Category Archives: Sports

The PAC-12: “We’re No. 1”

That’s right, the PAC-12 is now “No. 1” in college football, at least when measured by what has become the most important measure of success.  It is not games won, team rankings in the polls, etc. (the SEC is way ahead by those measures).  The measure I am talking about is MONEY!  The PAC-12 recently negotiated a $3 Billion deal for the television rights to their football games, and they are in the process of building a seven-channel television network.

You can read all the details in the December 19th issue of Bloomberg Businessweek, and in that article Commissioner Larry Scott does not try to convince anyone that College Football is not a “business.”  He believes College Sports are a huge business that has not come close to realizing it’s full potential.  He believes College Football will generate revenues comparable to the annual revenues of the NFL.  And that, my friend, is a great “business.”

The difference between Larry Scott and Mark Emmert of the NCAA is that he makes no attempt to perpetuate the myth that College Sports is not a business.  If Universities have a business with a product that can generate billions of dollars in profits, why shouldn’t they?  It’s a free market for the consumers’ dollar.

But if College Sports wants to have a long-term successful business they must stop the exploitation of the players.  You cannot emulate the NFL, or attain their level of success, if the players are not paid.  Whether they like it or not, a union will be organized and agents will represent the most talented players.  If they are smart, College Sports will not oppose these actions.  Just as with the NFL and NBA, College Sports (the franchise owners) will negotiate with the players to arrive at a fair deal.

These changes may seem radical, but with so much money at stake it is not possible to go back to the “good old days.”  Most of our major institutions of higher learning are now in the “entertainment business” and how they manage that business is going to have a huge impact on our educational system.

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NCAA-Solutions

My buddy, Dave Butler, who is being inducted into the U.C. Berkley Athletic Hall of Fame, asked me if I had any solutions to the problems facing the NCAA.  And of course I do.

  1. Scholarships should not be tied to performance on the athletic field.  The stated goal is to give the athlete a chance to get a college degree.  If the student athlete maintains the required GPA, the athlete should be able to attain the goal of graduating even if the coach is not happy with their performance.
  2. The “One and Done” practice has nothing to do with education.  Forcing a high school graduate to work for the NCAA for one year should not be legal.  We are the only country in the world that forces athletes to attend one year of college before playing professional ball.  Some players may benefit from the experience, but the choice should be theirs in a free society.
  3. The monthly stipend paid to the athlete should provide for a decent standard of living.
  4. Unless an individual college sport can pay for itself with ticket sales, alumni donations and student fees the programs should be dropped.  A small percentage of the student bodies at major universities participate in these sports, and they should not be subsidized with revenues generated by the football and basketball programs.

Let me know what you think Dave.

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David Stern Lock Out

Maybe I should have entitled this piece David Stern “Look Out.” The longer the lockout continues, and the closer you look at what Stern is demanding from the players, the more you realize that it is Stern and not the players who are being unreasonable.  I am an avid fan, and a Miami Heat season ticket holder, and as much as I will miss the game, I do not believe the players should meet his demands.

I know it is hard for many to have sympathy with either the owners or the players, but that does not mean the players should allow Stern to exploit the current economic situation.  Here’s why:

The new collective bargaining agreement is about the future, not the past.  It should not be used to make up for any losses the owners may have realized over the past five years.  We are all aware of just how bad the economy has been during the past five years.  Many businesses have lost money and most individuals have seen their savings take a big hit or worse yet, lost their jobs.  That is what happens during a recession.  Who ever said that the owners of NBA franchises should be “recession proof.”

David Stern stated that a 50/50 split of revenues would make the NBA a true partnership, and feels the 57/43 (in favor of the players) split over the past 5 years is unfair to the owners.  But what he fails to mention is that the owners own an appreciating asset (the franchise) while the players have a depreciating asset (their talent).  If Stern wants a real partnership he should offer the players a 50/50 split on any increase in value when a franchise is sold.  Obviously that is not going to happen.

From what I have read, the losses, Stern is talking about may be computed in accordance with generally accepted accounting principles but here is the problem.  The owners get to write off, as a tax deduction, a portion of their initial investment in the franchise.  That depreciation expense enables the owner to show an accounting loss when in fact the franchise is profitable on a cash basis.  It’s legal but that doesn’t mean the franchise has indeed suffered a loss.  As mentioned before, these franchises “appreciate” over time.  It’s a great business.

Finally, Stern does not want another 5-year agreement, he wants a 10 year deal.  If he can base that agreement on the economic data of the past 5 years, the owners will make a killing when the economy recovers.  He insults the players and fans with his patronizing attitude.  I don’t believe we are all that stupid.

At his age, he obviously wants to go out with a bang.  If he can force the players to accept his terms I am guessing he will be in line for a substantial bonus.

But I am betting he won’t be around much longer.  When an employee puts his or her interest ahead of the employer, the employee usually gets shown the door.  We can only hope.

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NCAA-It’s All About the Money

The NCAA’s exploitation of young men, mostly African American, from impoverished inner city neighborhoods has finally entered the conscience of the American sports fan.   The “tipping point” may have been last year when the NCAA signed an $11,000,000,000 multiyear contract for the broadcasting rites for “March Madness”.  That is a difficult number for most people to comprehend and it got many peoples attention.

As with any business, those responsible for developing a great product reap the rewards of their efforts.  In this instance I am referring to the Coaches and Athletic Directors who are now receiving multi-year, multi-million dollar contracts.  The product being sold to consumers is, of course, the athletic talent of those who play the game.  And it is a great product!

The Coaches and Athletic Directors of major college programs have become by far the highest paid faculty members at most of the Division I “educational institutions”.  And perhaps they should be because they and the players generate staggering amounts of revenue for their employers and the NCAA.  All the while, the NCAA continues to claim that it is all about education and not a business.  (It was down right painful to watch, Mark Emmert, the current president of the NCAA, trying to defend the NCAA’s position in an interview on the PBS program NOVA.  The words came out but you could see that he really doesn’t believe it.  The man has a conscience. He must know how Public Defenders feel proclaiming the innocence of their client who has murdered someone in front of a dozen witnesses.  A difficult task at best.)

College Athletics is a “business” but there are major differences between the business of College Athletics and all other businesses.  The profits are earned free of tax.  Private individuals can make tax-deductible capital contributions to the business and the employees, who actually play the game, receive no compensation other than their scholarship.  (And the scholarship is only good as long as the athlete performs up to the coach’s expectations.)

All the while the colleges can use the players’ name, likeness, video replays, video games etc. etc. to generate revenue without paying one dime of compensation to the players.

Back in 1998 a talented poor kid from Los Angeles named Andre Miller led the University of Utah’s basketball team to the Final Four in Dallas Texas.  His mother wanted to see her son play for the national championship so she road a Greyhound Bus for 26 hours, in order to be there.  USA Today wrote the story to show just how dedicated this mom was to her son.  But what I realized as I was reading this story was that if the school or some alum had bought her a ticket to Dallas on Southwest Airlines the NCAA would have declared Andre Miller ineligible.  I’m betting that no executive from the NCAA has ever ridden a Greyhound Bus half way across the country to see a game.

Since that time the business of the NCAA has grown into a multi-billion dollar enterprise but yet the exploitation of these young men continues unabated.  I am not so cynical as to believe this was all by design.  But it is very real.

Professional leagues, the NBA and the NFL love the system because the college programs provide a cost free minor league system for player development.  They were happy to collude with the NCAA by requiring players to play at least one year for the NCAA before moving on to the pros. How can that not be a violation of human rights.  A quick look at the NBA All Star roster list many players such a Kobe and LeBron who chose not to work for the NCAA before joining the NBA.

Everyone, the NCAA, the Schools, the Coaches, the Media, are all making money.  Everyone except the players who make it all happen.  When I tell other sports fans how it works their reaction is  “I didn’t know that” or “you must be kidding”.  But it is the truth, and a huge black mark on our institutions of higher learning.  We should all push to see a change soon.

The NCAA must clean up its act or they will self-destruct.  Can you imagine the consequences if a handful of star players refuse to play basketball in March.  It’s going to happen and I would love to give a guaranteed scholarship to any player willing to take a stand on this issue.

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