Pro Sports Can Pay College Athletes If Schools Won't

NFL Darft 2010 Derrick Morgan from the Georgia Tech Yellow Jackets holds up a Tennessee Titans

Photo: Jeff Zelevansky/Getty Images

This editorial is part of our GREAT DEBATE feature ‘Should College Athletes Get Paid?’

Warning: This article is based on reality, not fantasy. I don’t subscribe to any of the following fairy-tales:

  • College sports are played for the pure joy of the game
  • Players are there to get a “free education” 
  • Coaches and colleges care about anything but winning
  • All we need is better policing and enforcement of the rules.

The fact is college sports are big business—a multi-billion dollar business. Boy Scout pledges and trying to turn the clock back to a time that never was won’t fix it. Facing reality might.

Should college players be paid? Yes. Next question… 

Let’s back up a second. First of all, they’re already being paid. And they’re being paid on the basis of ability, or at least potential.

They receive college scholarships, worth between a few thousand dollars and hundreds of thousands depending on whether the school is public or private, more or less prestigious. Scholarships at athletic powerhouses are worth a whole lot more because of the level of play and the media attention.  

Win one of those and you’re being “paid” more than at an also-ran state teachers’ college.  And players can be “fired,”—that is, lose their scholarships—the moment they’re injured or cut from the roster. And unlike baseball players, college football and basketball players have no other path to the pros—no minor leagues.  Colleges are the minor leagues. I think you call that a monopoly.

“The NCAA allows players to collect welfare, and get food stamps. Meanwhile, the schools are reaping fortunes.”
College athletes are being paid…just not paid fairly. They can’t live on what they receive. The scholarships that pay their tuition, room, and board have been shown to fall short by $600 to $3000 depending on the school, and NCAA rules make it very difficult for them to supplement their scholarships with other income.

Josh Luchs Illegal Procedure

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The players are not allowed to hold down jobs during the school/athletic year and, given the demand for year-round workouts, they’re virtually barred from summer jobs. Ironically, the NCAA allows them to claim poverty and apply for tax-payer subsidized Pell Grants, collect welfare, and get food stamps. Meanwhile, the schools are reaping fortunes. Don’t believe the baloney that they aren’t. They earn enormous revenue from tickets, television, jerseys, sponsorships, and licenses. For instance, the Department of Education reports that in 2010, Penn State earned over $53 million in profit (pdf).

As any spokesperson or other NCAA personality will tell you, the colleges are non-profit organisations, which means that money is spent on coaches, stadiums, facilities, and other university endeavours. Just never on players. It’s an enviable business model:  run a company that takes in millions and doesn’t have to pay its labour force market-wages, show no profit, and pay no taxes. 

“The NCAA’s mission is to protect athletes from commercial exploitation, but it sells video games featuring players’ likenesses without paying them any royalties.”
Is it any wonder the schools and the NCAA don’t want to shatter the fiction?  But it’s just that, fiction.  We all know they wouldn’t be doing it, or be fighting so hard to protect it, if it wasn’t obscenely lucrative.  Division I schools often claim the big sports underwrite the small ones, which may well be true. But somehow Division II and III schools offer a full range of sports without the big bucks.

Part of the NCAA’s stated mission is to protect student athletes from commercial exploitation, but it still manages to sell video games featuring players’ likenesses and even names without paying them any royalties. (Baylor star Robert Griffin III will be on the cover of NCAA Football 13.)

Of course, schools could share the wealth with the athletes—gate, bowl money, ad revenue, sales of the players’ numbered jerseys—it’s their own rules that prevent it. But they’ve built their models on the money they take in, the way they take it in, spent the way they want. And “paying” players would threaten the schools’ tax-exempt status, expose them to worker’s comp lawsuits for injury, and burst the monopoly/power bubble.

MORE: ‘Should College Athletes Get Paid?’ at The Great Debate →
The best way to compensate college players more fairly is with “new money,” that is money that isn’t already coming in. (At least not officially.) Who has new money they’re willing to invest in college sports?  Those who are next to reap the rewards—pro sports, or the conduits to pro sports—the agents. Which of course is where many players are getting their petty cash already.  But what if it could be done above-board, with transparency, enabling players to get what they earn?

The Agent Loan System to Compensate College Athletes

In 10 Fair, Open, Realistic Steps

  1. Set up independent oversight and regulation of the Loan System – with standardized forms and loan agreements, and interest rates at or below market rates.
  2. NCAA retains paperwork on all transactions, with access to agent phone and bank records (which they do not currently have), in order to track activities, movement of money, etc.  Agents would have to agree to respond to all questions and make themselves available for depositions.
  3. Any certified agent who wishes to participate can register to lend money to athletes.
  4. Agent and player are allowed to meet openly to discuss amounts, terms, and details.  (Old rules imposed by the NFL Players Association prohibited this, but they have recently been changed. And because all loans would need to be approved by the NCAA, no one under 18 would be able to participate.) 
  5. Once agent and player arrive at an agreement, they can meet regularly to parcel out the funds on a piecemeal basis, rather than in a lump sum, and establish on-going relationships. 
  6. The agent and the marketplace determine how much it makes sense to lend.  Agent X may determine that player Y is worth $10,000 a year, that is, the player will earn enough once signed to a pro contract to repay that amount. But if agent Z determines the player is worth more, say $15,000, he can take the risk, like any lender, that the player can pay back more – a true free-market system.
  7. Notices of agent-player agreements would be posted openly, helping eliminate uncertified “runners” and other un-sanctioned player representatives.
  8. It is a business deal, a loan.  The player owes the money to the agent.  If and when the player signs a pro deal, he begins to repay the money on pre-agreed terms, protecting all parties. If the player’s career does not pan out; he is not drafted or signed, the agent has made a bad investment without recourse. 
  9. A player can openly switch agents if or when he determines that another agent offers him a better deal, or is a better fit. The new agent assumes the liability for the loans from the previous agent. 
  10. The Loan System would be totally consistent with Title IX. Rather than favouring only top sports, it can fuel any sport. If an agent determines that a soccer player can earn substantial money in the marketplace, he is free to loan money to the soccer player.  Or the hockey player. Or swimmer.  Male and female athletes alike.

There is already precedent for a system like this: College players are permitted to borrow against future earnings to buy disability insurance. The Loan System is a logical expansion of that, and best of all, it doesn’t cost the schools a dime—doesn’t touch the current revenue from tickets, jerseys, and bowl game TV rights they adamantly guard. It’s the agents’ money.

You may say it will never happen, and you may be right. The Loan System would effectively acknowledge the reality that college athletics are not amateur sports. And we all know the NCAA member institutions would much rather continue to insist that they are an extra-curricular activity for students. But it has one advantage over the system we have now: it might actually work.

Keep reading ‘Should College Athletes Get Paid?’ at The Great Debate →

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