- College sports generate billions of dollars for schools, networks, and corporate sponsors.
- Everyone is making money off college athletics — except the players.
- The Supreme Court ruled that colleges can offer "education-related" payments to student-athletes.
- The ruling opened the door for name, image, and likeness endorsement deals, and athletes already are cashing in.
On a crisp Saturday afternoon in Ann Arbor, the University of Michigan is set to battle its archrival, The Ohio State University, for gridiron supremacy in the Big Ten Conference — and perhaps a shot at the national championship.
Some 107,000 spectators have packed the "Big House," paying an average ticket price of $141. The game airs on ESPN, one of three networks linked to the Big Ten, thanks to a $2.64 billion contract.
Players are awash in Nike gear owing to the apparel giant's $174 million deal with Michigan and $252 million deal with Ohio State. On the sidelines, Michigan head coach Jim Harbaugh (salary: $8 million) and his counterpart, Ryan Day (salary: $5.7 million), finalize their game plans.
“College athletic programs collected $14 billion in total revenue in 2019, not including income from broadcasting rights and corporate sponsorships.”
The scene is played out nationwide that same day across dozens of U.S. college campuses — packed stadiums, network contracts, apparel deals, wealthy coaches.
College sports, particularly football, are a big deal and a big business. The Department of Education reported that college athletic programs collected $14 billion in total revenue in 2019, up from $4 billion in 2003. And that doesn't include income from broadcasting rights and corporate sponsorships.
More than 100 Division I coaches earn over $1 million per year. The top 25 football coaches take home an average of $5.2 million, while the top 25 basketball coaches bring in $3.2 million. In 41 states, the highest-paid public employee is a football or basketball coach.
Student-Athletes Get Scholarships, Not Salaries
Billions of dollars are swirling around college sports, and everyone is getting a piece of the action. Everyone, that is, except the players.
What about scholarships though? Some argue student-athletes are "paid" through full scholarships, something most college students can only dream about — and that's partially true. According to the NCAA, over 150,000 Division I and Division II student-athletes receive $2.9 billion in scholarships each year (Division III schools don't offer athletic scholarships).
Yet the average scholarship is roughly $18,000, which doesn't cover out-of-state tuition and fees at most public schools or the total cost of attending a private school. In short, most college athletes on scholarships aren't receiving a full ride.
But some are. In what's called "head count" sports — i.e., Football Bowl Subdivision (formerly Division I-A) football and Division I basketball for men, and Division I basketball, tennis, volleyball, and gymnastics for women — students receive full athletic scholarships covering tuition and fees, room and board, and books.
The rest are termed "equivalency sports," which receive lump sums that are allocated among players according to a coach's determination. These scholarships, which aren't guaranteed, are awarded year to year and can be rescinded for numerous reasons, including injuries. All told, only about 1% of student-athletes receive a full scholarship.
That's just the institutional side of it. Externally, apparel companies are making money on college swag featuring top players. When Nike sells an $80 Clemson University jersey with quarterback Trevor Lawrence's name and number on it, shouldn't he get a cut of the profits?
“The average athletic scholarship is roughly $18,000. Only about 1% of student-athletes receive a full scholarship.”
Folks in California think so. In 2019, Governor Gavin Newsom signed a law allowing college athletes in the state to sign endorsement deals with brands. The Fair Pay to Play Act would enable athletes at California schools earning more than $10 million in annual media revenue to make money from their likenesses and hire agents without losing eligibility. If the bill passes, the law will go into effect on January 1, 2023.
The NCAA warned that because California schools might have an unfair recruiting advantage over schools in other states, institutions would be banned from championship competition. That's why some colleges, such as the University of Southern California and Stanford University, opposed the bill.
Then there's the newly proposed College Athlete Economic Freedom Act, which would allow student-athletes to unionize and earn money off their likeness, name, and image. Introduced in February by Senator Chris Murphy of Connecticut, the bill promises to be one of the most expansive yet in terms of getting college athletes officially recognized as employees.
Before we dive into the debate over paying student-athletes, let's be clear about the NCAA's position. Its regulations state, "You are not eligible for participation in a sport if you have ever … taken pay, or the promise of pay, for competing in that sport … [or] used your athletics skill for pay in any form in that sport."
Further, the NCAA stipulates, "You are not eligible in any sport if, after collegiate enrollment, you accept any pay for promoting a commercial product or service or allow your name or picture to be used for promoting a commercial product or service."
Against this backdrop, here are both sides of the issue.
6 Reasons Why College Athletes Should Be Paid
They Rake In Cash for Their Schools
College athletes make their schools millions of dollars, so they should naturally receive a cut of the action. This argument holds true especially for football and basketball players, who become household names during their respective seasons.
Everyone around them makes money, but the students responsible for generating revenue receive nothing. To the truly jaded, this is a blatant form of exploitation.
They Give Their Schools Valuable Exposure
The exposure student-athletes bring to their schools can boost applications and donations. The Flutie Effect on college admissions — named for Doug Flutie, the Boston College quarterback who put his institution on the map in 1984 with his famous Hail Mary pass against the University of Miami and his Heisman-winning season — can be dramatic. For BC, the effect was a 30% increase in applications over two years.
More broadly, a study showed that when a football team "rises from mediocre to great," applications increase 18.7%. Similarly, if a team improves its win total by five games in a season, alumni donations go up 28%.
- (Video) The Shifting Debate Over How College Athletes Should Be Paid | WSJ
Playing Equals Working
Participating in intercollegiate athletics constitutes a full-time job. A 2017 NCAA survey revealed that Division I athletes dedicate an average of 35 hours per week to their sport during the season.
The opportunity cost of not working is considerable. A work-study job could pay several thousand dollars each year, and working at the typical minimum wage — $7.25 per hour — for 35 hours a week would earn the student a little over $1,000 per month.
Sports Take Away From Studies
Sports' considerable time commitment cuts into students' study time. Leaving aside barbs about the "student" part of "student-athlete," how is an athlete supposed to keep up with academics during their playing season? What about earning good grades and positioning oneself for the competitive job market? Might some form of financial compensation make this compromise easier to take?
Athletes Need Spending Money
Like other college students, athletes need spending money. Even if a student receives a full-ride scholarship, the award doesn't provide pocket money for incidentals and entertainment. If a student doesn't hold a part-time job, where does that money come from (besides their parents)?
The Potential for Injury Makes Compensation a Must
Athletes constantly risk injury and therefore deserve proper compensation. A seriously injured athlete could lose their scholarship (which is guaranteed only for one year at a time), jeopardize their opportunity to play professionally and potentially earn millions, or even face lifelong disability if the damage is permanent.
We're far more savvy today about concussions and the long-term effects of chronic traumatic encephalopathy (CTE). A 2017 study found that 91% of former college football players who had died had CTE, a degenerative brain disease linked to dementia.
6 Reasons Why College Athletes Should Not Be Paid
- (Video) College Athletes Are Cashing In on the NCAA’s New Rules | WSJ
They Already Get Full Scholarships
One of the primary arguments against paying student-athletes rests on the assumption that they already receive full college scholarships. But as we've discussed, this is seldom the case — most athletes only receive partial scholarships.
Secondary Sports Would Suffer
If a university decided to pay student-athletes, where would that money come from? Not likely from the school itself. Of the roughly 1,100 athletic programs governed by the NCAA, only 25 had a net positive revenue in 2019. The vast sums earned from football and basketball subsidize all other sports on campus. And not, of course, from the NCAA.
A likely scenario would involve universities cutting minor sports to pay athletes competing in the marquee sports. So while a few athletes would benefit financially, a greater number of students would see their athletic opportunities disappear.
Determining Salaries Could Get Messy
Exactly who gets paid and how much? The economics of a paid-athlete system is messy at best. At worst, it's chaotic and threatens team morale. Should all athletes be paid? That's not likely.
How about only football and basketball players? What determines how much each player should earn? Is the third-string left guard worth as much as the starting quarterback? Will the coach make these determinations? What if the coach's son plays on the team?
This scenario offers too many thorny questions and too few sufficient answers.
Rich Universities Would Benefit the Most
Assuming a free-market system, the chasm between the haves and have-nots would widen even further. Universities best positioned to pay athletes top dollar would win bidding wars and recruiting battles against institutions with limited budgets. Athletic competition nationwide would suffer as a result. Might this exacerbate booster interference and create a black market for top talent funded surreptitiously?
It Would Take Away From the Love of the Game
Paying student-athletes turns them into professionals and sullies the purity of amateur athletic competition. Student-athletes are students first and foremost, attending college primarily to receive an education and secondarily to compete in their sport. College students should participate in sports for the love of the game, not for financial gain, following the long-forgotten credo held dear by Olympic athletes.
Title IX Could Muddy Payment Structures
Title IX stipulates that colleges must provide equal opportunities for male and female athletes. Does this rule apply to payment structures, too, though? Would a university have to pay female athletes in aggregate the same amount as their male counterparts? Not necessarily — but a school would be required to ensure that female athletes receive proportionate opportunities for scholarships.
The Era of Name, Image and Likeness Profiting Begins
In a unanimous decision issued on June 21, 2021, the Supreme Court ruled the NCAA cannot bar universities from making education-related payments to student-athletes.
The case, NCAA vs. Alston et al — named for former West Virginia University football player Shawne Alston, one of several athletes who initiated the suit — centered on student-athletes from Division I men's and women's basketball and FBS football.
While the Court's decision doesn't necessarily permit colleges to pay athletes salaries, it does allow them to compensate students for "education-related benefits" including paid internships, study abroad programs, tutoring, computers, equipment, and graduate scholarships.
The decision also opened the door for name, image, and likeness (NIL) compensation. In June, the governing boards for all three NCAA divisions approved what they termed "a uniform interim policy" that suspends previous rules regarding endorsements for all incoming and current student-athletes in all sports.
"This is an important day for college athletes since they all are now able to take advantage of name, image, and likeness opportunities," NCAA President Mark Emmert said in a statement.
Since the ruling, college athletes have been cashing in on NIL deals, with a few resulting in seven-figure incomes. Last October, U.S. Sen. Richard Burr of North Carolina introduced the NIL Scholarship Tax Act, legislation seeking to tax the scholarships of college athletes earning more than $20,000 per year.
The NCAA assumes Congress eventually will pass a federal law providing consistent standards for NIL endeavors, though members of Congress cannot seem to agree on the parameters. Meanwhile, 18 states have NIL laws in place. Similar measures in additional states have passed but are slated to be in effect sometime in the future.
As university leaders wait patiently for federal guidelines promising to corral some of the chaos, the free market will continue to dictate individual and institutional fortunes.