Problems with Paying College Athletes

Heisman Trophy Winner Cam Newton

I recently attended a conference where I heard a very intelligent attorney contradict himself over the course of an afternoon. His diametrically opposed opinions are ones I think are not uncommon amongst college football fans. Early on in the day, he admonished college athletic departments for relying on direct institutional support and state government subsidies to in order to operate in the black. Later that afternoon, he made the case for why college athletes should be paid.

I’m not sure you can have it both ways.

The first question I ask people when they say college athletes should be paid is: where is the money going to come from? If you’re unaware, the NCAA released data showing that only 14 programs are turning a profit without having to rely on institutional support (like student fees or a check cut directly from the university coffers).

Although the NCAA did not list the 14 schools turning a net profit, Notre Dame is one of them. Athletic Director, Jack Swarbrick, has revealed that Notre Dame actually pours money back into the college’s coffers, to the tune of about $10 million in 2009. LSU tells me they are also one of the 14, having sent about $8 million back to the university last year.

Other schools that have been confirmed to be part of the 14: Alabama, University of Missouri, University of Texas, University of Florida, University of Tennessee and Ohio State University, and Nebraska. BYU’s athletic director also recently confirmed that BYU has operated in the black for the past three years.

So, where is the money supposed to come from to pay these athletes?

Even if we could get past this issue, I see a number of other problems. Here are some of my questions:

How do you decide which athletes are paid? Is it just in revenue-producing sports? Is it every athlete playing in those sports or just the elite?

Here is the second big problem. Actually, it’s probably the first, but I chose to focus on the issue of finances first. You cannot pay players without invoking Title IX. Safely assuming that any pay-for-play plan would pay male football and basketball players, you run into huge issues with federal law. More money will have to be devoted to women’s sports and it’s highly likely it’s men’s sports outside of football and basketball that will suffer. And, again, where is all this money going to come from?

Even if Title IX weren’t an issue (and let me just say, without revision to these federal laws, college athletes will never be paid), there are plenty of other problems standing between college athletes and their big pay day:

How much do you pay players? Is it one set amount for every athlete no matter the sport or the school in order to keep things fair? At least within a sport I think it has to be the same, otherwise schools with more money will have the advantage.

If you let athletes get paid for endorsements (which could avoid the first problem I outlined above), will it give some programs an unfair advantage? Playing for Alabama or Ohio State is bound to give you more endorsement opportunities (and more lucrative ones) than playing for Tulsa.

I see the same problem with allowing athletes to profit off merchandise sold with their name or number, like jerseys. Playing for Florida is going to give you greater opportunity to make money off merchandise than playing for Western Michigan.

Another way to pay player and avoid the first problem I outlined is to allow agents to pay players. Darren Heitner over at the Sports Agent Blog recently wrote a post advocating the lifting of all regulations against agents paying players. Heitner believes there would be no harm to the athletes from this situation and that it would allow the market to dictate what a player is worth.

Aside from the initial concerns I have regarding the influence these agents would have and the types of promises they could elicit from players about being paid back in the future, I have another bigger concern. Could these agents pay a player to choose a specific school? And what’s to stop a big car dealership in Athens from slipping money to an agent so he can encourage a player to attend the University of Georgia? (Thanks to @BrotherhoodSpt for pointing me to his blog on the subject, which included a link to Heitner’s piece.)

Will sports that pay athletes have to break from the NCAA? I think so. Tack on new administrative costs as those sports are forced to form new leagues to manage their sport.

There are far too many serious questions to answer for me to jump on the pay-college-athletes bandwagon. Without even getting into whether college athletes should be paid, I just don’t see a scenario where college athletes can be paid without allowing the gap to grow between the have and have-nots.

Posted on May 16, 2011, in Finance, General, Pay-For-Play. Bookmark the permalink. 13 Comments.

  1. “Aside from the initial concerns I have regarding the influence these agents would have and the types of promises they could elicit from players about being paid back in the future, I have another bigger concern. Could these agents pay a player to choose a specific school? And what’s to stop a big car dealership in Athens from slipping money to an agent so he can encourage a player to attend the University of Georgia?”

    Yet one day after a player loses student-athlete designation, an agent can provide anything in the world to the player and the agent can elicit the same types of promises. Is that player any different a day later? Why does everybody else get the blame for the athlete’s stupidity to enter into such a relationship?

    And I’m not quite sure about the line of reasoning regarding why a car dealership would pump money to an agent to steer a player to a particular school.

    • Having influence over where an athlete plays a professional sport is completely different than having influence over where an athlete plays a collegiate sport. Professional sports have mechanisms in place to attempt to keep the playing field even from the structure of the draft to salary caps. I’m not worried about the athlete and his or her ill-informed decisions. I’m worried about collegiate athletics that aren’t set up for his type of compensation.

      And why wouldn’t a car dealership or booster throw money an aren’ts way to steer a player’s decision? They already do it now, so why would his not open the flood gates?

  2. Why would the agent or car dealership care much about influencing where the player plays a collegiate sport? They care about getting the player’s business..

    • I picked a car dealership to illustrate my point because I know a couple of boosters who own car dealerships. The point is that many boosters will gladly funnel money through an agent if it means Top Prospect X decides to go to their alma mater. I know you’re a fellow UF alum. Surely this point can’t be lost on you after spending time in SEC country.

  3. I am not so much an adovocate of athletes getting paid as I am of the NCAA requiring that scholarships cover cost of attendance to a university.I think this would help eliminate some problems of student-athletes and money. there is a gap of $3,000 to $10,000 a year in the scholarship and cost of attendance. This depends on the school an athlete attends.

    The whole idea of a “full ride” is a complete fallacy. It’ isn’t a full ride and it is not clear that is the case until AFTER all is said and done.

    There is also a BIG difference from campus to campus on montly stipends. Some universities provide them under the scholarship, and others don’t.

  4. Regarding your first question, you’re making a logical error by linking the reported profits and losses under the status quo to an alternative situation where players are paid.

    If the rules were to change to allow players to be paid, then market forces would cause a substantial shift in the way the programs spend. The revenue-producing football and basketball athletes would be paid handsomely (i.e., the winners of the change), and there would be a variety of losers to offset the changing allocation.

    Whether this would result in increased, decreased, or unchanged profits for the programs themselves is unknown but not particularly relevant to the question of whether the athletes should be paid in the first place.

    • I see what you’re saying, but I don’t see how you can go to that model and still comply with Title IX. Comparable money would have to be spent on women’s sports. Still don’t know where all that money would come from, and it would likely mean the end for all other male sports.

  5. For what it’s worth, you can add Oklahoma to the list of school’s with self-sufficient athletic departments. Just thought I throw that out there.

  6. If a 16 year old high school student were so profiecient as to be often called the nation’s next top pitcher, pitched shut-outs galore, and had enough trophys to fill a room, but the expense of keeping him in the game and summer camps in new york was bankrupting his parents, where could he find an attorney in Georgia who would help him get back the money his parents had spent, the scott boras agency says the law prevents them from helping them be paid, but the law appears to be contradictory in that it is not helping high school and college in the face of bankruptcy ///J. Carroll

  7. Help me find the Georgia Law and federal Law against money for underage athletic geniuses///

  8. Instead of asking “where is the money going to come from?”, you should be asking, where is the money going from the TV contracts and March Madness? The NCAA makes $700 million a year and some of the coaches in the most successful programs in the country are making $4-$6 million dollars a year. How about they increase the scholarships so these athletes can have some money to bring their families to March Madness because college athletes put in about 50 hours a week. So how are football and basketball athletes supposed to earn an income if it violates the NCAA rules if they receive money else where? And further more, colleges, the NCAA, and EA Games are earning a profit from these athletes even after they have left their schools. For example, the Ed O’Bannon Case.

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