The National Collegiate Athletic Association (NCAA), that administers student athletics, reported a revenue of over $1 billion during the 2017 school year (Business Insider 2019). In the national spotlight, a majority of people have argued that the college athletes who create most of the revenue, should be able to make money during their college careers. Much of the money that is generated by the players go to member schools, which use it to fund coaches and administrators, their sports programs and scholarships for student-athletes.
The NCAA prohibits student-athletes from getting anything more than a scholarship for their effort and this corrupt practice exploits the young college athletes for their own profit.
The state of California is about to change that and is introducing a bill called the ”Fair Pay to Play Act” introduced by Sen. Nancy Skinner and it would give college athletes the right to their name, image, and likeness. This bill takes aim on the amateurism rules of the NCAA and if the bill passes student-athletes in California will be able to sign endorsements and sponsorships (UMich 2019).
The bill is giving college athletes the right-back, that all the rest of us have and has a huge opportunity to empower athletes to make the most of their gifts and talents. According to an article in CNBC, the President of NCAA Mark Emmert, penned a letter in opposition saying that if California schools allow student-athletes to make money, they would have an unfair advantage over schools in other states and if it becomes law they could be banned from championship events (CNBC 2019).
Many have said that if the NCAA were to follow through with this threat it would be an antitrust violation. California is home to some of the most decorated programs in the country and this could completely transform the business of college sports. Allowing student-athletes to profit from their name, image, and likeness is the beginning of a shift in power. The rules have for a long time been controlled by the NCAA and they are not interested in sharing that power.
In an article published by ESPN, they stated that college sports have become so popular that the five biggest conferences made more than six billion dollars alone, with so much money being made of games played by college athletes (ESPN 2016). The NCAA identifies them as amateurs strictly forbidding them from profiting of not just their ability, but their name, image, and likeness (Business Insider 2019). This led to a now-infamous case brought by the former player at UCLA, Ted O’Bannon, who sued the NCAA for profiting off his likeness over a decade after he left school. The federal court system decided that the NCAA’s amateurism rules were an unlawful restraint of trade, but the ruling did not call for schools to pay the players directly.
However, some players think they are being mistreated and a new federal lawsuit is directly challenging the NCAA’s model. O’Bannon have in other cases targeted certain elements of the NCAA’s business model, but this new case would fundamentally change college sports. The problem is that the athletes do not get paid, but everybody else does. According to an article published in Vice, they explained that the lawsuit, led by Jeffrey Kessler and Bruce Simon, wants to shift the focus to empower the schools and the conferences to make their own choices about what is fair for the players (Vice 2016). The problem is that college athletes spend years playing sports while suffering injuries and cannot profit from their athletic ability during those years after they graduate. If the schools are allowed to decide how to compensate these players it could change how we define the term “amateurism”.
Furthermore, that means schools would not be required to pay them, but the student-athletes would be allowed to profit from the use of their name, image, and likeness. According to sports economist Rodney Fort, University of Michigan, the reason that amateurism exist is because it allows the university discretion over a larger portion of the amount of revenues that could generate it by the athletic department than they would otherwise have and that discretion comes at the expense of the athletes (UMich 2019). Allowing a free market for the college athletes would allow them to decide what is the fair competition and as a result, the marketplace would be able to reach a decision on that the money is there. That same approach was applied to free agency in pro sports just as that market was expanding as new broadcasting and licensing deals added billions in revenues, but implementing that same approach could lead to drastic changes in college sports.
The debate over player pay is complicated and it gets even more problematic when the cost of running an athletics program is considered. Hundreds of millions of dollars are invested directly into expenses like word-class facilities and personal salaries, but while the coaches and administrators are compensated well, what they are providing to student-athletes is closely regulated. In the defense of not paying the players, the argument is that the student-athletes are receiving a free education that is covering their tuition fees, rooms, books, and their living expenses. In the article published by CNBC, Kathleen McNeely, NCAA chief financial officer, writes that “There is still a misperception that most schools are generating more money than they spend on college athletics. These data show once again that the truth is just the opposite,” In addition, a negative effect of paying student-athletes would be that you have to consider elimination of opportunities, meaning that schools have to eliminate sport programs and take opportunities away from young people. While colleges say they need this revenue to provide scholarships programs and facilities, economists like Rodney Fort, see nothing but record growth and record spending. According to Fort, all schools can afford to pay players and if revenues and expenditures are going up with the same rate because the money that is being generated by players is being spent on coaches and administrators and facilities then the money to pay the players is already there (UMich 2019).