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April 02, 2013 7:47 PM Can We Really Pay College Athletes?

By Daniel Luzer

A class action lawsuit against the National Collegiate Athletic Association alleges that college athletes should be paid because they’re currently being denied revenues that accrue to top schools due to athletic programs.

This looks like a potentially big deal, but how much would this really change college sports? How many athletic programs are really making money? Not many, it turns out.

There is, in theory, a lot of cash here. According to Brian Montopoli at CBS News

Football and men’s basketball players at top sports schools are being denied at least $6.2 billion between 2011 and 2015 under National Collegiate Athletic Association rules that prohibit them from being paid, according to a new study.
The study, from the National College Players Association and the Drexel University Sport Management Department, found that the average football player at an FBS - or Football Bowl Subdivision, is the highest tier in college sports - school had a fair market value of $456,612 above and beyond the value of their scholarship. The average men’s basketball player had a fair market value of roughly $1.06 million over four years, not including his scholarship. (That figure is even higher at Bowl Championship Series schools: $714,000 for the average football player and $1.5 million for the average men’s basketball player.)

Why can’t they access their money? Well,

Under NCAA rules, players cannot be paid for their efforts or given gifts of any kind. Players who violate the rules can be suspended or otherwise sanctioned. An antitrust lawsuit now before the courts, which faces a crucial hearing in June, is seeking to bar the NCAA from interfering with the market for players’ compensation. That could allow players to claim a portion of the revenue brought in from selling broadcast rights, as well as other revenue sources.

But a portion of what? College sports generate revenue, for sure, but most athletic programs lose money in the end. Check out this bar graph by Jordan Weissmann at The Atlantic, which breaks down athletic budgets by football bowl subdivision.

NoProfit

Revenue is in green. The total athletic program cost is in blue. The only reason most of these figures even equal out is because of the red portion, that’s the subsidies the schools give their athletic departments

If this class action lawsuit goes forward might do something interesting for how we see college athletes and their role in colleges, but are they going to be getting big checks? Probably not.

There may be a few teams that make big money for their schools in sports; but most sports teams, even the big athletic powerhouses, actually operate at a loss.

Sure athletic programs generate revenue, but most of them cost more to run. This “pay the athletes” movement looks legitimate. But the reality is that there’s not much money to pay them.

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer

Comments

  • Sgt. Gym Bunny on April 03, 2013 12:32 PM:

    It's not so much that colleges should pay athletes simply for playing but that college athletes shouldn't be arbitrarily prohibited from collecting any of the revenue that is generated when these colleges make lucrative deals with video game, athletic apparel, and broadcast companies that essentially sell these students as products.

    If EA Sports Video Games used the likeness of any person and slapped their name and face all over their marketing materials because Joe Schmoe is just guaranteed to sell so many units, Joe Schmoe would be owed a portion of the revenue. That's how it works for every market except big time college athletics. And that's by deliberate design per their student athlete contracts.

    Pleading insolvency isn't a very convincing excuse for not cutting student athletes in on revenue. And, personally, I could give two shits less if these big-time athletic departments can't make black on their programs. They could go back to being real student athletic programs to appease their local college students and alumni.

    (Naturally, I'm not that keen on college athletics: I went to a DIII school. Most of us didn't even know we had a sports program.)

  • Josh G. on April 04, 2013 9:42 AM:

    If colleges couldn't afford to directly pay their athletes, boosters would probably be willing to do so on their behalf. There are a lot of wealthy people willing to shell out money on college sports teams. In fact, alumni and booster donations are one of the major justifications for maintaining programs that appear to run as a deficit. The argument is that when you factor in the donations driven by the sports, they come out ahead. Currently, NCAA rules prohibit athletes from obtaining money from *any* source. It's one thing to say the colleges shouldn't be directly cutting the players checks, quite another to say that they should forfeit the rights to their own names and likenesses, and even more absurd to say that *unrelated third parties* can't voluntarily pay athletes a stipend if they so choose.

  • James B on May 29, 2013 3:32 PM:

    As far as I am concerned paying student athletes to play sports is BS. They already get housing meals and a college scholarship. That is around 25+k per year. College is a training ground for your professional career. As a student, I work very hard on homework and projects to prepare for my future. No one has offered me a scholarship and I am certainly not going to get paid for the work I do. Also, to date, I haven�t filed any lawsuits against my university. I have heard the argument that it is tough for the athletes to be in a system where they are the focal point and everyone around them is making money. Welcome to college life! I am working on a design project for a firm who will likely make money from it. My professors make money too. Guess who puts in 60 hour weeks? That is what it takes to be competitive in today�s job market.
    Moreover, I don�t appreciate how the athletic departments have over-run the academic institutions. With the close margins on athletics it only takes 1-2 injuries or suspensions for a program (and the university and state if it is a public school) to lose money. Then, the university raises tuition costs and drive students into further debt in part because they took too much risk. In any other industry, this wouldn�t be an option. The NFL, NBA and others have figured out how to make money so why are students and tax payers footing the bill for athletic departments� poor management? If the athletes want to get paid then they should suggest splitting the NCAA into a private league separate from academics instead of suing the universities.
    Most universities maintain separate accounts from athletics. As a booster you are giving money to the athletic department, not the university. It is possible to get booster credit for donating to the university instead of the athletic department but it is not as strait forward as donating to the athletic department. Also, there are many PR moves that suggest that the athletic department is financial beneficial to the university when in fact this isn�t always true. For instance, the athletic department gives X amount of money to the university at halftime for a new �turf grass research center.� The new �turf grass research center� in reality is a new golf course for the athletic department that costs several times X. Who do you think pays all of the university police that work on game day? Athletics are not beneficial to academics.