How to make athletes pay for their training and still bring home Gold! Gold! Gold!

As Aussie athletes make a name for themselves in Sochi, we can look forward to another four years of seeing their smiley faces shilling for products on our TVs. No athlete steps up onto that podium without making their agent’s phone ring off the hook.

That’s why the idea of a HECS system for athletes is very tempting.

(For the international readers, a quick primer: HECS is a TOTALLY AWESOME student loan system. Zero real interest rates and no need to pay any of it back until you earn above $51,309. Meanwhile Australia’s Institute of Sport spends millions training athletes without seeking any recompense.)

The Australian Sports Commission (which funds the Insitute of Sport) spent $310 million last year, and that’s before counting the various state institutes of sport. (The VIS is boasting today about an athlete that finished 61st in cross country skiing).

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But there are a few very intriguing twists to this tale that will require policy makers to work hard to stick their landing.

Problem 1. Athletes are So Poor.

We have a sample bias. The athletes we see the most are the athletes that earn the most. Thorpey. Cadel. T-Brizzle (Australia’s favourite Mormon!) Clarkey.

BRW tells us our top athletes are earning over $10 million a year. But the best need the rest to make their performances stand out. Their glory is made out of trampling coulda-beens, duds, ones with questionable work ethic, journeymen and hacks. The ones who make no coin.

Solution 1. The way an athletes HECS scheme works needs to be different to the student system. Most people are not going to pay off. But some will pay off in spades.

It’s not a low-risk low return game like training people in nursing or accountancy. It’s a high risk, high return set-up. That means you need to more than fully recover the cost of training from the few big winners. If Clarkey got $30,000 of support from the Cricket Academy, you need to get $300,000 back from him to cover all the guys who also got $30,000 but made a string of ducks and no cash. The debts should be 10 times the investment, and recovered progressively.

Problem 2. Sports skills are just not useful.

If the AIS trains you to be the best white-water canoeist you can be, in the hope of bringing home Olympic gold, and you don’t, but then years later you go on to found an IT consultancy and you invent a really quite terrific database that makes you a lot money, should the AIS be able to ping you for cash?

It hardly seems fair.

Solution 2. If athletic earnings could be kept separate from non-athletic earnings, that would be ideal, but I fear such a system is ripe for being gamed.

ATO: “Pay up, Clarkey.”

Clarkey: “Sorry ATO, no dice. Swisse Vitamins paid me this money because I’m a good-looking Aussie dude, they didn’t even know I played a spot of cricket!”

ATO: *curses*

A simpler idea might just be a time limit on AIS debt so it expires at about the time any sporting career ends. Ten years for gymnasts. 25 years for long-distance runners, or five years after any career-ending injury.

Problem 3. Some sports are cash cows, some are not.

The AIS supported 1233 athletes in the most recent year. This includes weightlifters. Pole vaulters. Badmintoners. These guys could be reigning nine-times world champion and spokesperson for the globe’s top shuttlecock brand and still need to pull shifts driving a forklift at a logistics company to pay their way.

Solution 3. This one is easy. Set the bar for repayment at $50,000 and the earners in these lesser sports will never trouble the threshold.

The Clifton Hill under 12s have as much profile as the Australian badminton team.

The reality is that sport is luxury. These are frivolous games to play and our national pursuit of Olympic “glory” is also a simple distraction.

When taxpayers lay the groundwork for a handful of golfers, cricketers, basketballers and boxers to own homes in Miami and St Tropez, there is a moral issue at stake. Sports training can fund itself using the above principles, and by god it should!

If there are any other clever features such a program should have, or if you think I’m totally wrong, leave a comment below!

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thomasthethinkengine

Thomas the Think Engine is the blog of a trained economist. It comes to you from Melbourne Australia.

2 thoughts on “How to make athletes pay for their training and still bring home Gold! Gold! Gold!”

  1. Sounds reasonable, but what’s reason got to do with anything in these days? An alternative system is to close loop holes and tax high income earners progressively – very few people (doubtfully anyone) is exclusively responsible for their own success independent of any benefit inherited from other peoples efforts or common goods. There is something quite rotten in this mythology of “self-made”.

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  2. Contingent loans have some merit in this scenario, but need to make clear if this is for new (additional) funding; merely transferring current funding to this model; or a mix of both. Federal government will be reticent to build up further contingent assets on their balance sheet during a contractionary phase, and when they are already considering selling existing HECS-HELP debt (this is on the back-burner now but will surely return to the debate sometime). With the right combinations of the (many) policy settings involved, it has possibilities.

    …and I would strongly argue that ‘Problem 2’ isn’t actually a problem at all, but that’s for another correspondence:)

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