Why do professionals with highly prized skills, especially when put in charge of multimillion-dollar operations, get handsomely rewarded? Supply and demand answer this question, but only in part.
When million-dollar paychecks go to college and university coaches, other factors come into play. Given the academic mission of these same schools where the coaches work, a double standard may appear to raise its head.
Why is this?
Something seems amiss when the athletics divisions of higher-education institutions bring in, and keep for themselves, so much money, while the academic departments may struggle financially, operating near the baseline or, in some cases, even in the red. From this point of view, a $3 million dollar annual salary for a football coach can seem excessive. Indeed, many may wonder whether the colleges and universities that pay out such salaries have not forgotten their real mission.
The lowest wage earner on our top-20 list of best-paid college coaches will earn $3.2 million this year. What makes a coach worth that much? Obviously, it depends on the going market rate for top-notch coaching talent—these individuals can command those salaries, relative to other talented coaches against whom they are competing, due to their track records.
But that answer does not really go to the heart of the question. The heart of the question is this: “What makes the athletics division worth so much in the first place?”
Many people believe that the money generated by the sports programs goes directly into the institutions’ piggy bank and is then used as needed. However, at top-ranked programs, this is not the case. Instead of going directly into an institution’s “general funds,” where it can be allocated for whatever use is most pressing, most of the revenue stays in the athletics department. Why is this?
The majority of the income from college athletics programs stays in the athletics divisions for one simple reason—because the universities need the money to stay there!
That is because a college’s or university’s high-profile athletics program is often the strongest marketing device the school has. A team competing at the national level draws worldwide attention, which brings multiple benefits to the school, both tangible and intangible, both to its athletics program and to its academic program.
But to compete at the top level requires talented—and winning—teams. And if you want great teams, year in and year out, guess what? You need a great coach!
So, the short answer is: Colleges pay top dollar for top coaching talent because . . . it pays for them to do so.
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