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What’s a Five Star Worth On the Open Market?

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Yesterday the NCAA acknowledged that it had a lack of institutional control when it fired its vice president of enforcement for violating NCAA rules. Combine this failing with Miami releasing a statement that chastised the NCAA for its unfairness and incompetence in the investigation surrounding inappropriate acts by a booster and the continuing fallout that could soon emerge from the class action lawsuit filed against the NCAA by former players and it’s fair to say these are the final days of the NCAA. The organization is so inept, unfair, and incompetent that it no longer has any moral authority to enforce its own rules. The NCAA is dead.

Indeed, there are already tons of articles being written about the death of the NCAA or ways to modifiy the NCAA to make it more effective, but no one really takes the next step and contemplates what a future without the NCAA would resemble. It’s important to remember that the NCAA derives its power from the institutions themselves, that is, the individual institutions have given the NCAA the authority and responsibillity to govern the game. But what if the NCAA suddenly vanished? What would college sports, in particular men’s basketball and football, the only sports where athletes have a clear financial value in excess of their scholarships, actually look like? 

This column is going to ask an interesting question, what if we replaced the NCAA with a free market system? One in which players could be paid for their talents as the market judges their value? It’s a fascinating question that I’ve never seen asked. Instead of a flawed enforcement model, it allows the market to determine the answer to this question, what’s the market value of an 18 year old five star in football or basketball?

Shockingly, we don’t actually know.

For someone who writes and talks about sports for a living, I get asked an inordinate amount about my political beliefs. The best way I can sum my beliefs up is this, I’m pro-markets and anti-stupidity, so basically I’m anti-NCAA. The NCAA represents everything that I dislike, a disjointed, dishonest, unethical bureaucracy which holds real power and lords it over everyone beneath them. And for all its power what does the NCAA actually accomplish? The NCAA exists to create an even playing field for all. But guess what, the playing field isn’t even. You think it’s a coincidence that the best schools get the most highly sought after players year after year after year? All the NCAA does is create a meddlesome and unnecessary middleman between the schools and the players.

Within that boggy middle ground is a series of ill-defined, arbitrary and complex rules that govern college athletics. Worst of all, the NCAA’s own rulebook, which acts as a force of law in college sports even though, ridiculously enough, there is no actual legal power behind the NCAA’s system of rules, is the grand arbiter of everything. Violating an illogical and arbitrary NCAA rule has very real consequences. The NCAA is a socialist construct that is attempting to keep a capitalistic system from flourishing, if it was a nation it would be North Korea. Where else in America other than college basketball and football can 18 year olds who are otherwise qualified to make a living at the height of their professions, not make those livings? And not just fail to be paid, but be punished for attempting to make a living off their talents.

Put simply, nowhere else in America.

The NCAA’s job is impossible because it must enforce an anti-capitalistic system of rules amid a capitalistic society. The NCAA is the most anti-American organization with real power in our country today.

And for what purpose?

Because the NCAA decided long ago that amateurism matters when it comes to college athletics. The NCAA is the lone holdout on amateurism now. Even the Olympics, long a bastion of pure amateurism, now allows professional athletes to be compensated for their skills. So why is the NCAA the lone holdout? I’ll tell you, because by enforcing the amateurism standard the NCAA maintains a monopoly on all the money that the athletes make. You want to talk immoral? The most immoral actor in college athletics is the NCAA itself, the organization that pockets billions off the blood, sweat, and torn ACLs of countless top athletes. 

As someone who is pro-markets and anti-stupidity, I hate when governments or governmental entities spend money to keep something on the black market. My default position would be this — legalize it and tax it. We allow people to spend their money on all sorts of stupid things with negative societal consequences — scratch-off lottery tickets and cigarettes, anyone? — because we believe that these individual vices are more permissible than other vices. Our country, thankfully, did away with prohibition, but we’re still picking favorites when it comes to what’s a legal and what’s an illegal. So long as it involves consenting adults, why do we make a values judgment on whether alcohol is better than pot or casino gambling in Las Vegas is better than an online poker in the privacy of your living room? Wouldn’t it make more sense to spend our eradication efforts on real crimes with real victims instead of creating black markets across our country?

Anyway, that’s my political belief system in a nutshell, and it happens to place a clear target on the the current NCAA morass. Namely, what would happen if the NCAA didn’t exist and we replaced everything in college athletics with a completely free market? That is, what if colleges and their boosters competed to sign the best players for as much money as the market would bear? Basically, what would a five-star player’s services sell for on an open market if he was able to sell his services to the highest bidder?

The truth is, we have no idea because there has never been a true market for selling high school athletes in men’s basketball or football. Sure, players have had their services bought before, but these negotiations take place on the underground, which is notoriously unreliable for projecting onto the free market. For instance, legalizing pot has led to a precipitous decline in the cost of the drug on the street. The working assumption seems to be that players would make much more money on the open market, but would they for certain? Cam Newton’s father memorably offered his services for $180,000 to Mississippi State — which would have been the greatest buy in the history of Mississippi — but what would Cam’s value have been if his father had been free to sell his services on the open market?

In theory, it would have been much higher, right?

But a free market is logical and cunning. Cam Newton came with a great deal of risk. He had a criminal background and was unproven at the top college level. Would these negatives have outweighed his potential positives? Who knows. All we know for certain is that the collective wisdom of the market is difficult to beat. What happens when a five-star gets a multi-million dollar signing bonus and then flunks out of school the next year? Or fails the school’s drug policy and gets kicked out with nothing to show for a big boosters investment? How about when a five star is just wildly overhyped, stays for four years, but never produces at a five star level? Wouldn’t the prices come down over time as boosters realized what an inexact science projecting player talent really was? Basically, how many Bryce Brown’s, the nation’s number one overall Rivals recruit who crapped out as a college running back, would it take to recalibrate the market? 

The other question we don’t know the answer to is this, how many people would be willing to pay for players? Schools themselves would be unable to pay for players thanks to Title IX and their own nonprofit status. But if boosters, agents, and corporations were able to pay players to attend schools, how much money would there be for the top players? Tens of millions at minimum. Maybe even hundreds of millions. Put it this way, how many fans of SEC schools would give $100 a year to sign top players? Wouldn’t every person reading this column bid for a top player? And those are just the small donors. How many insanely wealthy boosters, suddenly free to spend to their heart’s content, would pay millions a year for top players? Lots.

Is it even possible that Robert Nkemdiche, the nation’s top recruit in 2013, could make more money playing college football in the South than he could in his rookie contract in the NFL?

Maybe, especially if he was strategic about his college choices and got top SEC programs bidding against each other for top players. Can you imagine if Reuben Foster had Auburn and Alabama fans bidding against each other for him? If a top player got Florida, Florida State, and Georgia all bidding against one another for his services. Clemson vs. South Carolina, Ohio State vs. Michigan, this would be great theater during the offseason.   

We know that last year’s number one NFL draft pick, Andrew Luck, signed a four year, $22 million dollar deal with the Indianapolis Colts. Now, Luck’s contract isn’t entirely a free market because the NFL’s CBA sets parameters for draft picks. That is, there’s a tiered salary system based on where a player is drafted. Luck received five million a year at the top of the board, but the final pick in the seventh road will receive a few thousand dollars in contractual guarantees. NFL players don’t really hit the true free market until their second deal, when they reach 26 or 27 years old. It used to be that top draft picks set the salary market in the NFL, witness Sam Bradford signing for nearly $50 million, now that’s not the case.

But if you assume that Andrew Luck, the highest ranked quarterback in years coming off multiple proven seasons at Stanford, is worth in the neighborhood of $5 million a year, what would a five-star player, the equivalent of a first round draft pick in college, be worth at 18 years old?

Barton Simmons, a national recruiting analyst for 247Sports, hazarded a guess, “I could absolutely see a five star getting over a million dollars,” he said. “No question.”

Several college coaches who, not surprisingly didn’t want to be on the record discussing how much a five star would be worth on the open market, backed him up. So did several high school coaches.

How much over a million?

No one knows for sure, just that top playes would easily command a million to sign with schools.

So if a five-star is worth a million dollars on the open market, why are we surprised that there’s a vibrant underground market? The underground, or black market, just exists to plumb the inefficiencies of our legal markets. If a kid’s value is over a million dollars and he isn’t allowed to take any of that money, is it any wonder that there’s a major conflict here or that the NCAA’s job in policing this inefficiency is hopeless? Money finds a way to reach the talented. Trying to pretend otherwise is like trying to keep water from flowing downhill.

But how many players would actually receive substantial money in a pure free market? The answer is probably not very many, since the payments would be structured like a pyramid, the highest ranked players, those at the top of the rankings pyramid who can go to any school in the nation, would receive millions. But your average three star with only a few options, that is the vast majority of the recruits in the nation? He might receive twenty thousand dollars or so, potentially less. Also, you’d also have to keep signing limits in place. If every top school could only sign 25 players, the top schools, those with abundant amounts of fan money to spend, would rapidly fill up their spots.

How much money are Buffalo’s boosters putting on the table? Probably not much. The same is true for Akron and others. Although, can you imagine what kind of class T. Boone Pickens could put together at Oklahoma State? Football. Factory.

What would the impact be upon the universities? Allowing players to be paid might actually lessen the facilities arm’s race and allow athletic departments to ease up on fundraising. How so? Because right now universities compete to impress athletes with their facilities because they aren’t legally allowed to pay them to play. If the players are being paid to come to the school then the facilities matter less. This is why the University of Tennessee, for instance, has infinitely better facilities than the NFL’s Tennessee Titans. The Titans pay their players, the University of Tennessee, at least permissively, does not. So most of the money surrounds the players in college facilities, food and apparel, as opposed to going into their pockets. 

Sure, some will immediately be opposed to the idea of paying top players for their talents in college, but why? Paying for performance is the American way, the very foundation of capitalism itself. If the NFL and the NBA see colleges as legitimate competition for top players perhaps they would allow players to enter the leagues right out of high school, ending the ridiculous charade of sending players to college to kill time until they can cash in on the professional level. 

We don’t ask Taylor Swift to go sing with Vanderbilt’s choral team for three years before she releases her first album. We don’t demand that Michelle Wie or the Williams sisters head off to college to play golf and tennis, respectively, before they become pro athletes. If college basketball and football are going to make billions of dollars a year off the sweat equity of top athletes, isn’t the least we can do allow them to sell their services to the highest bidder?

Let every five star auction himself off and open up the free market to boosters, agents, and companies. 

It’s the American way. 

Or don’t. 

And let the NCAA, the North Korea of college athletics, continue to muck up the process. 

It’s your choice.   

Written by Clay Travis

OutKick founder, host and author. He's presently banned from appearing on both CNN and ESPN because he’s too honest for both.