September 2023

The Intricate Chess Game: NCAA Athletic Departments and the Art of Controlled Loss

In the complex world of collegiate sports, where victory and defeat are measured in inches and seconds, a different game is being played behind the scenes - one that involves the careful orchestration of financial strategies within athletic departments.

This subtle dance between budgets, expenses, and revenues may hold the key to understanding how NCAA athletic departments deliberately operate at a loss, utilizing a very creative, intentional, and widespread loss leader strategy.

Beneath the surface, it's a calculated tactic fueled by creative propaganda and carefully manipulating athletes entitled to profit sharing at odds with everyone else on campus.

related: If Government Spending in Ukraine Upsets You, so Should the NCAA's Misallocation of Athlete Pay

1. The Deliberate Loss Leader:

We've all heard it, "we cannot pay student athletes because we don't turn a profit." At first glance, it may seem counterintuitive for athletic departments to intentionally operate at a loss, but it makes perfect sense when it's just a creatively crafted loss leader strategy.

The role of an athletic department for the school is to always exhaust its budget 2st, and to win games 2nd which increases the budget much easier which allows the school to increase the tuition and expenses for the entire student body which they can then apply to increasing their own salaries.

However, this strategy could be a calculated move to maintain a specific power dynamic.

related: Profit Over Fairness: The NCAA's Utilization of the Shirky Principle to Exploit Athletes

By perpetually claiming financial insolvency, institutions can argue that there's simply "no money to pay" student-athletes beyond their scholarships.

This weakens the bargaining position of athletes who seek compensation for their time, talent, and dedication.

2. Staff Pay and Incentives:

Operating at a loss also requires the athletic departments to channel funds into other areas, particularly staff salaries and incentives. By intentionally exhausting budgets, departments can justify pay raises for coaches, administrators, and support staff. This serves as a form of loyalty reward and incentivizes them to support and perpetuate the larger scheme. In turn, a well-compensated staff is more likely to remain committed to the institution's overarching strategy while buying silence and an ally in the fight against paying student athletes.

3. Tuition as the Ultimate Product:

Perhaps the most significant aspect of this intricate strategy lies in the ability to consistently increase tuition fees. When an athletic department is perpetually in the red, it necessitates increased financial support from the university itself. This, in turn, drives up overall operating costs. As a result, universities often find themselves passing these costs onto students in the form of higher tuition fees.

see: A Look at College Tuition Growth Over 20 Years

The Checkmate:

By understanding the nuances of this financial chess game, student athletes can gain insight into how NCAA athletic departments use controlled losses as a strategic tool. It's a method that allows them to simultaneously control the narrative around student-athlete compensation, reward their internal team, and indirectly increase university revenue through rising tuition costs.

Student athletes must understand their role and their leverage in this intricate scheme, and at least be informed when making decisions and listening to the excuses being made as to why their labor cannot be compensated.

related: College Sports Revenue Redistribution Should Be Treated Just Like Affirmative Action

We have a strict "don't hate the player hate the game" policy at JRZY, but it raises questions about the fairness and transparency of NCAA financial practices, because NCAA athletes are definitely getting played in plain sight.

The deliberate operation at a loss by NCAA athletic departments impacts not only student-athletes, but also the broader financial landscape of universities and students facing skyrocketing tuition costs.

Issa Hall, Esq

Issa is also the founding partner of Hall & Dixon law firm, and brings over a decade of experience in tech and law to the table. Alongside legal expertise, Issa is a certified fitness trainer who combines a passion for science and research with a love for sports and wellness. With a multifaceted background, Issa's expertise spans the realms of law, fitness, sports, and lifestyle, making him a well-rounded professional committed to helping others succeed in various aspects of life.

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