Saturday, February 28, 2009

Roy Williams, College Basketball and Coaches Salaries

There is a lot of buzz going on now about the injudicious manner in which John Calhoun, coach of the UConn Huskies and two time winner of the National Championship, answered a question about his salary level at that public university.

In order to perform due diligence, reporters across the country are questioning the coaches in their respective states, probably hoping for a meltdown similar to Calhoun's.

Here's the full text of the question and response by Roy Williams coach of the UNC Tar Heels, followed by some of my thoughts.

Would you be willing to take a paycut providing that it would help the University system? I am aware of the fact that your salary doesn't come through the same revenue of other state employees, but even just as a gesture…would you be willing to do that?

"Well, I think first of all, there's no way to answer that question. You say 'Yeah,' but then somebody's going to call today and say, 'give it all to me back.' And if you say no, you come across as being insensitive. Right now, I'm the most sensitive person in this room to the state of our nation's economy.

"My son called yesterday, and it was a great day, because they just told him he was finished. He’s a bond trader for Wachovia Securities, and it was bought by Wells Fargo, and Wells Fargo doesn't do what Wachovia Securities did. So I'm more sensitive than anybody in here; I've got a son that's part of the nation's unemployed. Now he's a cocky little rascal that think he's going to have a job by tonight. I said, 'Son, people aren't hiring, they're letting people go.' ….

"It's a tough time. I'm also sensitive in that I do give a great deal of money to the university every year. I am sensitive to the fact that the initial contract I signed in the spring of 2003, that it was in the contract that we would revisit and renegotiate my contract after the second year. Second year was a pretty good year, we won the national championship.

"I never asked to have it renegotiated. In fact, I forgot about it. The athletic director came to me six months after we were supposed to revisit, and I said, don't worry about it. The next year, 2006, I had maybe the most satisfying year I've ever had as a coach. I was National Coach of the Year, and he asked me whether I wanted to renegotiate again. And I said I was fine, I was satisfied with it. And we did something the year after that.

"I don't think I'm in the business to make money. If you convince me that me giving something up would help somebody, then we would really have a great discussion. Because I'm willing to do a lot of things; I'm not willing to stand up here and say 'Yes,' and I'm not willing to stand up here and say 'no' because I think it's a question that there's no good answer. I just know from my buddy Jimmy Calhoun that I'm not going to tell you to shut up.

"These are tough times, these are times that nobody knows. I can look around the room and know that it's affected the people in the room right here. But it is a fact … I am not paid by state funds, and we've had some success, and we've made a lot of money in men's basketball. And if we start losing games and losing money, they're not going to ask me to give any of the money back, they're going to fire me. And that's something else I understand.

"But again … I don't believe there is anybody who is more sensitive to it than I am. I do believe I give a great deal of money, whether it's Carolina Covenant or other programs here in our department or to build other buildings over there, or to help build baseball stadiums. So I'm very proud of what my wife and our family have done there, and I'm going to continue doing it.

"We have video equipment in our office that's used by … six other teams here, that I bought. If they fire me tomorrow, I don't think I'm going to give a darn about that video system. It was a system that was good for other people, and there wasn't necessarily a place in the budget for it, so I bought it. And I could care less – if they fire me, I have 13 free weeks at the Maui Marriott. And I am not going to give a darn about that video equipment at that time, so they can keep the sucker."

Fairly well answered and handled, I would say, except that, like Calhoun, he tells us what a beneficent giver he is. Please. What does it say in the Sermon on the Mount about revealing acts of charity?

While I certainly qualify as a free marketeer, I admit that I find some of the arguments tiresome on both sides of the political spectrum. Those who argue for a flat tax, most of who are Republicans, virtually never own up to the payroll tax and the fact that it disproportionately socks the young and the poor. They also never own up to the fact that Ronald Reagan greatly increased payroll taxes. He increased Fica, while cutting marginal tax rates on the rich, which were, indeed, at the time, far too high, something some liberals are now willing to admit, even if they were not at the time.

Many of Calhoun's defenders, on the merits, are attempting to defend his salary as an example of the free market. That is partially true, but overly simplistic. In terms of the “market” setting prices and salaries, well that is chapter one of the free market reader and most free-market oriented people stop reading here.

When you get to chapter two, you find out about something called public choice theory, which essentially undercuts much of the thrust of the market being efficient to begin with.

What does it all mean? It means that Roy’s salary is partially set by free market forces and partially set by non-free market forces, such as the Carolina Basketball Lobby, which we all love and hold near and dear to our hearts.

Nevertheless, I am sure that Roy could earn more coaching in the NBA if he wanted to.

“People who make the sort of money he makes are already contributing a grossly disproportionate amount to the public good, while getting little or nothing from public services in return.”

The statement directly above is typical of much of the defense of Calhoun in the blogosphere.

I used to think this statement was absolutely true, but such a statement is probably not something that can be verified scientifically.

To a large extent, it is true that the Carnegies and the Mellons created lots of jobs and built schools and hospitals. Nevertheless, it is also the Bill Gates of society and the rich in general who benefit disproportionately from the existing social structure.

People who have more assets and property, arguably place much more of a burden on the public provision of police protection and other services.

It is an utter fallacy to simply cite who pays what and what percent, as somehow proving the “proper” rate of taxation based on some abstract notion of fairness. It may convince many people as a political proposition, but as economics, it is not scientific.

Taxes pay for schools and roads and libraries and police protection. Obviously huge amounts go to pay for weapons and the soldiers that fight all over the world beneath the American flag. I am not sure how someone can say that he or she is getting little or nothing from military protection.

Taxes pay for the CIA, the FBI and the National Security Agencies, who police our borders and check and manage our phone and internet transmissions to make sure that no further terrorist attacks take place. In fact, many would argue that it is the rich who benefit the most from the protection from such attacks, since they are the ones who have the most to lose should there be great destruction.

To me, the strangest thing about this argument is that essentially, it seems to be arguing that the University of North Carolina is a waste of taxpayer money. I certainly do not believe that.

In fact, I think there are probably a lot of lawyers who were educated at UNC Law, who are thrilled to pay taxes in North Carolina to support the school and the law school. I know that UNC is not quite the bargain it was when I went there, but it is still a pretty amazing deal for people in state. I could have attended Davidson or Wake, but honestly, I thought my friends from the state of North Carolina who went to those schools were suckers.

The difference in tuition between Davidson and UNC back in the early 1980’s was probably $10,000, which means Davidson cost close to $10,000 and UNC essentially cost zero, i.e., under $1,000 a year for tuition. There were a lot of low-wage mill workers who never attended college, who paid taxes to subsidize my education at UNC and I would like to thank them for allowing me to benefit disproportionately from such an amazing public service, which is the University of North Carolina at Chapel Hill.

So obviously, people have tons of different opinions on these controversial topics. If I had been Roy, I would just have politely pointed the reporters to the FOIA provisions covering his employment and left it at that.

1 comment:

Marshall said...

For whatever reason that reporter got under Calhoun's skin but nonetheless the reaction was obviously overwrought. I guess the question I would raise respecting Jim Calhoun or Roy Williams is how does one calculate their market rate anyway? The supply is so limited that the market is illiquid so we're relegated to commenting on their values to their teams, universities and states. I think there's no doubt that Calhoun has raised UCONN's status as has Geno Auriemma with the women's team. So in addition to whatever figure can be calculated in terms of direct investment as a result of the basketball team, it could be argued the improved academic standing of the school is an indirect benefit of Calhoun's efforts. Didn't, arguably, John Thompson perform a similar task for Georgetown in his day? Of course Calhoun and Williams operate in the public sphere so there is a different, political dynamic at work as well.