Moral Hazard and College Football Recruiting

Let’s say Johnny Five-Star is deemed the consensus-best football prospect in his home state after his sophomore season of high school. In the summer before his junior year, he gets the call he’s been waiting for his whole life. It’s Coach Seven-Figures offering him a scholarship to come play football at State U.

Mr. Five-Star takes the deal on the spot. He calls the local recruiting analysts to let them know the big news, and they immediately take to their websites to inform the legions of pathetic fans (like myself) interested in where a 16-year-old kid they don’t know is going to college.

Figuring he has it made, the prospect spends the next two years coasting. He’s not really hitting the weights. He’s skipping workouts. He doesn’t make it to all the camps he plans on attending.

When he shows up on campus as a freshman 24 months later, he’s clearly not the same player the coaching staff expected to get. Meanwhile, late-blooming prospects who might be more deserving of that spot on the team get shut out.

Moral Hazard

Economists refer this kind of situation as a “moral hazard.” It describes a scenario in which one party engages in risky or detrimental behavior because he or she is shielded from the full costs. For instance, imagine if taxpayers had to bail out a cabal of major financial institutions because they made a series of staggeringly dumb bets that threatened to nuke the global economy. That would be a case of moral hazard.

For the most part, the aforementioned scenario involving young Mr. Five-Star wouldn’t happen in today’s college football world. The fact that scholarship offers aren’t guaranteed gives schools the prerogative to cut ties with a prospect at their discretion. If coaches decide they have greater needs at other positions or more appealing options than players who have verbally committed to their schools, tough luck, kid.

In fact, we’ve seen that the more pernicious moral hazard within the current system stems from coaches making promises to recruits that they ultimately won’t honor. Take the well-publicized case of South Carolina high school running back Matt Colburn during the latest recruiting cycle. Colburn assumed his recruitment was over after committing to Louisville almost a year before this month’s national signing day. Yet, he found himself scrambling for a new destination at the last minute after getting the rug pulled out from underneath him by Bobby Petrino.

Unless there’s a direct hit on a coach’s or program’s reputation, the penalty for withdrawing a scholarship offer or demandingrequesting that a recruit take a grayshirt is negligible, especially when such business is done behind closed doors. Likewise, the move to recruit prospects earlier and earlier has given rise to shell games like “non-committable offers” of scholarships that aren’t worth the paper they aren’t printed on.

Solutions?

Viewed through the lens of moral hazard, is there a way to reform the college football recruiting process that would lead to better outcomes for players and programs? Put another way: What guidelines would force more transparency on the part of schools while still promoting development among recruits?

Whereas the natural inclination of the NCAA is to write rules to address these kinds of issues, I’ve always felt the exact opposite approach would be the better path here: deregulation over more regulation. Andy Staples of SI.com just published a piece on deregulation that hits on a lot of these same ideas.

I’d say Rich Rodriguez is on the right track with his recommendation of doing away altogether with the restrictions regarding when players can sign a national letter of intent with a school. Furthermore, if I were in charge, I’d explore the idea of a yearly hard cap on the numbers of LOIs that can be signed for a school. Keep the current restrictions on players breaking an LOI in place, but once a player signs an LOI with a team, that team’s allocation of LOIs for the player’s class goes down by one, even if that player ultimately doesn’t attend the school or never plays a down there.

For example, assume the annual LOI count for every team is 25. If a player signs an LOI with a program for 2020, that school’s LOI count for 2020 is down to 24 and that spot is gone, no exceptions.

In theory, this would force programs to be far more judicious with their scholarship offers and push the recruiting process back. You could lock up a sophomore stud if you want, but you’re rolling the dice that he will still be the same caliber prospect in two years, that he will qualify academically, that he will still want to even play football, et cetera. Conversely, recruits would have a much better idea of where they stand: Either the school is offering an LOI or it isn’t.

Obviously, this kind of proposal would be about as popular with coaches as Jenny McCarthy at an epidemiology conference. Likewise, I don’t doubt that there would be residual effects I haven’t even considered.

Even so, I think it reflects the kind of market-based, behavioral approach to reforming recruiting that the NCAA would be wise to implement.

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