Unrestrained Capitalism — College Football Edition

When academics broach the topic of unrestrained capitalism, whether in an economic or political context, it is usually a prelude to the evolution of regulation and unionization. You learn about the robber barons of the Industrial Revolution and their ruthless approaches to maximizing profits, including horrific working conditions, children chained to machines, and thugs violently breaking up worker gatherings. Though some try, it is hard to argue that an entirely unregulated system driven by pure profit is healthy for any society.

The balance between ownership and labor has drifted back and forth over time. No system is perfect, but with profits and overall business health enjoying unprecedented transparency, the range of negotiation, e.g. that which is ‘up for grabs’ so to speak, is no longer a mystery. Unions and workers now know when there is daylight, something to ask for, and ownership realizes that a happy workforce helps create even more daylight.

This is especially true in professional sports. Once transparency regarding revenues was achieved, it took a few decades for ownership and the unions to establish frameworks, and ranges, within which to constrain their expectations. There are still labor disputes, but the focus and discourse have narrowed considerably and the leagues enjoy growth and the players enjoy pay increases (e.g. rising salary caps), which align with hard numbers.

What happens to a professional sports league where the owners pretend they are not owners, but otherwise act with the same ruthless greed as the robber barons of old? Of course, I’m talking about the major universities in the United States whose schools participate in the highest tier of college football. Schools like Penn State, Texas, UCLA, and Georgia are all ‘state’ schools, non-profits, run by state employees, and supported with state land grants and state tax dollars. In the world of college football, these teams participate in leagues that have commissioners, hired to act in their member school's interests. The NFL has a commissioner and he is transparently hired by the team owners to maximize the value and profits for his clients. What about the SEC commissioner, Greg Sankey? He is hired by, with minor exception (hello Vanderbilt!), state employees to help the mission of their non-profits. Here’s the mission statement of the University of Alabama:

…to advance the intellectual and social condition of the world through teaching, research, and service.

What is Greg Sankey’s role in fulfilling that mission?

So, we have a series of non-profit, state-run institutions, with entirely obtuse mission statements, owning and running for-profit leagues. It is hardly arguable that Greg Sankey’s mission is to maximize revenue for SEC’s members considering the most important aspect of his job is to negotiate media rights. How does he affect outcomes in this role? By ensuring his league attracts the most eyeballs, which in turn drives him to accumulate the most valuable assets with which to work. This is what underlies all the turmoil in college football conference alignment, including the breakup of the Pac12, the movement of Texas and Oklahoma to the SEC, and Oregon State and Washington State being left in cold.

As we saw in our earlier discussion, unrestrained profit-seeking without regulation led to some pretty horrific conditions. No one is going to equate the Pac12 folding (or mostly folding) to the scourge of child labor, but it is resulting in some pretty undesirable outcomes. Stanford now plays in the ACC, otherwise known as the Atlantic Coast Conference. I’m no expert in geography …

The ‘tragedy’ here, if there is one, is two-fold. One, the players do not enjoy unionization and therefore are not in a position to obtain their piece of the pie. In fact, until just a few years ago, the players were not paid at all. Further, left to their own devices, and with no top-down oversight, these leagues will cannibalize themselves and what’s left of the competition, to the point that the diversity, pageantry, and tradition of the overall sport is unrecognizable. It is already happening. Many won’t care. Fair enough.

By far the most unappealing aspect of all this is the utter hypocrisy of the schools themselves. They are the owners of these leagues and need to take a long look in the mirror in terms of how they align with their institutions’ mission statements. Since we know they would never scale back their supposed academic missions, perhaps, just for the sake of honesty, they should add some language about making as much money as they possibly can without giving a whit about who they trample and destroy in the process. At a minimum, I’d be very much entertained by a debate within the Pennsylvania state government apparatus regarding such a change to Penn State’s mission.