Ron Knecht: College sports: Higher ed’s tail wags the dog

In every state, the highest-paid public employee works in higher education: 39 football or basketball coaches, five medical or law school heads, five university presidents and — in Nevada — a plastic surgeon at UNR’s Las Vegas medical school facility.

Make what jokes you will about the plastic surgeon, but his large revenue-generating clinical practice in the medical school makes him the only one of the 50 who is surely not a burden on taxpayers.

Recently, Nevada regents voted to increase the annual base salary of UNLV’s head football coach from $500,000 to $700,000 (with substantial non-base sweeteners). From all I’ve heard, the coach is a fine person, running a clean program, improving student-athlete academic progress, and now enjoying on-field success.

But as I pointed out in opposing the increase, while he had a winning season this year (7-6) and beat UNR for the first time since 2004, his team badly lost its bowl game. With a 6-32 record in his first three years, his 13-38 total UNLV tally hardly merits $500,000, let alone a 40 percent increase.

Some defenders of the increase said it reflects the going rate and that paying to ensure we retain the right coach is the only way to get the best financial outcome for the athletic program. I pointed out that the market for college coaches is not one of the efficient, well-functioning markets of economics texts, but instead is distorted in various ways and thus not a proper standard.

UNLV gets $7 million annually in tax support for intercollegiate athletics, besides tax-supported major facilities for which athletics is not charged market rates and $2.6 million in student fees. Yet, Rebel football lost money last year — $2.8 million by one account. So, claims that taxpayers and students are not burdened by the athletics spending arms race because a particular salary is paid from “non-state” funds are misleading.

Further, contract terms are very asymmetrical in favor of coaches. Thus, if the coach leaves tomorrow, he will owe Nevada a $250,000 fee; but if we terminate him tomorrow, he will receive $1,275,000 in severance payments.

We should not criticize him for this, for these problems extend also to basketball and UNR and are generic to major college revenue athletics. Almost no major athletics program pays its own way without substantial taxpayer and student fee support, and most lose significant money even with that support.

Which brings us to the big issue. When did we decide that free markets provide so little of luxury entertainment services — that’s what college revenue athletics is — that states must contribute large tax and fee subsidies? Especially when every state dollar spent on such entertainment is a dollar denied to health and human services, education, welfare, law enforcement, taxpayer relief, etc.?

Moreover, big public subsidies are a major reason the market for football and basketball coaches is distorted. Another reason is that we prohibit paying market rates to the athletes, who are at least as important as coaches to the entertainment value. Reflecting these distortions, coaching compensation has long risen much faster than incomes of taxpayers and students.

I’m a college sports fan and former college athlete. But because this system is warped and the tail is now wagging the dog, I will oppose all such contracts until we get matters back into balance.

Ron Knecht is an economist, law school graduate and Nevada higher education regent.