Collegiate Salary Cap

The Chronicle of Higher Education notes that the Knight Commission is looking to get an antitrust exemption that would allow for a cap on salaries of coaches - men's basketball and football coaches - (but not their overall compensation). 

Concern about the escalation in coaches' salaries -- in particular the eight-year, $32-million contract Nick Saban recently signed with the University of Alabama to coach its football team -- led two commission members to disclose that the NCAA might seek a federal antitrust exemption for college sports. Such an exemption could help universities cap coaches' salaries but not necessarily their overall compensation, which often includes money from boosters and shoe companies.

According to the commissioners, the National Collegiate Athletic Association's Division I Board of Directors discussed the possibility at the NCAA Convention earlier this month, and the association has hired lawyers to determine whether it should pursue an antitrust exemption.

"We're seeing renewed interest in looking harder for solutions" to high coaches' pay, Michael F. Adams, president of the University of Georgia and a member of the NCAA's Division I Board of Directors, said in an interview after the commission's meeting. "The competitive pressures are as great if not greater than they have ever been."

Two thoughts come to mind: 

1. Rent seeking:  if a cap comes about, the money saved on salaries has to go somewhere, and it's not going to go the players.  The saved money would probably travel farther up the athletic department structure, maybe even into college president compensation.  It's not at all clear that the money saved would go to non-revenue sports as some would like to see.  Even if the saved cash went to non-revenue sports, it would still be rent.
2. Creative accounting and contracts:  overall compensation might not get capped, so there would be a search for creative book entries and contract writing that would allow schools to pay coaches market compensation while staying within any cap.  Good coaches can attract more sports dollars, giving them some hold-up power in negotiations.  If they can't get compensated by "salary", those who want to employ them will look for some other way to pay them.  A dollar earned as "salary" spends just as well as a dollar earned as something else.