Why Sports Corrupt

Note: the following is an excerpt from a article by Frederic H. Murphy of the School of Business at Temple University. It originally appeared in Interfaces (May-June 1996: 22-25), a publication of the Institute for Operations Research. The portion of the article reproduced here appears with the kind permission of Professor Murphy.

The article stands out from most writing about "professionalized" college sports because it isolates one of the actual mechanisms through which such sport programs corrupt intellectual and academic values at the institutions that support them. The explanation -- what in game theory is called the "dollar auction game" -- is given below.

Professionalized College Sports as  'Dollar Auction Game'

Over the years there have been many athletic scandals. A few years ago the majority of the schools in the Southwest conference were on probation for recruiting and other violations. The pay packages of many coaches include hidden side deals that guarantee them incomes over 10 times those of the average full professor. At the University of Nevada at Las Vegas, the coach had a million dollar deal.

Some schools have kept athletics in line. The University of Chicago dropped out of the Big 10 and canceled its football program. The Ivy League was formed by a small number of schools that wanted to avoid the corrupting influence of professionalized college sports. Yet, all too many schools buy into the athletics game.

The problem of college athletics for the typical university is starkly drawn at Temple University where I teach. A study done a few years ago by the faculty senate reported that the Temple football program was losing about $4,000,000 per year. The size of the loss depends on how one does the accounting. For example, the costs of athletic scholarships are not included in lower estimates. yet athletic scholarships, an oxymoron of a budget category, constitute $4 million of the $6 million scholarship budget for the university.

[Professor Murphy is saying that Temple awards a total of $6,000,000 a year in scholarships. $4,000,000 of these "scholarships" go not to students -- i.e., applicants who are good at physics or philosophy or biology or history -- but to individuals paid to perform in Temple's sports program. ]

Why has the problem of athletics persisted?  A basic law applies: when a problem of this sort persists, the source of the problem is not just the individuals involved but the institutional structure within which these people operate.

Game theory helps us understand the situation here. Athletics, both college and professional, is a game of escalation that may be described in terms of what in game theory is called the "dollar auction game."

In a dollar auction game, one auctions off a dollar with the following rules: (1) the highest bidder wins the dollar, (2) both the highest bidder and the second highest bidder pay what they bid, but (3) the second highest bidder wins nothing.

I teach this game in class as follows. I get a student to begin with a low bid of 10-20 cents. I then get a second student to bid around 30 cents. Usually the first student then comes back with a bid just below a dollar, say 99 cents. The second then responds with a bid of a dollar, thinking the game is over.

[Watch carefully now. Suppose that you were the bidder who bid 99 cents. You don't win the dollar. But under the rules you still have to pay what you bid: 99 cents. The whole trick is to see that,  if you now bid $1.10, it looks like you can 'magically' save yourself 89 cents. But now the other bidder has a huge incentive to cut losses by outbidding you just a bit more. Watch . . . ]

When I tell the first student that he or she will lose less if the bid is raised to $1.10, I get a sequence of bids that I cut off at $1.50, at which point the class is laughing at my ability to sucker the two students into the game.

Try running a dollar auction at a party after everyone has warmed up. You can make a healthy profit and embarrass your friends (but don't rub in the losses or they will not be your friends much longer).

College athletics is a classic dollar auction game. Each school draws up its athletic budget at the beginning of the season. They all spend all of the money they have budgeted, but only a few are winners. The next year the losing schools either opt out of the game (which rarely occurs) or, hope springing eternal, they up their budgets trying to win the next round. After all, last year's money is a sunk cost.

An egregious example of a school upping the ante is the University of Alabama at Birmingham: the Birmingham City Council voted to spend city money to improve the college football program. The only constraint on universities is that for public relations reasons they must leave a bit of money for teaching and learning, the ostensible purpose of a university.

[Rutgers 1000 says: the exception to the situation described above is institutions wise enough never to get involved in so vacuous a pursuit in the first place.

Professor Murphy mentions two examples: the University of Chicago and the Ivy League schools that in the mid-1950s outlawed "athletic scholarships" and as a result have remained among the nation's leading institutions.

This is the choice that now faces Rutgers. Is Rutgers to become an "open admissions" university like the University of Nebraska or UNLV or Florida State -- that is, essentially a professional football or basketball franchise with a remedial-education "university" attached -- or is it to remain a genuinely distinguished institution of higher learning? ]

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