THE ECONOMY:
Superstar Salaries

By Russell Roberts

So the winning coach is a millionaire. Would you rather have a losing coach on the cheap? By Russell Roberts.

In contrast, college sports seems a more pristine opportunity for student-athletes to clash on the playing fields next to the ivy-covered halls we studied in years ago. There is an inevitable romance about college sports that comes from this nostalgia, a romance that the NCAA—the governing organization of college sports—works to preserve and enhance.

The NCAA roots out the most trivial recruiting violations to maintain the amateur image of college athletes. Why, they’re just like the rest of the student body, they just happen to be on the football or basketball team! Never mind that they have to practice nearly year-round or they’ll lose their scholarships. And the NCAA makes sure that all those student-athletes earn their scholarships by insisting that they maintain a minimum grade-point average.

But the rest of college sports looks pretty professional. The bowl games have sponsors. So we get the Tostitos Fiesta Bowl and the FedEx Orange Bowl. College football stadiums and basketball arenas are multimillion-dollar facilities with professional-quality weight-training and conditioning equipment and trainers. Ticket sales for basketball and football generate millions of dollars. Alumni donate millions to athletic departments. College sports is a big business.

Then there are the coaches. No amateurs or volunteers there. The latest example is Nick Saban, the new football coach at the University of Alabama. Saban will get about $4 million to coach the Crimson Tide. That’s a lifetime of income for some of us. But for Nick Saban, that’s the annual figure.

Illustration by Taylor Jones for the Hoover Digest.

Saban’s story outraged pundits, citizens, and taxpayers. How can a mere football coach be rewarded so handsomely? How can the university president and the head of the athletic department be such irresponsible stewards for their institution? By what justice does the football coach, who makes people happy 11 or 12 days a year, earn more than the best professor in the medical school or the governor of the state? These complaints come not just from the English department, where you’d expect some griping. They come from the fans of college football who are having trouble feeling romantic about a team led by a $4-million man.

But if those fans want to find someone to blame, they should look in the mirror. They are the source of that salary they find so exorbitant. Their desire to revel in victory is what drives the university to pay not an exorbitant salary but merely the going wage: what it takes to attract a talented coach away from other universities and the professional ranks.

By what justice, many ask, does the football coach who makes people happy 11 or 12 days a year earn more than the best professor in the medical school or the governor of the state?

At Alabama, those fans are tired of losing to Auburn. At Oklahoma, where Bob Stoops makes more than $3 million to coach the football team, alums from Oklahoma want to revel in victories over Texas. Now and then, they expect a national championship. At Ohio State, Jim Tressel makes a few million to ensure that the Buckeyes stay competitive with Michigan.

And those expectations and the thrill of possibility are what make that $4 million salary feasible. That $4 million is what the market will bear because the rewards for victory have become so great. The television contracts are bigger than ever. The same is true of the bowl game payouts to both winners and losers. When prizes get bigger, people will spend more to get a crack at those prizes.

And what drives that increase in prices? The fans. The fans who care more than ever, who watch those bowl games in greater numbers, who generate the ad revenue that creates those television packages and ticket revenue.

The fans create the incentive that drives university presidents and athletic directors to give people like Nick Saban a salary 100 times what the average fan in the stands is earning. If you don’t like it, stop watching, stop caring, and stop contributing to the athletic department.

Available from the Hoover Press is Free Markets under Siege: Cartels, Politics, and Social Welfare, by Richard A. Epstein. To order, call 800.935.2882 or visit www.hooverpress.org.

Russell Roberts is a research fellow at the Hoover Institution and a professor of economics and the J. Fish and Lillian F. Smith Distinguished Scholar at the Mercatus Center at George Mason University.