SEC Football Teams Should Become For Profit Businesses

A few weeks ago I wrote a column explaining the current conflict in college football between Alabama's Nick Saban and Texas A&M's Jimbo Fisher as a symptom of college football's Berlin Wall collapsing. Just like when the Berlin Wall came down and communism was suddenly replaced by capitalism, after years of top college football players not being compensated anywhere near their overall economic value, suddenly college football -- and college basketball, but on a far smaller scale -- are experiencing unregulated free agency, sports free agency on steroids.

After generations of artificially stifled economic opportunity, players are essentially free to sell their services to the highest possible bidder and jump from one school to another based on who is paying them the most. As I laid out in that column under existing rules a college football player, in the space of four years, could sell his football labor three different times in four years to three different schools. (A player can sell his labor as a recruit, can enter the transfer portal after a year or two and sell his labor again, and a player could enter the portal a third time by graduating and receiving the graduate transfer exemption. That could be three free agency pay days in four years.) That compares, for instance, with a first round draft pick in the NFL who is locked in to one team for five years before he could enter free agency.

This means the practical reality is now college football players have more freedom when it comes to selling their athletic labor than, amazingly, any pro sport athletes. (The same rules apply for college basketball players, but, again, the revenue of college basketball, even for top teams, is a pin prick of the value of college football.)

This unlimited and effectively perpetual free agency isn't new for college football -- football coaches have had it forever -- but what we've done is expand the marketplace so that college football players and college football coaches are, at least in theory, perpetual mercenaries. Just as a college football coach can have a good season and leap to a better opportunity. So too can a college player. The result of college football perpetual free agency has become that major conference college football coaches often make more money than NFL head coaches. (Nick Saban, for instance, could leave Alabama tomorrow and take over coaching at Auburn without having to sit out for even a day's work. That isn't true for Bill Belichick, who is under a contract and couldn't leave the NFL's New England Patriots to take over as the head coach of Buffalo Bills tomorrow.) The same might soon be true for top college football players as well, who could out earn their rookie salaries in the NFL.

(And no one has even talked about the holdout situation that is looming. What's going to happen when a top player decides he's sitting out for a big game unless he gets more money? You know it's going to happen.)

Since college football players haven't made money -- at least not legally -- in the sport for generations, the result has been a constant arms race for facilities. The top college football programs have far better facilities than many NFL teams do because the NFL teams spend most of their money on player salaries and the college football teams haven't had that expense. The results? Lots of waterfalls in weight rooms and lots of phenomenal video game playing facilities as well in player lounges. But the players have gotten virtually no money from the schools. (Stop with the scholarship argument. Courts have struck it down. And how many of you working for salaries right now would trade your salaries for a scholarship to a college? Almost none of you. I sure as hell am not taking below market value to do a job -- and make no mistake, football is a job -- in exchange for an education I may not even want.)

Players are now selling their services to the highest bidder and that's going to become an impossible genie to put back into the college bottle no matter what happens in the years ahead. (Even if you have any faith in the NCAA or in politicians to regulate this issue -- newsflash, I don't -- this would likely turn into a massive state vs. federal law mess and spend decades in the courts.)

As a result of college free agency arriving, super rich boosters are now engaged in a battle to spend as much money on top recruits as they can. Where does this end? We don't know. But one direction we could certainly be heading is a super rich billionaire, intent on his favorite school winning every game, simply endows billions of dollars in an NIL fund and uses it to buy players.

This feels inevitable to me.

Eventually the guy with the most money will buy the best players. And the guy with the second most money will buy the second best players and on down the list. It may take five or ten years to get there, but this is where we're headed in college sports.

It's inevitable.

Pro sports owners know this. They're all wildly competitive capitalists and they know that left to their own devices the guy with the most money to spend will eventually win. It's why they've all put in place collective bargaining agreements to ensure that the richest American owner simply doesn't buy the best players and slowly destroy the league's business.

The result? Pro sports -- and college sports -- are some of the only businesses where the goal isn't actually to put your competitor out of business. Instead the competitiveness of the games is the business itself. The more even the competition is, the more fervent the fan support and the more money you all make. If the same team always wins, people stop watching. And if your team can never win, you also lose interest and stop watching. What you need is fair competition where everyone thinks they can win.

No pro sport does a better job in America of producing parity than the NFL, which, interestingly, is the only sport in America more popular than college football. The NFL's business is made up of socialistic monopolies. That is, the league imposes socialism via its business spending -- a salary cap for players -- but enforces a monopoly by ensuring there are only 32 franchises. The result? A gold mine. It's impossible to lose money, at least so far, by buying an NFL franchise. (By the way, as a newly rich guy, one of my newly learned life lessons is invest by buying what super rich people want. In the long run, you'll do fantastic with this goal in mine because super rich people's incomes are going to increase faster than average people's income. That means what super rich people want, like sports teams and beach houses, will increase faster than what super rich people aren't interested in buying.)

Since the college football Berlin Wall has come down, I've been thinking quite a bit about where college football goes from here and my idea, at least initially, will strike many of you as radical. But the more I consider the business, legal, political, and educational aspects of our current situation in college football the more sense it makes. So here's my big idea: the SEC schools should spin their football teams off and allow them to become for profit businesses.

I know, your jaw just dropped because you've probably never seen anyone make this argument before. I also understand this is a somewhat radical idea, but there are already successful precedents on college campuses -- many hospitals have been spun off from university campuses and thrived as for profit institutions which still retain a connection to the schools themselves.

So let me explain the rough logic of my admittedly provocative idea below.

The SEC as a brand is wildly valuable and exclusive. There are 16 teams with rabid fan bases all located in the South, the fastest growing part of the country, where people are moving on a regular basis. And each year these schools produce a new generation of diehard fans, newly minted graduates of their universities who will go on to very successful lives with lots of disposable income to spend on their favorite teams.

If anything, the SEC football teams as a business are being held back by its association with not for profit colleges and not for profit athletic departments because it leads to inefficient spending and investment. Plus, there's no way to legally solve what I believe college football is headed towards -- a race for billionaires to spend as much money as they can on top players. The Supreme Court has said that schools and leagues can't really restrict this from occurring without violating anti-trust law.

So what can get around the anti-trust issues? A collective bargaining agreement between owners of the teams and players. But that requires the players to become employees. And it requires those employees forming a union to bargain on their behalves. (Yes, the players will pay taxes! College football fans are OBSESSED with players having to pay taxes. I've never seen anything like it. Tax guy will respond in the comments within forty seconds after I tweet out this article. Just wait.)

So what does this look like?

These 16 SEC football businesses could enter into an agreement to collectively bargain with all the players on their rosters, who would be represented by a union. This negotiation would create a league wide collective bargaining agreement that would govern player contracts and compensation. Under this CBA most players would make far more than they would stand to make on the open NIL market. Some players, however, would make less. That's how CBA's work in pro sports too. (NFL quarterbacks like Patrick Mahomes make less under NFL CBA's than they would if there was no CBA at all, but the majority of players, that is most of the union members, do better than they would on the open market.) Individual players would need to sign over their NIL rights to the teams they play for, preventing schools from simply funneling money to players through NIL deals. (Current pro athletes don't have to do this, but in exchange they agree to be drafted, restricting recruiting teams from offering them incentives outside the salary cap. NIL money could still be allowed if players agreed to a college football draft, but that seems unlikely and I'll discuss this below.)

CBA's are exempt from anti-trust law so there would be no need to worry any more about college anti-trust issues or the lawsuits they create. This would also avoid all the looming Title IX and NIL issues that are going to collide in the near future. Eventually, after much wrangling, an agreed upon salary cap would be negotiated and every team would have the same amount to spend. These salary caps could treat all players on the roster the same -- that is every player would make the same across the entire league -- or players and teams could set up a salary cap system like the NFL has, where every player can maximize his revenue on the open market as a recruit and players would make different amounts. But, beware, if you overpay a recruit and he doesn't pan out, you will suffer on the field just like an NFL team does. Unlike, however, in the NFL where a draft slots players to whichever team wants him, each player would have the right to pick whichever school he wished to attend and would then represent that team while attending school on campus. (Players would give up NIL money during their time on a team in exchange for the right to pick schools.) Player trades would be forbidden, and transfers would probably become far less common, although in the event of a transfer both teams would have to agree on a departing player and his value, which might create a default trade market. (That is one player who wishes to transfer might be able to find another player who wishes to transfer on another team.) The practical impact would be a recruit's high school choice would be even more important than it is now since the team taking him would invest far more money in his growth.

As compensation for spinning off their teams, the schools would be compensated for the value of their football facilities and stadiums. All players would receive scholarships as part of their compensation. That is, players would remain students subject to the same guidelines and restrictions as all other students, but the teams would pay their tuition dollars to the school in order to maintain the school and team connection. If a player was kicked out of school for academic failure or misbehavior, he would no longer be able to represent the university's affiliated team. So teams would still be incentivized to keep their players in good academic standing and there would still be an educational component for young men preparing for adulthood. (Again for the tax obsessed dudes, players would pay taxes!)

Many of these details are just my ideas, others might feel differently when it comes to designing the practical reality of the new league, but this would provide the rough template to maintain university affinity for newly independent for profit football businesses.

It also solve an important issue.

Namely, from a business perspective the current existence of college athletic departments makes no sense at all. Only two athletic teams, football and sometimes men's basketball, actually make any profit. It makes no sense to house these two profitable businesses with those teams that lose money under the same system. (The first thing any business owner who looked at the books of college athletics would do is cancel all the businesses that lost money and focus on the profitable teams. That is, there's no profit rationale for most of college athletics to exist). Under this framework the universities would all receive a massive lump sump payment for the football team's business and that money could then be placed in an endowment to fund non-profit athletic teams for generations to come. Most college sports would return to their initial intent a hundred years ago, college kids would be able to compete against other college kids in a more traditional educational environment, the swim team wouldn't be treated like the football team.

The sixteen schools of the SEC, linked as NFL teams are in one organization, would be free to maximize their true earnings power as a for profit business. The league could be organized with individual owners -- can you imagine what these franchises would sell for?! -- or it could be a collectively owned entity with all 16 teams owned by one governing body. Heck, the Southeastern Conference could go public on a stock exchange and the SEC could actually be governed by the SEC, the Securities and Exchange Commission. There are many different organizational methods by which this could occur and I'd leave the best business practices to the guys better at manipulating Excel spreadsheets than me.

But the value? The value would be monumental, especially if a single entity owned all teams and you could sell the entire product to TV networks for generations to come.

Look at what the UFC is worth today. Look at what the WWE is worth today. Netflix, Apple, Amazon, Disney, Fox, they would all bid billions of dollars to own this league and be able to sell its rights going forward. You think the dollars are big now? You ain't seen nothing yet. The SEC could be a foundational property for any streaming service. Heck, it could start its own streaming service and eventually buy up other leagues.

The opportunities are endless.

The future of sports, in my opinion, is eventually in big brands owning entire leagues. Why would Disney want to rent the UFC, for instance, when they could buy it and own it forever? Why would the SEC not want to own itself?

In the short term the SEC could begin to play its own schedule entirely against league teams -- play 15 total games, each SEC team plays each SEC team and then finish with an all SEC final four in the playoff and crown a champion. (You could reconfigure the clock so the number of snaps in a 17 game season was similar to those played now.)

The competitive business advantage would be so massive that all the best players would come to the SEC and eventually other top college teams would beg to join the SEC. The result? The SEC would be able to add the 16 top college football brands from across the country to another division and create a 32 team league, just like the NFL. Initially, the SEC could be on one side and the rest of the nation would be on the other side. Each year the SEC could play the nation for the college football title.

It's the Super Bowl, but for college sports.

Eventually you could integrate all 32 for profit teams into the same league and set up the best possible scheduling match ups and divisions, just like the NFL does today. Gone would be the small school bought games, the top 32 for profit teams would compete for a "college" title by only playing each other. (It's a fair question to ask why the SEC should do this and not, say, the Big Ten, ACC, Big 12 or Pac 12 doing this first. My answer: I don't think the ACC, Big 12, and Pac 12 has a loyal enough overall fanbase or the political wherewithal to pull this off. For the Big Ten, I think they lack the political capital and university relationships to make this a reality. I believe the only college conference that could conceivably pull this off is the SEC.)

And thanks to the CBA, just like the NFL, every team would be on a truly equal footing.

The players would make more money, the competition would be more even, and the fan fervency wouldn't change.

Yes, I get it, the SEC teams spinning off from their schools as for profit franchises is a revolutionary idea, but that doesn't mean it's not the best solution for the new paradigm in college football, one that balances business, legal, competitive and educational interests.

Ultimately college football is a big business. Now that college football's Berlin Wall has come down, this just makes it a bigger, and more honest, business.

(And, yes, the players would pay taxes.)