Category Archives: Sports

The Daddy Baller’s Dilemma

My Kid is My Favorite Player

My Kid is My Favorite Player

Daddy Ball is what many call youth sports where the coaches are also the fathers of one or more of the kids on the team. It is usually described with derision because the coach or coaches are usually claimed or assumed to be playing favorites with their own child. I have a child on a baseball team with five daddy coaches, so as you might imagine, that leads to some pretty awful dynamics. However, it is hard to know who is right or wrong about the decisions being made on the field. Who’s daddy is playing favorites and whose daddy is simply living in fantasyland?

There are several possible situations we need to consider:

  1. The coaches kids are the best on the team and are treated accordingly.
  2. The coaches kids suck, but are given preferential treatment.
  3. The coaches have no clue how to evaluate or develop talent.
  4. The coaches have no clue how to play kids to get a winning team.

You might think that a coach is giving preferential treatment to his own kid, but the reality might be that his kid really is the best or he is delusional or simply incompetent. Say it isn’t so! Yes, I think it is more than likely that the coaches have no idea what they are doing, but then again, you probably don’t either. Youth sports coaches are usually not experienced players or coaches and have never had to prove themselves by developing a winning team. Even if they are former players or coaches, there is plenty of mediocrity out there and they have a huge self interest that they have to overcome. Chances are, they may be trying to be fair, but are deluding themselves or are simply mediocre at their job.

Dad's Gone Wild

Dad’s Gone Wild

I’ve come up with one way to figure out the answer as to whether or not you are on a real Daddy Ball team, and it is based on what I call the Daddy Baller’s Dilemma.

Most business school students have heard of the book “The Innovator’s Dilemma” by Clayton Christensen. The Economist magazine named it as one of the six most important business books ever written. The  basic idea is that successful companies put too much emphasis on customers’ current needs, and fail to adopt new technology or business models that will meet their customers’ unstated or future needs. They also avoid new technologies or models that will disrupt their current market position. He argues that such companies will eventually fall behind because disruptive innovators will eventually eat into their market and marginalize their business.

Just Say No to Daddy Ball

Just Say No to Daddy Ball

What does business have to do with daddy ball? Both business and sports are competitive activities that require smart decisions. However, business and sports leaders both have conflicting interests. Coaches who play favorites with kids who are not the best on the team are making decisions based on their own current self interest, but will eventually pay the price because the team will fail to excel. It will start to fall behind in competition with teams that do not play daddy ball. If a team has coaches with the best kids on the team and they know it, and they are able to evaluate and play talent well, they have a great chance of developing a winning team. Teams at the top of the league are probably in this situation, or they have paid, and thus relatively impartial, coaches.

If a team has coaches whose kids who are not very good, or they are incompetent when it comes to choosing and playing other kids, it is likely that the one of the following will happen.

  1. They will play their own weaker players the most and in the “best” positions.
  2. They will attempt to get other stronger players to fill in the other positions.
  3. They will start to lose games due to the weakness of their own kids.
  4. They will piss off the parents of the stronger kids and lose their best players.
  5. They will not be able to attract the best talent.
  6. They will eventually drop down into divisions with less competitive teams.

The Daddy Baller’s dilemma is that he can only start to win by attracting other stronger players and placing them in positions in which they can be most successful. However, this is not in the coaches’ own self interest because it will undermine their own kids, who want to play in the “best” positions, get the most playing time, and hit first. Not only are their kids less talented, but they don’t have to compete for the best positions, so they never have to work to improve. So, while Daddy Ball coaches want to win, they are unable or unwilling to field a winning team and will eventually start losing. Rather than looking bad, they will drop down into lower divisions where the competition is weaker and they can look better.

My thesis is that, if the coaches kids are not the best on the team, your team is not improving year after year, is losing good players, and is dropping down in terms of competition, then there is a strong chance you play for a team where the coaches play Daddy Ball. Or, the coaches are simply incompetent. Get out before it is too late! But if your team is doing well or nobody else will take your kid, consider the possibility that you are simply delusional and your kid isn’t as good as you think!

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Pay to Play

Pay to Play

Pay to Play

What would you call an organization that conspires with member businesses to avoid having to pay a fair market-based wage? That’s easy–an illegal monopoly in violation of the Sherman Anti-Trust Act. What about an organization that completely prohibits the payment of ANY wages? I guess that would be fine for a non-profit, or maybe even for an internship, but not for a business raking in tons of money and abusing those same people. Anyway, no could possibly get away with such a policy, right?

So, how is it that the National Collegiate Athletic Association (NCAA) has managed to ban college athletes from receiving any compensation aside from a tightly controlled amount of scholarship money? How have they managed to do this even while they cheat athletes out of the education they promised by dumbing down their courses or even making up fake courses just to keep them in school? How have they held onto a valuable tax dodge that exempts them from federal taxes on sports-related revenue?

As non-profit organizations, NCAA colleges and universities are mostly tax exempt. That includes the huge profits that are generated by many big football and basketball programs. These profits go to support enormous salaries for coaches, bowl game officials, top NCAA executives, athletic department staff, impressive facilities, and so on. Sure, at some schools, some of it goes to support non-revenue sports, but that can’t excuse the massive corruption that pervades revenue sports.

From 1973 to 2012, the NCAA even banned schools from offering 4-year scholarships. In 2012, they lifted the ban even though a majority of the schools still wanted to keep it. Schools are now allowed to offer 4-year scholarships, but they are still able to withdraw scholarships after the first year. It is a myth that most athletes can even get a full ride scholarship.

College Sports Profits vs. Scholarships

College Sports Profits vs. Scholarships

College Sports Expenses

College Sports Expenses

Something about this smells bad, and it isn’t the athletes after a hard practice. The big NCAA schools just don’t want to share their enormous income on the athletes themselves and justify this by saying it will kill amateur sports, or favor some schools over others. Hmmm, if they are implying that the NCAA somehow ensures that all schools are equal, they are feeding us a load of BS. There will always be inequality in college sports because alumni and other donors can give as much money to their school as they want in order to make their school more attractive to students and athletes. Some schools already have an enormous advantage and sports revenue follows the winning teams.

After pretending for years that the Olympics was limited to amateurs, the rules were finally changed to allow paid professional athletes to participate. We always knew that Russia, China, and plenty of other countries effectively paid their athletes to pursue an “amateur” sport. It just took a while to finally admit it and stop the ban on money for athletes. The Olympics didn’t come crashing down. As for NCAA athletes, the lucky ones effectively get paid too–by those parents who are willing and able to support them all the way to the pros.

College Athletes

College Athletes

Nobody stops individuals or businesses from paying other college students. You can get a scholarship or grant for just about anything today. If you are smart, you can even raise money on your own or sell your virginity for tuition, but not if you are an athlete at an NCAA school. It makes no sense. Actually, it does. The pretense of amateurism allows schools to get out of paying taxes on billions of dollars of income. Some say that athletes will never be paid because, if they were paid by the schools, they would have to be considered employees, which would cause the schools to be subject to all kinds of tax headaches.

Athletic departments would lose its tax exemption under Internal Revenue Code Section 501(c)(3). Currently, athletic departments (which are generally a separate legal entity from the university), athletic foundations/booster clubs, and bowl games all enjoy tax exempt status because they “promote amateur athletics,” which is an exempt purpose under the Code. If college athletes were compensated and found to be employees, this tax exempt status would most likely be revoked. Moreover, they would likely lose 25-50% of donations since donors would no longer being able to make tax-deductible contributions. No only that, but large donors would then have to pay a gift tax on donations over $13,000.

Even if they didn’t lose their tax-exempt status, they might still have to pay tax on income from athletics if they are ruled to be unrelated to the primary activity of the school. Congress created the Unrelated Business Income Tax (UBIT) so that income from regularly carried on business activities that do not further the organization’s exempt purposes would be taxed as though earned by a for profit corporation. Colleges and universities, which were established to provide an education, are getting a free ride on the UBIT right now, but this could change. Maybe this whole issue is nothing more than another unintended byproduct of our broken system of taxation that could be easily fixed by tax reform. Another reason to simplify the tax code.

The Most Expensive Game in Town

The Most Expensive Game in Town

We often think of sports as a way for poor kids to make it. But preventing them from getting paid at all actually undermines this opportunity. The fact is, families who are serious about sports probably end up paying more out of pocket than they could ever hope to get back in a sports scholarship. That’s right. It’s expensive to play amateur sports. Many school districts don’t even have public sports programs at the elementary or middle school level, so kids have to pay to join club sports teams to even have a chance. If they are good, their families have to pay for uniforms, equipment, field time, tournament fees, and all the other stuff that comes along with being on a youth sports team.

A supportive community may help to raise the funds for poor kids, but such opportunities are not guaranteed. It can cost $1,500 to $5,000 dollars per year, depending on the sport, just to get the chance to play at a competitive youth level. Some say it is even higher–like $9,000 to $12,000. The youth sports industry is estimated to be worth $5 billion. These teams are mostly where college athletes are now recruited. The limited availability of scholarships and limits on payments to athletes probably benefits wealthy families who can afford private teams and coaching that can help them get to the 10,000 hours of practice that some say is vital to the development of an elite athlete. But it doesn’t provide a level playing field for everyone. Now, if colleges would help to fund the costs of promising amateur high school athletes, instead of offering empty promises, that would help to level the playing field.

Some lawsuits have challenged NCAA compensation rules. As the result of lawsuits that ruled the NCAA has violated anti-trust law, athletes are now allowed to receive a small share of profits from their school’s use of their likenesses, but it is capped at $2,000 to $5,000, depending on the school. It’s a small step, but still a pittance that does nothing to change the face of college athletics.

I think the time has come to stop the NCAA from banning monetary incentives for athletes (e.g. full scholarships, stipends, bonuses, or whatever). If not, there is certainly justification in the tax code for using the UBIT against them, as noted in a recent study of tax law:

“ there are precedents in tax law for (1) attaching conditions on the use of proceeds from an exempt activity (e.g., a requirement that big-time athletic revenues be used to subsidize other charitable outputs, such as increased athletic opportunities in non-revenue sports or for women); (2) expenditure limits such as caps on coaching salaries, and (3) expanded disclosure via a schedule to Form 990, similar to the new Schedule H for hospitals, that would require both the NCAA and universities with athletic programs to provide more information regarding their programs and the academic progress of student-athletes.”

As parents, we already know we have to pay to have our kids play, but it is a burden we would gladly share with others who are more than willing to help. Our kids are already willing to play their hearts out for nothing but the opportunity to have fun and maybe, if they are the best of the best, to make it to the pros. But doesn’t mean we have to let the big colleges take advantage of them and make their journey even harder. It’s time to get back to this country’s free market roots. Pay to play is the way to go, baby!

Pay for Play

Pay for Play