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  1. #1
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    Salary cap in college sports

    I'm not aware of anyone with any level of importance discussing a college coach salary cap nor am I sure about the legality of implementing such a cap--apparently it was ruled in 1998 that the NCAA could not set salary caps for coaches, although some have suggested that conferences could possibly set caps--so I'm not really commenting on the legality of the structure, but in principle if I were an Athletic Director or a member of a university's board of directors/visitors/trustees I would be concerned about what we're witnessing in the college coaching circuit.

    What we're witnessing is a snowballing of coaching salaries that are increasing not just by percentages but by multiples. At the collegiate level, I would not be surprised if in the next decade we get our first $10 million per year coach. The NFL has set a team salary cap for players in order to enforce both parity and financial prosperity--as a result, the NFL is one of the most, if not the most, profitable athletic associations in the world and has some of the very best parity in sport.

    I'm one of the most right-wing, pro-free market people you will ever meet, but college athletics has almost nothing to do with the free market--university athletic programs are tax-exempt non-profits that are backed largely by the names of state-sponsored universities that receive enormous sums of money in federal tax payer financed grants. However, the vast majority of athletic programs do not break even or run profits yet they are upping the ante each year for head coaches and assistants. Frank Beamer is currently making about $2.5 million per year. I would not be surprised if our next head coach is hired for around $3-3.5 million, which is a major bite out of the program's already thin margins.

    What are the thoughts on college coaching salary caps? I was thinking around $4 million increased by the rate of inflation each year would be a limit high enough to prevent limiting the supply of quality coaches while preserving the long-term margins of the athletic programs. Programs like Texas and Alabama (and Duke in bball) can afford to pay $5 million ($20 million!) per year to a coach, but it puts pressure on all of the other 122 programs--most which aren't profitable--to sacrifice their already ugly margins to compete. I'm surprised we haven't heard some rumblings yet from athletic departments.

  2. #2
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    Quote Originally Posted by TJ was Broke
    university athletic programs are tax-exempt non-profits that are backed largely by the names of state-sponsored universities that receive enormous sums of money in federal tax payer financed grants.
    How much is the enormity?

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    Quote Originally Posted by Pylons View Post
    How much is the enormity?
    $59 billion per year in federal research grants (not all to universities, but much of it); pretty much the entire financial aid/loan system is now run directly by the federal government where before it was run largely by federal GSEs (NY Times said $112 billion in federal student loans were issued in 2012); feds provide something like $31 billion in Pell Grants; plus they give all kinds of tax credits and incentives (NY Times says the feds give $6.6 billion in higher ed tax credits each year); plus all donations to the ADs and universities can be written off on taxes.

    Select colleges (e.g. Grove City College) make sure to accept no federal aid at all, even federal scholarships and financial aid because otherwise the federal government can dictate certain aspects of school policy.
    Last edited by TJ was Broke; Sat Jan 11 2014 at 02:32 PM.

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    Re: Salary cap in college sports

    Quote Originally Posted by TJ was Broke View Post
    $59 billion per year in federal research grants (not all to universities, but much of it); pretty much the entire financial aid/loan system is now run directly by the federal government where before it was run largely by federal GSEs (NY Times said $112 billion in federal student loans were issued in 2012); feds provide something like $31 billion in Pell Grants; plus they give all kinds of tax credits and incentives (NY Times says the feds give $6.6 billion in higher ed tax credits each year); plus all donations to the ADs and universities can be written off on taxes.

    Select colleges (e.g. Grove City College) make sure to accept no federal aid at all, even federal scholarships and financial aid because otherwise the federal government can dictate certain aspects of school policy.
    Very little (none?) of that is athletics-specific (athletic donations are...80% deductible when you receive benefits)
    Last edited by Pylons; Sat Jan 11 2014 at 02:41 PM.

  5. #5
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    Quote Originally Posted by Pylons View Post
    Very little (none?) of that is athletics-specific (athletic donations are...80% deductible when you receive benefits)
    In context, the point was that these athletic programs are 1) non-profits and 2) are largely sponsored in name, land, fan base, etc. by state-supported universities (e.g. Texas, VT, Alabama, PSU), which receive a ton of federal and state tax payer support, so to oppose coaching salary caps solely because you're a free market capitalist is a misnomer since college athletics is not a private, free market. If one were going to oppose coaching salary caps, there are a million reasons I can think of, but free market capitalism is not one of them.

  6. #6
    Old Line Hokie's Avatar
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    Quote Originally Posted by TJ was Broke View Post
    I'm not aware of anyone with any level of importance discussing a college coach salary cap nor am I sure about the legality of implementing such a cap--apparently it was ruled in 1998 that the NCAA could not set salary caps for coaches, although some have suggested that conferences could possibly set caps--so I'm not really commenting on the legality of the structure, but in principle if I were an Athletic Director or a member of a university's board of directors/visitors/trustees I would be concerned about what we're witnessing in the college coaching circuit.

    What we're witnessing is a snowballing of coaching salaries that are increasing not just by percentages but by multiples. At the collegiate level, I would not be surprised if in the next decade we get our first $10 million per year coach. The NFL has set a team salary cap for players in order to enforce both parity and financial prosperity--as a result, the NFL is one of the most, if not the most, profitable athletic associations in the world and has some of the very best parity in sport.

    I'm one of the most right-wing, pro-free market people you will ever meet, but college athletics has almost nothing to do with the free market--university athletic programs are tax-exempt non-profits that are backed largely by the names of state-sponsored universities that receive enormous sums of money in federal tax payer financed grants. However, the vast majority of athletic programs do not break even or run profits yet they are upping the ante each year for head coaches and assistants. Frank Beamer is currently making about $2.5 million per year. I would not be surprised if our next head coach is hired for around $3-3.5 million, which is a major bite out of the program's already thin margins.

    What are the thoughts on college coaching salary caps? I was thinking around $4 million increased by the rate of inflation each year would be a limit high enough to prevent limiting the supply of quality coaches while preserving the long-term margins of the athletic programs. Programs like Texas and Alabama (and Duke in bball) can afford to pay $5 million ($20 million!) per year to a coach, but it puts pressure on all of the other 122 programs--most which aren't profitable--to sacrifice their already ugly margins to compete. I'm surprised we haven't heard some rumblings yet from athletic departments.
    I'm for salary caps on college athletic programs. Anything over the cap has to go towards academic programs and scholarships for students. That way, schools like Alabama and Louisville would be elevating their academics through their profitable athletics departments. Isn't that what the NCAA is most concerned about, the student's education and well-being?

  7. #7
    Senior Member Mercury's Avatar
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    Like the old TV contracts pre-1981, a salary cap would be challenged in court and probably be overturned. In 1981 college TV was allocated such that a school was allowed only so many appearances a year therefore everyone got a chance. UGA challenged that in court, and was overturned and the gates opened up. It would be the same for salaries. Simply, its a game, who can afford it and if you can't you are left out.


    Quote Originally Posted by Old Line Hokie View Post
    I'm for salary caps on college athletic programs. Anything over the cap has to go towards academic programs and scholarships for students. That way, schools like Alabama and Louisville would be elevating their academics through their profitable athletics departments. Isn't that what the NCAA is most concerned about, the student's education and well-being?

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    Quote Originally Posted by Mercury View Post
    Like the old TV contracts pre-1981, a salary cap would be challenged in court and probably be overturned. In 1981 college TV was allocated such that a school was allowed only so many appearances a year therefore everyone got a chance. UGA challenged that in court, and was overturned and the gates opened up. It would be the same for salaries. Simply, its a game, who can afford it and if you can't you are left out.
    Then again, I could make an argument that coaching salaries are subject to Title IX since they have a possible disparate impact on educational opportunities. If the courts accepted it, there'd be an effective cap on football and men's basketball coaches (or a LOT of really happy women's sports coaches).

    There are two very different legal principles here -- one (the CFA decision) regulated how schools earned money; the other (the proposed salary cap) regulates how schools spend it. Federal and state governments engage in the latter all the time by (in the case of the feds) placing conditions on the schools that accept said funds or (in the case of the states) by withholding and/or granting moneys in the first place. For example, all schools receiving federal funds must, by law, present "educational programming" in conjunction with Constitution Day. Indeed, if there really was support for the cap idea, all one needs to implement it is to have Congress pass a law. That's how the Constitution Day requirement was imposed as a condition of federal aid. Nobody requires you to put on such a program (or theoretically to impose such a cap), but if you don't, you won't receive any student loans/grants, any research grants, ROTC funding, or the like.

    The question is, is there any political support for this?

  9. #9
    Senior Member Mercury's Avatar
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    Guarantee no support in the Hill from both sides. YOu think McConnell will do this (and hurt UK and Louisville hell no); ALl the university's lobby in washington would squash this in a heartbeat. AND FRANKLY with all the other stuff, this is small potatoes.
    Quote Originally Posted by Perfesser View Post
    Then again, I could make an argument that coaching salaries are subject to Title IX since they have a possible disparate impact on educational opportunities. If the courts accepted it, there'd be an effective cap on football and men's basketball coaches (or a LOT of really happy women's sports coaches).

    There are two very different legal principles here -- one (the CFA decision) regulated how schools earned money; the other (the proposed salary cap) regulates how schools spend it. Federal and state governments engage in the latter all the time by (in the case of the feds) placing conditions on the schools that accept said funds or (in the case of the states) by withholding and/or granting moneys in the first place. For example, all schools receiving federal funds must, by law, present "educational programming" in conjunction with Constitution Day. Indeed, if there really was support for the cap idea, all one needs to implement it is to have Congress pass a law. That's how the Constitution Day requirement was imposed as a condition of federal aid. Nobody requires you to put on such a program (or theoretically to impose such a cap), but if you don't, you won't receive any student loans/grants, any research grants, ROTC funding, or the like.

    The question is, is there any political support for this?

  10. #10

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    Quote Originally Posted by Mercury View Post
    Guarantee no support in the Hill from both sides. YOu think McConnell will do this (and hurt UK and Louisville hell no); ALl the university's lobby in washington would squash this in a heartbeat. AND FRANKLY with all the other stuff, this is small potatoes.
    The Title IX scenario doesn't involve congress at all, just the courts. And I'm not so sure there wouldn't be support in DC for limiting coaching salaries. The Paterno situation opened up a can of worms. And it's the small potatoes that make it through the sausage machine precisely because the stakes are so low. No university is going to lobby for an unfettered right to pay coaches exorbitant salaries, especially when the NSF and NIH budgets are at risk. (Well, Bama might since it's one of the few whose athletics revenue exceeds its research grants -- but it's an exception.). And if it's "forced" on the schools, they have a face-saving way to implement it. All in all, fairly reminiscent of the original origins of the NCAA (formed to prevent TR from banning football period).

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