Universities Look to Uncle Sam To Help Restore Their Cartel Over Profits Generated by Student Athletes

Athletic competitions mesmerize because, being unscripted, their outcomes are unpredictable. But as college football season lumbers forward, there is occurring a predictable but nonetheless entertaining event associated with college athletics: Government and large, mostly state-run universities are collaborating to reestablish the cartel that for decades enabled the schools to reap billions from the negligibly compensated labor of “student-athletes.”That phrase, which has become risible regarding the best revenue-generating athletes (principally male football and basketball players) central to today’s drama, is clung to by the cartel that coined it. It puts a pretty patina on a business model that until 2021 suppressed what all cartels everywhere exist to minimize: costly competition. The cartels are the National Collegiate Athletic Association’s four “power conferences” that generate the lion’s share of college sports’ billions.The serpent (which is not the villain in this story) slithered into big-time college sports’ Edenic paradise in 2021 when so-called NIL payments to players were authorized for the use of their names, images and likenesses. Such is the spontaneous creativity of markets, “collectives” quickly sprung up. These private groups of well-heeled boosters collaborate with schools’ athletic departments in the recruitment and retention of talent.The “transfer portal” is a euphemism used, as euphemisms usually are, to obfuscate. The candid name for what the portal created, but might soon be severely circumscribed, is free agency — athletes selling their services to the highest bidders. This is what President Trump targets when he calls for prohibiting the “third-party market of pay-for-play inducements.”It is axiomatic: When an industry begs government to regulate it, assume that it is seeking protection from threats to the status quo with which the industry is comfortable. The universities are pleading with Congress, which you might think has more urgent priorities, to protect them from twin terrors: athletes being paid their market value, and antitrust litigation resulting from the cartels collaborating to stifle this.The conferences want, in effect, federal price controls, lest athletes in some states be able to earn more than those in other states — a nightmare for recruiters. And lest too much money flows to the athletes the money-spenders pay to see.Mr. Trump, who cannot see a parade without jumping in front of it, has issued (what else?) an executive order, saying that federal action is needed to “restore order.” Translation: to suppress the disorder that results when society’s lower orders (here, athletes suddenly allowed serious compensation) acquire rights and aspirations. This has happened now that athletes with lucrative skills enjoy free agency, the ability to sell their services to the highest bidder.The president’s order says the post-2021 system “risks exploiting student-athletes.” His sense of irony deserts him when he says athletes now face exploitation as they finally gain leverage, a.k.a. freedom, regarding the wealth they create.The college sports industry is hurriedly improvising institutions empowered to give the schools cost-certainty, and handsome profits. Because of a lawsuit settlement, there will be a $20.5 million cap for all schools, distributed across all sports. Do not expect “equity” to dictate that quarterbacks and gymnasts must be paid equally. More important, NIL payments, sometimes of seven figures, that athletes negotiate with third parties (collectives) do not count against the cap, so far. We shall see what Congress devises to prevent this from largely nullifying the cap. A new body, N.I.L. Go, will scrutinize third-party NIL contracts worth more than $600, which means most contracts.Scrutinize by what standards? For whose benefit? Stay tuned. And bear this in mind:Most college football players, even from the big conferences, are not going to play in the NFL. Their market value will end when their college careers do. The fortunate few who, for a few college years, translate their talents into large third-party payments are, before their mid-20s, done monetizing their skills. Nevertheless, bet on the cartel concocting measures to minimize third-party payments.To be fair: All sports leagues, including the college football conferences, impose measures that regulate the resources members can deploy, lest competitive balance be lost. And it is refreshing that post-NIL developments have finally ended tiresome genuflections at the altar of “amateurism.” And of “tradition”: the scramble for television dollars has jettisoned many old rivalries by reshuffling conference memberships.Although big-time college sports are strange appendages to higher education, they are, momentarily, educational. They are teaching how government collaborates with society’s big battalions to resist disruptions. Even if you have no interest in football, pay attention and see how tirelessly big government defends the strong.The Washington Post

Universities Look to Uncle Sam To Help Restore Their Cartel Over Profits Generated by Student Athletes

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