Last updated on 10/20/2016
This question came up in the Senate today, when someone criticized me for saying “the NCAA cartel” in my remarks introducing President Schill at the previous Senate meeting.
I was floored by the idea that it’s controversial to call the NCAA a cartel. Of course the NCAA is a cartel. The NCAA has been a stock example of a monopsonistic hiring cartel in microeconomic principles and industrial organization classes for years. I was taught it as an undergraduate. I teach it every year.
I’m not going to go through the whole lecture, but basically you invert the standard monopoly diagram, so it’s best to go through a few monopoly examples first. Supply slopes up, so the marginal cost of athletic labor to the cartel is above the supply curve. The NCAA maximizes the profits of its members by helping them collude to keep athlete’s wages low.
As with any cartel, the members have an incentive to “cheat”, in this case when coaches and boosters offer good players slightly better deals than the NCAA wage ceiling for revenue athletes – room and board plus free tuition for any classes that don’t interfere with games or practice time or weight training, plus $0 an hour. Remember the Prisoner’s Dilemma lecture? So the cartel can only hold together if it can punish these cheaters, which is the job of the infamous NCAA Committee on Infractions, etc.
A quick google search for ncaa cartel economics syllabus site:edu yields hundreds of results. Here’s one rather dated syllabus from the University of Chicago:
I don’t always have time to go into it in depth, but I try to also get across the point that, in the case of a labor monopsony or cartel – and did I mention that the NCAA is a cartel? – a labor union can actually move the market towards efficiency, instead of away from it. A nice demonstration of the Theory of the Second Best at work.
Agree entirely with UO matters on this one, and the cartel aspect gets worse ever year, especially as individual conferences (SEC) get their own TV channels.
A good recent synopsis is here:
http://www.forbes.com/sites/jimpagels/2016/09/10/one-intriguing-way-the-ncaa-cartel-could-crumble-and-pave-the-way-to-paid-athletes/
Or when conferences create their own network and leverage the I2 network backbone to backhaul multicamera feeds from member campuses back to the Bay Area control rooms…
You were not criticized for saying the NCAA is a cartel. You were criticized for inappropriately using the Senate Presidency as a bully pulpit for your anti-athletics agenda. Actually Chris Minson was much more diplomatic than that, he framed it as editorializing.
I don’t disagree with your opinions about the NCAA and many of your criticisms of athletics are valid, but you were called out on bad behavior, not inaccurate use of language.