Guestie: College sports and financial deception

Posted: September 16, 2013 by terryvandrovec in Uncategorized
Tags: , , , , ,

By Rich Jensen

If you’re a dirty coach or athletic director at a dirty school in big time college athletics, this is probably a pretty good time for you.

Sure, it doesn’t seem like it, but it is.

See, fans of college athletics seem to have reached the “throw-your-hands-up-in-the-air” phase, wherein corruption is perceived to be so widespread that the system itself is now declared to be the problem.

Yes! Blame the system! Don’t blame me. I’m just a simple coach (AD, agent, runner, recruit) trying to make my way in the universe.

But I’m here to tell you that the ADs, the presidents, the coaches should be punished regardless of how widespread the corruption is.

Remember 2008? Remember the financial crisis? Remember how all those investment grade banks and all those investment rated bonds were suddenly bankrupt and worthless? (Side note: Technically, these products were not bonds, they were “Collateralized Debt Obligations,” “Asset Backed Securities” or “Structured Investment Vehicles.” But it’s simpler to just call them bonds, even though that’s not strictly accurate.)

Now think about how all that happened: Why did those bonds have investment-grade ratings? Because firms like S&P and Moody’s said that the bonds were investment grade. Okay. Who pays for those ratings? The banks issuing the bonds. So, what you have here is a ratings business that is funded by the very institutions it is supposed to monitor. Does that seem likely to create conflicts of interest by the truckload?

Further, within the banks themselves, there was strong incentive to deceive and mislead the ratings agencies. As complaisant as the agencies were, there was a limit to how far they could be pushed (or how much could be bought). Thus banks routinely sought to undermine the ratings agencies’ ability to evaluate their bonds.

And why was this corruption tolerated? Because it was immensely profitable for all concerned.

So. Naturally, the logical response to this corruption is to say, “Hey, everyone’s doing it, so there’s no point in prosecuting anyone.” Or, “it’s not cheating if everyone’s doing it.”

Right?

The NCAA is just like these ratings agencies. Its legitimacy rests entirely on confidence in its ability to enforce adherence to its rules. But nearly all of its income is derived from events wherein the primary attraction is not the NCAA itself, it’s the universities that participate. CBS isn’t paying billions to air the NCAA tournament because of the NCAA. This is comparable to the ratings agencies’ policy of accepting payments from the institutions they are supposed to be monitoring.

And at these name-brand universities? There is every incentive to cheat the NCAA in order to gain a competitive advantage or even level the playing field against other universities that are also cheating. Because, as with the ratings agencies, the NCAA will only allow its credibility to be stretched so far without pushing back. The NCAA can’t permit open flouting of the rules anymore than the ratings agencies could openly sell their ratings.

The stakes are much lower in college athletics, but the character of the dishonesty is remarkably similar.

If there is clear motivation for ratings agencies and investment banks to cheat each other and investors, then it should also be clear why the NCAA and name-brand universities are willing to cheat each other and their players.

The NCAA preserves the fig-leaf of amateurism, which enables far more money to be spent on coaches and facilities than would otherwise be the case.

By propping up the facade of amateurism while subverting it at every turn, name-brand universities are engaged in a level of duplicity and hypocrisy that is every bit as objectionable, every bit as disgusting as the deceit practiced by investment banks who counted on investor trust in ratings agencies while making a mockery of those agencies. And the NCAA is every bit as worthy of contempt as the ratings agencies for cheerfully putting money before integrity, and for being willfully blind to the extent to which they have been duped by the institutions that they are supposed to monitor.

Unlike some, I have no disdain for the concept of amateurism. But I also view the concept to be hollow, hypocritical and exploitative at universities where TV revenues are measured in the tens of millions of dollars, where upwards of 90,000 people will pay to attend football games, where basketball players are ringers brought on for a single season for no other reason than to win games.

And, in the end, that’s why the NCAA and these universities, and their various decision makers should be collectively and individually held to account: They’re lying to you, the fan, by trying to convince you that you are watching something other than bad semi-pro ball. They’re doing everything they can to deprive players of revenue, while simultaneously doing all they can to maximize revenue from what those players do.

They are engaged in a cynical, calculated and thus far successful form of theft by deception, and the extent to which it is practiced should hardly mitigate our disgust with it.

About the author: Jensen is a resident of South Dakota and a student of the world.  

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