For Your Reading Pleasure

A few weeks ago, I wrote a post about Nick Saban’s salary. While I probably won’t be changing my opinion– at least in basic principle– I do think it is healthy for people to hear different takes on the topics of the day.

The first link is from The Sports Economist, a multi-blogger site. In this post, Phil Miller makes several different points. One stood out to me:

4. Saban’s high salary is *not* a sign of an unhealthy society. As I wrote in the earlier post, the diamond-water paradox applies. According to the paradox, water is necessary for life but diamonds are not, yet the price of diamonds is much higher than water. Understanding the solution to the paradox comes from understanding two things: 1. the value of any good is determined by the satisfaction consumers obtain from it at the margin; 2. the price of anything is determined by its relative scarcity. It’s quite possible for there to be quite a gulf between the two (the so-called consumer surplus).

Diamonds are more pricey than water because they are relatively scarce while water is relatively abundant. The price that people pay for diamonds is much closer to the marginal satisfaction they obtain from them while the difference between the marginal satisfaction obtained from water and the price of water is much greater. The fact that water is necessary for life and we can get it for a cheap price is a cause for celebration, not general alarm.

The same thing can be said about a collegiate education and football. The talent that Saban, Tressel, and other coaches have is relatively scarce. The Sabans of the world are even more scarce. On the other hand, the talent it takes to teach effectively, for example, at the collegiate level is more abundant. So the price of coaching talent is much higher than the salary obtained by most professors. But people obtain a lot more satisfaction at the margin from education than they do from football.

For a counterpoint in the Saban salary debate, we look towards The Sports Law Professor. While he understands part of the argument that the athletic department can technically be self-sufficient, he points out that there is more than meets the eye.

Once we understand the fluidity of university finances, we can see that a particular university can designate whatever components of the university it wishes as “self-standing.” If it is clever about it, the university will designate that program most likely to appeal to donors as the program that depends entirely on the gifts of those donors, in order to present the most sympathetic object for their charitable impulse. This is not cynicism; it’s just part of the big business of charitable donations. We all give money to feed the poor, but of course some of our dollars (either directly or indirectly) pay for the advertisement that brought the plight of the poor to our attention….
I understand the positioning of athletic departments as “self-supported” for fundraising purposes. But let’s not confuse the shell game with reality. Confusing the fundraising fiction with the reality of university responsibility for and supervision over its athletic departmentwill lead to sloppy thinking and to mistakes. It will lead us to conclude that the “owners” of a state school should have nothing to say over how the “independent” football team pays its coaches or to whom it awards its scholarships. The mechanisms for taxpayer control may not work well, and the university administration or even the legislature may be effectively captured by the athletic department and its supporters, but nonetheless ultimately the taxpayers should feel free to exercise their dominion. They may like things just as they are. On the other hand, some taxpayers may wonder why state athletic scholarships don’t often go to state citizens, or why the state has locked itself into paying a football coach four million dollars a year for eight years is the right thing to do, even if it is profitable. There may be a reason the state established its university as a not-for-profit institution.

I may not be swayed into his exact line of though. But, I do think he makes an solid point. The only statement from the Sports Prof I have an issue with is this one:

Personally, I doubt Saban’s marginal revenue product will be that much (in other words, I doubt even a successful coach will add that much additional revenue to the athletic coffers), but that’s for the University of Alabama to figure out.

He’s not familiar with SEC football, so this is understandable. We basically have more than our fair share of football crazed fans, and even crazed boosters. While the state itself isn’t football obsessed, there are certainly plenty of booster and supports who are getting behind this program more than ever financially. Saban’s best intangible asset is the excitement he has brought to this program… for now at least.

Finally, to prove that The SLP isn’t just trying to join the ‘Saban haters’ ball, here is a post of his regarding Nick Saban’s lie to the media. I really found this statement to be very interesting:

Don Shula is no stranger to the flexibility of coaching contracts. He was the very successful head coach of the Baltimore Colts back in the 1969, the team having played in the Super Bowl the previous season. As the 1969 season neared a close, the Miami Dolphins surreptitiously contacted Shula about the possibility of his coaching their team. In a complaint to the league, Baltimore accused Miami of tampering, successfully, and the league forced the Dolphins to give the Colts their first-round pick as compensation. His position with the Colts undermined by his flirtation with Miami, Shula was allowed to resign from Baltimore and take the Dolphins’ offer.

Hopefully Don Shula will realize that he should stop blasting Saban in front of every sports writer he can find. I hope you have a great week. Yes, Coach Shula, we understand your feelings about Mike Shula being fired. But don’t take it out on Nick Saban like he had it out for Mike. You know deep down that Mike refused to make adjustments to better the program, so he was released. Have a good week everyone.

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One Response to “For Your Reading Pleasure”

  1. Capstonereport Says:

    “Everything is worth what its purchaser will pay for it” Publilius Syrus


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