be very factual in my presentation of heir argument, but I simply could not do it without a moderate amount of commentary and, at times, snark.  

With that trigger warning out of the way, let’s dive in and see what we can learn about why the NCAA (purportedly) should win

Keep reading

Over March 9-10, fourteen different groups of Amici filed Amicus Briefs on behalf of the College Athletes (the Respondent/Plaintiff) in the Alston case.  Here they are with a brief summary of the content of each.

 Amicus Brief of the United States: This is the most consequential of all the briefs, simply because when the Solicitor General of the United States (basically, the government’s highest trial lawyer) argues for one side of a case (here, for the athletes & against the NCAA), the Court traditionally gives those arguments a lot of weight.

The brief itself is focused on technical antitrust issues, which you will see is a common theme among many of the amici.  The NCAA & Conferences have argued that Judge Wilken erred in even entertaining a factual inquiry into whether the NCAA’s rules harmed competition in the athlete labor market, under the theory that the Courts (including the Supreme Court in Board of Regents) have essentially pre-blessed any NCAA rule that ensures athletes’ pay is capped.  And thus, even though that factual inquiry determined the rules in question were NOT procompetitive, the Court should have just assumed they were and ended the case.

The DOJ & FTC, as the country’s top antitrust enforcement arms, argue this is not how the antitrust law should work.  Instead, if collusive conduct is not condemned per se, it should be subject to a full factual review (under the “rule of reason”) and not merely assumed to be kosher.  

This seems pretty obvious – if you know a factual inquiry will show something caused harm, it would be weird to say that we know the conduct was so pure it couldn’t possibly cause harm.  The USA argues, yeah, duh, take a look and if you see a problem, don’t turn a blind eye because a past case may have said, at that time, there wasn’t likely to be a problem.

The rest of the brief is even more technical, as to whether the court fairly applied issues of burden of proof, etc.  Antitrust lawyers may dig this sections.

Amicus brief of 65 Professors of Law, Business, Economics, and Sports Management: This brief also focuses on the proper application of the rule of reason and of the conflict between the NCAA’s business model and antitrust law, the latter of which strongly frowns on collective pricing decisions by economic competitors.  Their bottom line is that “The courts below found a hornbook violation of antitrust law” and none of the NCAA’s/Conference’s arguments provide any reason to overturn any of it.

Amicus Brief of the American Antitrust Institute: While this is a technical brief aimed at questions of antitrust law, it is also an important policy document as it lays out how the NCAA’s argument, which is essentially that its consumers only want to attend/watch college sports if it comes with a dose of economic exploitation, creates a framework in which any misdeed could be justified as meeting consumer demand.  They instead advocate that the search for, and weighing of, anti- and procompetitive benefits from a restraint be limited to the market in question (in this case the labor market for college athletes) rather than extend downstream to other markets.  To quote the brief:

“Petitioners now ask the Court, instead, to permit unrebutted harm to competition in a labor market because it allegedly benefits competition in a product market.”

“The Court cannot do so. The Court does not have authority to sacrifice competition in a labor market for the sake of competition in a product market. Even if it did have authority, judges have no justiciable means of determining which markets, and market participants, are more deserving of competition in discrete parts of the economy, and by how much.”

As a nice touch, they quote Robert Bork (a conservative antitrust scholar whom the more conservative justices may heed, who wrote: “[T]here is no economics, no social science, no systematized knowledge of any sort that can provide the criteria for making such a trade-off decision.”)

They separately argue that collective agreement by competitors to define their product as containing some otherwise illegal attribute should not be a form of carte blanche to break the law via “product-design”. As they put it:  

“Petitioners’ alternative approach is to ask the Court to allow private joint venturers to displace competition in discrete parts of the economy by fiat. The Court should reject the invitation to create a “product-design” exception to the ancillary restraints framework.”

Amicus Brief of African American Antitrust Lawyers: This brief was filed by three African American antitrust lawyers, Patrick Bradford (Fordham University), and Heather Souder Choi and Christopher Wilson (both in private practice).  They discuss the fact that amateurism has a larger impact on African American athletes than others, and that the NCAA’s/Conference’s justification for imposing this harm on those athletes is, essentially that a mostly white audience has a commercial preference for watching underpaid Black athletes.  Not surprisingly (and quite correctly), these lawyers argue that is a poor reason to grant what amounts to a quasi-antitrust exception.

This is a nice book end to the AAI brief above because it provides context regarding the real-world impact of the error the AAI argues the Courts make when they try to balance labor harm against consumer harm.

Amicus Brief of several think tanks (The Open Markets Institute, Color of Change, National Employment Law Project, Strategic Organizing Center, Towards Justice) as well as individual scholars of economics and law: As with the prior two briefs, this brief focuses on the role of antitrust enforcement in protecting workers and other sellers from purchasers’ restraints of trade and monopolistic practices.  They focus on how the O’Bannon/Alston cases overemphasize consumer preferences at the expense of suppliers (athletes) in the relevant market, which is the market for athletic labor.  Hence, the Ninth Circuit should have considered only amateurism “harms and benefits to college basketball and football players,” without looking downstream to the impact on consumers.  Finally, they explain that just relabeling price fixing as “amateurism” or saying the price fixing has been going on for a long time is not a justification for continuing a harmful practice.

 Amicus Brief of Professional Sports Unions, filed by NFLPA, NBPA, WNBPA, and NWSLPA

After discussing how “Amateurism” harms college athletes, the Unions go in hard on how “amateurism” is just a polite word for price fixing and the NCAA’s speculation of the perils of abandoning price fixing ignores the actual factual record of the case.

Amicus Brief of Historians: The authors of this brief are historians, many of whom focus on the history of sports.  Taylor Branch – who wrote a pivotal take-down of the shame of “amateurism” in 2011—is the most famous among them, but special note should be given to Ronald Smith, who wrote the extremely valuable history of the “pay for play” era in college sports prior to 1956 (aptly Titled “Pay for Play”) and Jay Smith, who co-authored “Cheated” which documents the history of the “paper class” scandal at UNC.

These amici focus on the history of college sports prior to the NCAA enforcing amateurism and show “Amateurism” is a fiction, and that the evidence shows the absence of amateurism was correlated with the growth of consumer interest in college sports.  In contrast, they posit that “amateurism is little more than an excuse for exploitive and unfair treatment of college athletes”

Amicus Brief from Advocates for Minor Leaguers: This brief focuses on how unique baseball’s antitrust exemption is, and how bad it has been for the development of labor issues in that case, relative to all the other leagues which are bound by the antitrust act. The focus is on how the Toolson case in the 1950s was a chance for the Court to undo the mistake of Federal Baseball (when MLB was first exempted from antitrust) and they missed that opportunity.  The amici implore the Court not to pull a Toolson and turn the nonbinding dicta from Board of Regents into an actual exemption.  As they write: “This Court ignored reality in Toolson and the consequences were devastating. The Court is not compelled to repeat that mistake here.”

Their closing statement is worthy of a full quote:

“By 1953, it was readily apparent that baseball was interstate commerce subject to federal regulation. Yet the Court closed its eyes to that reality. Over the past seven decades, hundreds of thousands of Minor League baseball players have suffered as a result. Today, it is readily apparent that college athletics is big business and should be subjected to antitrust scrutiny. If the Court closes its eyes to that reality, college athletes may spend the next seven decades like Minor League Baseball players: exploited and abused, with this Court partly to blame.”

Amicus Brief of eight US States (AZ, CO, DE, IL, MN, NY, OR, & PA): In contrast to brief that the former confederate states (Plus Montana and the Dakotas) filed in favor of the NCAA last month, these 8 states support the athletes’ side of the debate. Their brief focuses on technical rule of reason points related to the NCAA’s claim they should get a quasi-exemption from scrutiny under the antitrust laws.  They go through the history of the pre-1956 era, in which economic competition for players went hand-in-hand with the increased popularity of the sport.  They then narrate the 70- years of changing amateurism rules once the NCAA did intervene, showing “amateurism: is not some fixed, platonic ideal, and how now Olympians can earn hundreds of dollars and all athletes can get annual cash payments (up to $6,000) and still be “amateurs.” To quote the brief:

This history demonstrates that Petitioners have no fixed conception of what the phrase “amateurism” actually means. What that phrase meant in 1928 is different from what it meant in 1948, and what it meant in 1948 is different from what it meant in 2008. In just the last seven years, Petitioners’ understanding of the phrase has changed significantly. Today, a college athlete can receive full cost of attendance, thousands of dollars in stipends or grants, thousands of dollars in prize money, and hundreds of thousands of dollars in Olympic performance bonuses and still be an amateur. To Petitioners, “amateurism” appears to mean one who is not compensated beyond the current restrictions Petitioners have imposed. The inherent circularity and ambiguity of Petitioners’ “amateurism” justification thus significantly limits its function as a per se exception from antitrust scrutiny….

They end with an explanation of why allowing competition under the existing Alston injunction will not bankrupt schools.

Amicus Brief from former NCAA executives: I call these six former NCAA folks the “the Apostate Amici.” (For the curious, an Apostate is someone who commits “apostasy,” i.e., being a member of a religion but then abandoning it).  Each of them were paid to enforce amateurism in some way or another, and have now seen the error of their ways (though notably, none of them have volunteered to give the money back, at least to my knowledge).  The importance of this brief seems more tied to who these people are – i.e., people who once spouted the company line but now can no longer do so in good conscience – rather than because they advance some novel argument. You can read more about this brief in a Sportico article by Daniel Libit.

What they argue is that the facts of the industry have changed radically since the 1985 Board of Regents decision, so that “the NCAA’s professed commitment to ‘amateurism’ has become a way of preserving the market that the NCAA has come to dominate, rather than a means of protecting and benefitting college athletes.”  These six apostates argue that “with the benefit of further experience and hindsight,” they now see that amateurism as the NCAA defines it is not some sacred principle, and that ending the rules in suit would not harm consumer demand, but would benefit athletes.

Amicus Brief from the Committee to Support the Antitrust Law: This is another brief focused primarily on whether the rule of reason was appropriately applied to this case.  The three big points are (a) The NCAA Is not a Joint Venture; (b) even if the NCAA were a JV, it would be best analyzed under the Rule of Reason, which is designed to analyze joint venture activity; and © what we’ve seen in the wake of the Alston (and O’Bannon) case provides a real-world demonstration of why simply assuming a restraint is good, rather than doing the factual dive the rule of reason requires is a bad idea.

Amicus Brief of the O’Bannon case Plaintiffs: This brief is basically a way for the people who represented the O’Bannon Plaintiffs (Ed O’Bannon himself as well as the other named plaintiffs and the class as a whole) to counter certain jabs the NCAA and conferences took at the O’Bannon decision even though this appeal is ostensibly only about Alston. 

As these lawyers (Michael Hausfeld and his excellent team, plus my favorite trial lawyer, Bill Isaacson) know the record of that case very well, it is a nice compact way to get to the justices the facts established in that case, which I would imagine are not in the record otherwise (again because this is not an appeal of O’Bannon).  They explain that the facts established during the 5 years (and 15 trial days) of O’Bannon contradicts a lot of what the NCAA claims about “amateurism,” including the past history without enforcement as well as the changing rules over time, and they quote my friend and business partner, Dan Rascher, for the obvious proposition that:

 “testified that consumer interest in major league baseball and the Olympics increased after baseball players’ salaries rose and professional athletes were allowed to compete in the Olympics.  … In addition, Dr. Rascher noted that consumer demand in sports such as tennis and rugby increased after the sports’ governing boards permitted athletes to receive payment. … Amateurs compete along professionals in major television events such as golf’s U.S. Open and the Masters.55 National soccer competitions such as England’s FA Cup and France’s Coupe de France are prestigious tournaments featuring amateur, semi-professional, and professional teams competing against each other.” And in all of these cases, the introduction of professionals into the sports has not harmed consumer demand.

The brief then explains the NCAA has a long history of predicting the sky would fall if they had to give up a rule, but as usual, their predictions about the harm from allowing COA payments (which O’Bannon allowed) have proven false when we let reality test-drive the new rules. As they write, these changes in compensation rules:

“increased the amount that most scholarship athletes receive by several thousand dollars in unencumbered and unmonitored spending money. In the first year in which such compensation was available (2015- 16), NCAA members paid it to over 3,000 athletes in the Power 5 conferences (nearly 45% of all athletes in those conferences), as well as to more than 1,000 athletes outside the Power 5 conferences. … And some forms of compensation are quite substantial. Students have received ‘bowl gifts’ worth hundreds of thousands of dollars, insurance policies to cover risk of future earnings loss costing tens of thousands of dollars, and Olympic incentive payments totaling tens or even hundreds of thousands of dollars. This development has created a natural experiment testing whether compensation in excess of cost of attendance (‘COA’) has any impact on consumer demand or the health of college sports. … Yet there has been no evident harm to college sports since 2015, which have proven resilient and extremely popular even during the COVID-19 pandemic. ’[T]he compensation rules adopted in 2015 propelled the compensation of many college athletes, especially at most FBS schools, far above any plausible estimate of [cost of attendance] plus participation in sports. Meanwhile the revenues of college sports continue to increase.’” 

Finally, there are two sets of briefs written primarily by people in Sport Management and Sports Economics, many of whom are my friends either from conferences or just from twitter interactions.  

Amicus Brief of Amici Curiae Sports Economists, written by 23 prominent sports economists, makes points that should be obvious to readers of Sportsgeekonomics.  These are that (a) the NCAA is not a sports league because it is the conferences that perform the league function in college sports and (b) that importantly the NCAA does not produce college sports (again, this is the schools and conferences – the NCAA essentially just puts on post-season tournaments, and in FBS football, they don’t even do that).  They go on explain that © amateur college sports can exist without the NCAA, and conclude that (d) what the NCAA really is, rather than a joint venture that produces league sports, is simply a “price-fixing cartel over college athletes.” As they conclude:

“The upshot of these conclusions is that the ‘joint venture’ NCAA, designed and implemented by member conferences and independents, is a price fixing cartel over college athletes. The collusion of member conferences and independents to fix this input price is not necessary for member conferences and independents to fulfill their necessary function of creating conference and independent play. While most of the debate is about the fairness to athletes, economics adds that there are efficiency losses to this cartel behavior and that removing the cartel actually produces efficiency gains that the courts are not considering yet.”

Amicus Brief of seven professors of sports management (and related fields).  This brief is basically written by all the important scholars in the field who weren’t in the previous brief (leaving to the side those who worked on the case  – like me, even if I don’t qualify as “important” -  who cannot file as amici).  They are Ellen Staurowsky, Eddie Comeaux, Joseph Cooper, Billy Hawkins, Amanda Paule-Koba, Richard Southall, and Robert Turner.

As a quick aside, Eddie Comeaux was kind enough to include a chapter that Dan Rascher and I co-wrote in his book “College Athletes’ Rights and Well-Being” and Joseph Cooper (author of the excellent “From Exploitation Back to Empowerment” is also an Academic Advisory to the Professional Collegiate League).  Other key books by these amici include Staurowsky’s co-authored “College Athletes for Hire” and Hawkins’s “The New Plantation.”

This brief also provides factual background that counters the NCAA’s narrative of 150 halcyon years of “amateurism” – at this point you probably know the highpoints, which the authors lay out at the end of their brief:

 “The lower courts were correct in finding that the NCAA’s hews to a different, narrower conception of amateurism than the one it claimed and, further, that the injunction would not undermine it. As explained in Section I, plaintiffs already receive certain financial benefits related to education, as well as some not related to education. As explained in Section II, plaintiffs pursue their sports as a vocation and power a massive commercial enterprise. The education-related benefits that the injunction permits will hardly compromise the conception of amateurism that reflects these realities. By allowing the NCAA to continue to restrict unlimited payments unrelated to education, the injunction preserves the very distinction—the only distinction—that the NCAA, in practice, seeks to maintain between college and professional athletes.”

 They then conclude with an irony: if the NCAA’s primary purpose really is aimed at improving the education of college athletes, then

“If anything, the injunction is too limited to realize the NCAA’s stated goal of improving the education of college athletes. The NCAA’s own expert, Dr. James Heckman, “conceded that additional compensation could improve outcomes for student-athletes, belying the notion that the challenged compensation limits, as they currently stand, are necessary to achieve positive student-athlete outcomes. Additionally, other evidence shows that student-athlete achievement, as measured by graduation rates, has increased since 2015, when permissible athletics-related compensation increased.”

And now you know what these 14 briefs say, at least enough to sound smart at a cocktail party, not that anyone is going to a cocktail party anytime soon.

Did I get anything wrong?  Did I miss anything major?  Shoot me a note or send me a tweet @andyhre.

This is not a full blown lecture on how to comply with Title IX.  You can read those elsewhere on this blog.  Rather, this is a quick dive into one school’s data to show how you can check at home (or say, in the AD’s office) whether a school that plans to cut a woman’s sport will run afoul of Title IX or not.

Let’s take the case of Michigan State, which is on the verge of being sued for cutting women’s sports.  Title IX has many components, but one of them says Michigan State has to meet one of three “prongs” related to female participation in intercollegiate sports.  These are:

1. Whether intercollegiate level participation opportunities for male and female students are provided in numbers substantially proportionate to their respective enrollments; or
2. Where the members of one sex have been and are underrepresented among intercollegiate athletes, whether the institution can show a history and continuing practice of program expansion which is demonstrably responsive to the developing interests and abilities of the members of that sex; or
3. Where the members of one sex are underrepresented among intercollegiate athletes, and the institution cannot show a history and continuing practice of program expansion, as described above, whether it can be demonstrated that the interests and abilities of the members of that sex have been fully and effectively accommodated by the present program.

44 Fed. Reg. at 71418.

The first of these can be called “proportional participation” meaning you have to have your M/F ratio for sports be close to the M/F ratio for undergrad enrollment.

What is close for the purpose of participation?  Well it’s a little squishy, but some sources argue that the standard is essentially the same for D1 colleges, i.e., participation is only “substantially proportionate” to the undergrad population if the ratios are within a point or two of each other, and this is the interpretation I find the easiest to work with: 

So let’s look at Michigan state’s undergrad enrollment.  As of the end of the 2018-2019 academic year [the last one for which I have data], there were 17,360 men and 18,231 women enrolled as undergrads at Michigan State.  This is a 49/51 M/F undergrad ratio.

In terms of athletic participation, there’s a little trick school do, which they appear to be allowed to do, to make it easier to comply with Title IX.  The data on participation can be calculated 2 different ways.  One way, you simply count up the rosters of every men’s sport and women’s sport and add them together.  Doing this for MSU gets you a total of 451 men and 449 women.  That’s a 50/50 ratio, and that’s almost surely going to be close enough to be seen as proportionate to the 49/51 undergrad ratio.

But the thing is, that doesn’t mean 451 men and 449 women actual participate in sports at MSU.  Often athletes on one roster are also on another – especially in a sport like running, where colleges can have an outdoor track team, and indoor track team, and a cross country team.  Michigan State appears to have a lot of double (or triple) dippers b/c those 451 men on rosters are actually only 370 actual men, and the 449 women on rosters are actually only 345 actual women.  That ratio isn’t 50/50, but instead is 48/52.  That is a 4 point disparity and so if the rule is with 2.0 percentage points, then MSU would be OUT of compliance and that would be problematic.

That said, my understanding (which could be wrong!) is that MSU is allowed to use the duplicative count, which means MSU is officially a 50/50 school and thus is the rare school that DOES comply with prong 1.  This gives MSU a lot of flexibility compared to schools that don’t meet the first prong.   We’ll come back to this in a moment to check whether the cut is ok, but let’s quickly discuss what happens if you don’t meet Prong 1.

Schools that don’t meet prong 1 almost surely CANNOT cut a woman’s sport b/c they rely on prong 2, which essentially asks “have you been adding women’s sports over time and NOT cutting any?”  The moment you cut one, you lose prong 2.

What about prong 3?  Prong 3 sys you need to show you have met the desire of *every* undergraduate woman to ply intercollegiate sports.  For one, that’s hard to do, but also it is hard to show.  Schools rely on surveys but having to survey the population every year and hope you don’t let in a woman who wants to swim (if there’s no swim team) is dangerous.  And since the swimmers are generally on campus before you cut the sport, cutting the sport almost surely runs you afoul of Prong 3.

So it’s prong 1 or die for MSU.  And they currently meet it.  But what happens if they cut women’s swimming?  Well, According to the 2018-19 data, MSU had 34 women swimmers and 29 men’s swimmers.  By cutting both sports, the (duplicative) participation count drops to 422 men and 415 women, which is still 50/50 if you round to the closest percentile.  And so MSU just squeaks in under Prong 1.

As a side note, MSU is almost surely in violation of a different element of Title IX, which is the Financial Proportionality Requirement.  

UPDATE: I’ve discovered the lawsuit also alleges violation of the financial proportionality rules and so this is not really a side note!

These rules state:

In order to ensure equity for athletes of both sexes, the test for determining whether the two scholarship budgets are “substantially proportionate” to the respective participation rates of athletes of each sex necessarily has a high threshold. The Policy Interpretation does not, however, require colleges to achieve exact proportionality down to the last dollar. The “substantially proportionate” test permits a small variance from exact proportionality. OCR recognizes that, in practice, some leeway is necessary to avoid requiring colleges to unreasonably fine-tune their scholarship budgets.

When evaluating each scholarship program on a case-by-case basis, OCR’s first step will be to adjust any disparity to take into account all the legitimate nondiscriminatory reasons provided by the college, such as the extra costs for out-of-state tuition discussed earlier. If any unexplained disparity in the scholarship budget for athletes of either gender is 1% or less for the entire budget for athletic scholarships, there will be a strong presumption that such a disparity is reasonable and based on legitimate and nondiscriminatory factors. Conversely, there will be a strong presumption that an unexplained disparity of more than 1% is in violation of the “substantially proportionate” requirement.

In practice, this means that because MSU is a 50/50 school for participation (as we’ve just shown above), it needs to be 49/51 or 51/49 or somewhere in between for athletic scholarship funding.  Sadly, though, MSU gives 55% of all financial aid to men, putting them outside the +/- 1% cushion.   Cutting men’s and women’s swimming almost surely doesn’t fix this, though the public sata I have cannot answer that definitively – but the men’s swimming team would need to get a LOT of financial aid for these cuts to cause that, and in my experience men’s swimming teams rarely get a lot of funding.

So bottom line?  As a quick first-pass based on the 2018-19 public data, and subject to seeing the school’s internal numbers, I would think Michigan State has managed to stay within the lines re: participation) by cutting men’s and women’s swimming but appears to be outside the lines re: financial proportionality.  I am willing to be shown I am wrong though, so if you have a different view, leave a comment or hit me on on twitter where I am @andyhre​

Further Update: I am told the swimmers allege the participation counts themselves have been rigged, by adding women to rosters who were not truly on the team.  Nothing in what I’ve analyzed can show me data on that, and so to the extent that is true, all of my calculations are likely distorted.  As a data analyst my output is only as good as the data inputs are true.