Tuesday, November 23, 2010

"Pay the Players" Misses it All

NCAA President Mark Emmert made emphatically clear that he categorically rejects the claim that college athletes should be "paid." "Student athletes will never be paid as long as I am President of the NCAA." He is absolutely right.

Football announcers and sports commentators often  complain that college athletes should be paid to play. Usually this is done in the context of watching some full stadium of D1A elite schools and muttering about all the "profit" from the games. The idea might come up expressed as an the illusory wish that somehow paying players would eliminate the scandals surrounding agents. The idea possesses a sort of populist sense and makes good press, but it makes no sense.

This idea is based upon profound misunderstanding of the nature of college sports and the nature of college economic realities. I think we would all be better off if we realize that college athletics is about investment in people, not paying players.

You have to start from a baseline. Where would the young players be if college sport did not exist. The vast vast majority of them, 95 percent, would not be playing sport, and many of them would not be in college. In fact women's athletics would not exist at all since it involves almost universal structural deficits of between 4-10 million dollars. So athletes in all sports but a few basketball and football programs play on money losing teams--the revenue generated does not cover the costs.

In a true life baseline, a trace element of teenage athletes might be playing pro sports or participating in professional tracks like in Europe. So none of the arguments make any sense until you calibrate the baseline. Without college sport, the players would not be playing, would not be in college, would not be getting an education. This is the default for the vast majority of the 400,000 NCAA athletes.

Now we can think about what it might mean to "pay the players."

The "profits" don't exist. Only two college sport categories ever make any money--men's basketball and football. The money comes from TV exposures and not the revenue generated by seats. The rest of college sport teams lose money at tremendous rates. In fact, 98 percent of college football teams lose money and do not cover the basic expenses. Well over 94 percent of college men's basketball teams also lose money. With the rare exception of about maybe 20 programs, the revenue generated by by college football and basketball games never cover costs. What money is left over almost always goes to funding other money losing sports like soccer, swimming, volleyball, water polo, lacrosse, the list goes on. They all are subsidized by either football revenue (rarely) but mainly by fundraising and internal transfers or student fees.

Second, the commentators pontificate  as if the athletes are not receiving anything in return for playing. This is rubbish. At the moral core of college athletics, the athletes  are playing a sport they enjoy and love. Unlike the vast majority of the young men and women around the world who must give up the sports at age 15, college student athletes still play and pursue their passions. A microscopic few might have brief careers in the pros, but for the 1400 schools in the NCAA and the approximately 140 D1A football schools, this is the last time the young men and women will play in a supported organized way. Most of them play from passion and love.  Playing on an supported team provides the students with community of fellow team members who create a support group that so many young college students do not possess in the mega-universities of today. The cultural critics and media commentators miss all this because they don't know the students.

Along with pursuing their passion, the young men and women gain a college education. Here is the crux of the whole issue. Education matters. They provide a huge benefit; the scholarships cover the cost of education or enable a student to get into a school he or she may not have been able to attend without athletics. This investment can range from 12,000 to 50,000 per year upfront. Being in college and afterwards  college education can improve the quality of a person's life.

This means that colleges must make sure student athletes get educated, not just eligible. But a college education can furnish immense economic, personal and social value. It's tells you alot about those who make money off and comment on college sport that they forget that the athletes are actually going to class, or they have grown so cynical that they believe the schools are pretending to educate the athletes stuffing them in remedial classes and useless majors. This group of commentators  fixates on following ultra elite  football or basketball and ignore all the other sports where most athletes live and play----an average college degree increases lifetime earnings by a million dollars right now.

Along with the satisfaction of continuing their passion and getting an education for the future, student athletes receive immense support while  in school. The university provides trainers, medical care, conditioning and facilities to support their growth. The student athletes often have academic support that  helps ensure that the education has real value given their immense workloads.

These support systems do not come cheap. Infrastructure costs for facilities, people and the ancillary media, marketing and support groups as well as fund raisers create a high but not absurd overhead for the units.  Despite their absurd levels in football, coaching costs have remained constant at around 18 percent of costs as have administrative costs. Since the programs are all nonprofit and associated with education, what "profits" exist must be reinvested, even if too often in football salaries.

Aside from the glamorous few in the top very rich programs, 98 percent of schools lose money on football but provide an arena for athletes to pursue excellence and passion past a time when most of them would have that opportunity. They make available an education that has immense personal and economic values for those students to take advantage of.

The gut reality is that the average cost invested in any student athlete at a major college is over 78,000 dollars per year. With the exception of maybe 14 teams, all college sports lose money. Providing women's teams involves structural deficits of 4  to 10 million per year. All men's teams with rare exceptions in football and basketball lose money. Most football programs and basketball programs lose money. So the "profit" or "surplus" does not exist except for a very few ultra elite programs.

The one area where the athletic issue of being paid makes strong sense, as Emmert mentioned, is to raise the reimbursement permitted for college athletes to cost of attendance. Right now scholarship calculations cover focus on books, tuition and meals, but has no room for actual living expenses. The formulas systematically underestimate the real live cost of attendance. A number of groups are pushing the NCAA to mandate this as the baseline for scholarships, but  face immense resistance from programs. The poorer programs especially resist this as making it further difficult to complete since they barely survive and must subsidize their programs with student fees, transfers and fund raising as it is. The NCAA should change here because student welfare demands it.

The next time you hear the claim "pay the players," remember this is not about pay, it is about investment and life.

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