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College Football is Big Business (Duh!)

September 4th, 2015 by dk

As the Oregon Ducks make their final preparations for their 2015 football season before kicking off tomorrow, can we get one bold admission on the record first? College football is a business and a good one, at least in Eugene. There should be no harm in saying so.

Universities spin off profitable businesses all the time, allowing them to benefit from the school’s resources, while also freely pursue whatever market opportunities their expertise has created. Nobody flinches when that’s done with zebrafish, curriculum development, or photogrammetry technology. Why should football be different?

If our local team became Oregon Ducks, Inc., some things would be more difficult, but other things much easier. Head coaches earn hefty salaries, as do many CEOs. Once ODI became a for-profit venture, those salaries would no longer be compared to state employees, whose work may be considered by some to be more vital to the state.

Selling ODI tickets or jerseys or television rights would be straightforward. Every dollar raised would better the team’s chances of winning, as it should be, but without any distracting doubletalk about education and student-athletes.

Pulitzer Prize winning journalist Gilbert M. Gaul has a new book out about the college football economics. “Billion Dollar Ball” explores excess, examining the Oregon Ducks and others. The New York Times last week profiled Under Armour CEO Kevin Plank’s and his alma mater University of Maryland’s attempt to follow — and maybe surpass — Nike’s lead.

The conversation is already underway, so let’s try to catch up.

A few years ago, I thanked then-president of University of Oregon, Richard Lariviere for always working the word “entertainment” into his next sentence, whenever he was talking about the school’s football team. He paused for a moment, and leaned back a bit, as if taking my stock. “You noticed that, did you?”

Nothing wrong with entertainment, or success, or the business of the Oregon Ducks. We’re all happy for the distraction. Many of us would probably be willing to pay a bit more for the added honesty of calling it what it is — an expensive and profitable business venture, an economic stimulus for the school and the region, and a source of immense civic pride.

Procuring season tickets to watch Oregon Ducks, Inc. would be very different. There’d be no such thing as a “mandatory donation” attached to each seat. As English professors on campus would rightly insist, such an oxymoron could never have existed in the first place. If it’s mandatory, it’s not a donation. If it’s not a donation, it shouldn’t be tax-deductible.

Fans would still have reason to make donations to the school, to help athletes retain their eligibility, but the school’s academic leaders would have sole discretion for how donations are spent.

Wage inflation would no longer be a concern. Retaining a good coach costs money. Retaining a good Russian literature professor does too — only much less. If athletic apparel companies want to use a team for research and development, they should pay for those services. After all, even lab rats must be fed.

Under Armour claims to have developed a fabric that is impossible to grab. Does it work? Apparently. The University of Maryland won its first game wearing the fabric, 37-0. If there’s one thing we want from and for our college athletes, it’s less grabbing.

Opulent facilities are meant to turn heads, and once those buildings are put on the property tax rolls, nobody will have reason to shake their heads in disbelief. Once the buildings’ inhabitants begin paying property taxes year round, they might find new motivation to make their properties useful for more than a handful of Saturdays each fall.

Corporate subsidies would have to continue, but we’d no longer call them donations. Companies are always looking for leverage, and ODI would offer them more, not less. Unhappy investors could dump their stock holdings or maneuver to get a seat on ODI’s board of directors.

We trust unfettered economics to produce outcomes that are optimized. We want nothing more for our Ducks than optimized outcomes.

We’re not uncomfortable with the market’s invisible hand controlling our football team’s fate. We only ask the invisible hand to stop shielding our eyes.

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