Big Bucks for Coach Anderson

30 March 2009 at 9:34 am 9 comments

| Peter Klein |

In light of our recent discussions of salaries for US college coaches (1, 2), I note that Missouri basketball coach Mike Anderson, whose team lost over the weekend to the Connecticut Huskies (good thing Dick Langlois and I didn’t have a wager on that), is likely to get a big raise this year. Anderson’s base salary is $850,000, a pittance compared to Jim Calhoun’s $1.6 million. (Indeed, Anderson’s predecessor Quinn Snyder, fired at the end of the 2006 season, pulled down $1.2 million.) Local media outlets guess that at least $1.3 million will be required to keep Anderson from bolting for openings at Georgia, Virgnia, or Arizona (and Memphis, if John Calipari takes the Kentucky job). University System President Gary Forsee, Chancellor Brady Deaton, and even Missouri Governor Jay Nixon made public statements over the weekend expressing their desire to keep Anderson. Not one mentioned the University’s delicate financial situation (a huge revenue shortfall has led to cuts in academic programs, research support, faculty and staff benefits, and other expenditures). I can understand the argument for “investing” in a big-time coach but, given the recession, wouldn’t you expect campus officials to be a wee bit more discrete when tossing around these big numbers?

Entry filed under: - Klein -, Education. Tags: .

New Online Books Imaginary Tweets

9 Comments Add your own

  • 1. david  |  30 March 2009 at 2:47 pm

    Official university site

    http://www.missouri.edu/

    Official athletic site:

    http://mutigers.cstv.com/

    Quin Snyder at $1.2 million was a steal:

    http://fanbash.com/videos/550/

  • 2. Mike Sykuta  |  30 March 2009 at 3:50 pm

    Until it gets to be billions, it is no longer a big number. After all, if trillion is the new billion, what does that mean for a measly $1.3 million?

    Well, unless you compare it to the salaries of economists on campus.

  • 3. REW  |  30 March 2009 at 8:07 pm

    The coach’s salary is a sound investment. The ROI from grants-in-aid and other donations from happy alumni, higher ticket sales, and TV revenues will likely exceed 200%. Moreover, part of the salary package may come from basketball camps for your (and other parents’) children, endorsements, and other sources of funds that are not general revenues.

    University officials cannot afford to be circumspect about the signaling. WE will defend our coach against poachers. WE care about intercollegiate athletics, particularly successful programs. WE care about the alumni, students, and fans. WE cannot hide this under a bushel. Otherwise, the predators will swarm…

  • 4. Scott  |  30 March 2009 at 9:53 pm

    a few years ago i gave my sister-in-law a driving tour of the penn state campus, where i had recently joined the faculty. As we passed by the library, i mentioned “this is the new wing to which the football coach, Joe Paterno, donated $3.5 million”. My sister in law, who had never played or watched sports in her life, asked incredulously, “What’s a football coach doing with $3.5 million???”
    A very good question, I realized. But the economics of big-time college sports are mind-boggling. Here at Penn State the successful football team fills a stadium with 110,000 people 8 times per year (> $50 per ticket), fills all hotels within 45min of town on those weekends, and drives the local souvenir and restaurant business.
    I agree with Peter that the timing may be distasteful, and maybe it says something disturbing about our culture that it works this way, but there is no doubt that the consistently successful head coaches are an economic bargain.

  • 5. Peter Boettke  |  30 March 2009 at 10:52 pm

    Peter,

    Great topic.

    Do you know what real wages for college basketball coaches were in 1979 as opposed to today? I wonder if faculty and college coaches are among the fastest growing salaries over the past 25 to 30 years.

    It is interesting that many people will understand the argument about competing to retain a successful coach, but don’t get the point about talent and CEO pay. What do you think is the reason for that difference in public opinion?

    Pete

  • 6. Scott  |  30 March 2009 at 11:07 pm

    PB:
    I suspect that coaches’ high salaries are tolerated because consumers (fans) have such a strong emotional connection to the product (team), and the CEO (coach) is inextricably tied to the team in the public mind. In contrast, i have a fairly weak emotional bond to my bank and certainly don’t associate the CEO with whatever emotional connection I may feel with a couple of the bank tellers at my local branch.

  • 7. Peter Klein  |  30 March 2009 at 11:10 pm

    Pete, the cynical answer is bread and circuses — the same people expressing outrage about executive pay and bonuses are delighted to see their favorite coach get a bonus (Mike Anderson is actually getting about $130K for meeting several performance milestones in his contract) and raise, even while rank-and-file employees at that same university are being laid off. Of course, I’m not cynical, so I can’t say that. I suspect there’s also an element of class envy — corporate executives are seen as spoiled, upper-class elites who don’t deserve their high salaries, while coaches are seen as regular guys who made it big.

  • 8. David Hoopes  |  30 March 2009 at 11:23 pm

    As a long suffering Missouri fan (I grew up in St. Louis): that Mizzou’s basketball and football teams are now national powers is staggering. Give coach Anderson the key to the state. Also, I prefer teams that play defense (although I HATED Arkansas; but that has more to do with living in Austin and going to UT than anything else).

  • 9. Scott  |  31 March 2009 at 6:31 am

    also: (1) there is a standard frame of reference for evaluating outcomes for a team (W-L record) that does not vary by economic conditions; and (2) everyone knows that coaches will be fired quickly — sometimes unfairly — when public expectations are not met (e.g., Gillespie recently fired after 2 seasons of winning records at Kentucky because he did not live up to historic expectations).

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Authors

Nicolai J. Foss | home | posts
Peter G. Klein | home | posts
Richard Langlois | home | posts
Lasse B. Lien | home | posts

Guests

Former Guests | posts

Networking

Recent Posts

Categories

Feeds

Our Recent Books

Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).

Follow

Get every new post delivered to your Inbox.

Join 261 other followers