Literature Review #5

Visual:
 

Citation:
Sanderson, Allen R., and John J. Siegfried. "The Case For Paying College Athletes." Journal Of Economic Perspectives 29.1 (2015): 115-138. Business Source Premier. Web. 21 Apr. 2015.

Summary:
This is a very interesting article that talks about the rise in the prominence of large-scale commercialized sports programs.  Universities have realized that their athletic programs are a huge source of revenue and in turn more and more importance is being put on these teams.  In particular, schools are making large profits from the rise in broadcast rights fees for live games that are being played.  It is clear that these school are exploiting their players, paying them nothing, while the university makes millions from these games.  The authors make the case that a change is needed to the current system of college athletics, they propose a free market system.  Under this system the schools would compete against each other for the services of high school athletes.  This would bring competition between schools in which each player could now have a fair financial valuation.  This competitive market would allow athletes to be paid and could give a less prestigious recruiting school
an opportunity to sign better players.  They go on to talk about the potential transition costs that would accompany such a drastic change, but acknowledge that a change is needed.

Authors:
Allen Sanderson is a senior lecturer in economics at UChicago.  He currently teaches a two-quarter sequence in introductory economics, a course on the economics of sports, and has organized a team-taught multidisciplinary course entitled “Sport, Society and Science."  John Siegfried is professor emeritus of economics at Vanderbilt, and secretary treasurer of the American Economic Association.

Key Terms:
Free Market.  In the article the authors propose a potential solution to the monopoly that the NCAA currently has over its players, and that is a competitive free market system.  Under this free market for labor, the schools would compete for the services of high school graduate athletes.  This would result in competitive wages paid to players based on skill level, and a profit loss for the college athletic departments.  These athletic departments currently fix college athletes' wages by considering them "amateurs," this is how they have been able to exploit them for so long.

Explosion of revenue.  There has currently been an explosion of revenues going to NCAA member institutions as a result of large broadcasting contracts with television networks.  A 14-year $10.8 billion contract between the NCAA, CBS Sports, and Turner Broadcasting system was signed to televise the men's basketball tournament from 2011 to 2024.  The only reason that these games can be televised is because of the primary input of the situation, the players and they are seeing none of this money.  Too much profit is now being made by the NCAA and universities for players not to recognize that they are being financially exploited. 


Quotes:
"The rise in broadcast rights fees for college football and basketball games has been the main source of revenue growth of big-time college sports." (119)

"In a free market for labor, universities would compete against each other for the services of new high school graduate athletes.  With many universities and many high school graduates, such a market could be workably competitive." (124)

"One fact seems inescapable: rents are expropriated from the most talented football and men's basketball players in high-profile programs and redistributed to other parties." (129)


Value:
This article is important to my argument because it is highlighting the amount of revenue that is being put into the big time college athletic programs, and how much they are really making from this.  The explosion of television broadcasting contracts has brought in billions of dollars for the NCAA and the players can no longer sit idly by.  Too many forces are bringing the issue to light and players have to step up and try to change the system.  A proposed change would be a free market system which would allow schools to compete for players right out of high school.  I think that this is the most logical transition for the NCAA, but one that cannot happen over night. I think this article will support my thesis that athletes are being exploited by the monopoly that is the NCAA and that a change is needed to the system in which players can receive financial compensation.