On December 10th, 2009, Mack Brown -- the incumbent football head coach at University of Texas -- signed the biggest contract ever awarded to an intercollegiate athletics coach (http://sports.espn.go.com/ncf/news/story?id=4728932). Coming in a hefty price tag of $5 million per year, Mack Brown's yearly compensation package is larger than those of some Fortune 500 CEOs:
* $4.5million -- Joel Staff -- Reliant Energy Corporation
* $4.2million -- George Buckley -- 3M Corporation
* $4.1million -- Mark Parker -- NIKE
* $4.1million -- James Skinner -- McDonald's
(http://www.forbes.com/lists/2006/12/TotComp_12.html)
It is interesting to note that Reliant Energy Corporation is a wealthy enough business to own the naming rights to an NFL stadium (Houston Texans' Reliant Stadium), yet still pays its CEO less than the highest paid college football head coach. Certainly, as previous articles on Economics of the Collegiate Gridiron has discussed, it is true that some college football programs are capable of bringing in revenues comparable to that of Fortune 500 corporations; nonetheless, the issue is that the NCAA and its athletic conferences stand firmly on the notion that its leagues and sports are intended to be amateur, nonprofit, and for the benefit of its student-athletes. How did coaching college football suddenly become so lucrative? A New York Times article entitled "Coaches Receive Both Big Salaries and Big Questions" published in 2004 reads:
"Is Alex Rodriguez worth $250 million to play baseball?" said Skip Bertman, L.S.U.'s athletic director and former baseball coach. "Of course not, and it's not a question of whether a baseball player or a coach is worth that much. The issue is what is the market value."
(Source: http://www.nytimes.com/2004/01/01/sports/ncaafootball/01SALA.html?pagewanted=1)
The truth is, in present day society, the correct question to ask is not, "is the product worth the price?" but rather, "what does the market think the product is worth?" Therefore, as the NYT article suggests, the upward spiral in head coaching salaries in college football is probably attributed to the rising wealth of college athletic programs, and the increase in the willingness-to-pay of the viewers and fans of the sport. Some readers may not think that it is too bad; after all, the athletic programs certainly will not attempt to spend more than they make, so the rising salaries of coaches can only be a good indication of the financial health of the sport. This explanation may make pure economic sense, but there is a macroeconomic issue that must be addressed: tax-subsidies
According to Senator Charles Grassley (R-Iowa), college coaches have enjoyed major increases in pay when other university-employed staff members and students have faced tuition increases, salary reductions, hiring freezes and layoffs during these tough economic times (http://www.usatoday.com/sports/college/football/2009-12-10-coaching-salary-concerns_N.htm?csp=obinsite). Furthermore, athletic departments of universities are completely tax-exempt; therefore, one could argue that it is the American taxpayers who are partially footing the bill for coach salaries.
It is difficult to simply state whether the rise in NCAA football head coaches' salaries is simply a market-driven phenomenon or an unethical practice that is contradictory with the NCAA's amateur spirit (which also caused a great deal of public outrage). However, if the justification for high salaries is simply "supply-and-demand," the athletic departments should not use its tax-exempted funds and tax-deductable donations from its alumni base to fund its coach salaries. After all, most things in the United States that are governed by the "supply-and-demand" principle are NOT tax-exempt.
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