Harry Child
Amateurism: A Chokehold on the Free Market
What would most scholars and economists consider the greatest monopoly of 2002? Microsoft? Opec? Neither, according to Harvard professor and economist Robert Barro. Writing for Business Week Magazine in 2002, Barro voted the NCAA his “monopoly of the year”(Hruby). Why? Because billions of dollars are funneled through the NCAA each year from television contracts and ticket sales, and the athletes who generate the revenue aren’t properly compensated for their work. Under the rules presented by the NCAA, it is strictly prohibited that student athletes receive any compensation outside of scholarship money. Under the Amateurism clause in the NCAA’s rulebook, athletes automatically lose eligibility if they have been paid for their sport (“Amateurism”). Through the use of two terms, “student athlete” and “amateurism,” the NCAA has made it legal to restrict fair market principles and deprive college athletes of compensation.
The NCAA is critical for the success of college sports and standardization of competition. The NCAA is the governing body of college athletics. Without it, standards of play would be dropped , and player safety would be sacrificed. Each year, the NCAA devotes tens of millions of dollars towards research on player safety. Tens of millions of dollars that another institution might not provide (“Where”). The founding principle of college sports was that the athletes and schools would compete for glory, rather than money. It wasn’t until 1905, thirty six years after the first college football game, that even the head coach of a program was paid. Bill Reid, the head coach for Harvard, became the first paid head coach in the history of college sports, and was paid twice as much as a full time professor. One year after the introduction of money into college sports, Theodore Roosevelt banded schools together to create the NCAA in order to make the game safer and preserve the noble idea of amateurism (Branch).
The first reported incident of under the table compensation for athletes occurred in 1939, when Pittsburgh was paying their players a stipend after each game. This forced the NCAA to establish the first official rule against pay for athletes: the sanity clause. The clause would later be repealed because of its harsh consequences, but it established that any school caught providing concealed benefits to players, would be banished from the NCAA (Branch). The modern structure of the NCAA first appeared in 1951, when Walter Byers was named the first executive director of the NCAA. Byers turned the NCAA into the corporate giant that it is today by doing two things: Signing the first television contracts for the NCAA regarding football and the NCAA men's basketball tournament; Coining the terms “student athlete” and “amateurism.” With unclear rules regarding compensation for athletes in the 1950’s, the NCAA was presented with a suit from the widow of a former football player. Ray Dennison was killed in a football collision and his wife was seeking workmen’s compensation death benefits from the the college that Dennison played for. The Colorado Supreme Court denied workers compensation for the widow because being a “student athlete” meant that Ray Dennison had forfeited his rights to compensation (Branch). This ruling set a precedent that the NCAA would follow for the next half of a century.
Regardless of a person's stance on amateurism and the NCAA, the statistics of college athletes and need for more money don’t lie. In a study done by Ellen Staurowsky for the National College Players Association, plenty of startling statistics were found. First, on average, the typical athlete with a full ride sports scholarship receives $3285 less than he or she needs for the cost of living. The full ride scholarship covers all costs provided by the school ie. tuition, room and board, books, but still leaves athletes short on living costs like gas, clothes, off campus living and entertainment. The shortage in scholarship money puts 80% of athletes that live on campus under the national poverty line when including their scholarship as a salary (Staurowsky). The average athletic scholarship is valued at $8,385 per year, and the national poverty line is $11,670 (2014). Up until 2012, instead of changing rules to help struggling athletes, the NCAA allowed players to file for food stamps and welfare to cover the gap between scholarships and living costs (Staurowsky). Second, the vast majority of college athletes will not go professional with theirs sport and won’t receive a payday for all of the hours that they have worked on their sport (Levine). This means that tens of thousands of hours have been essentially wasted away once an athlete graduates from college. Finally, not only are athletes in need of compensation for their work in sports, but they have a value in the free market. If college athletics were not tied to the idea of amateurism, and followed a professional model like that of the NFL, players would be compensated for their work like any other American (Hruby). In fact, if the NCAA followed a professional model, the athletes would be worth a large amount of money in their college career. On average, an FBS football player would be worth $456,612 in the span of a four year college career (Staurowsky). The value for an NCAA Division One basketball player is more than double that of a football player, coming in at $1,063,307 (Staurowsky). Not only do college athletes need the money that they generate for their universities, but they are being denied their free market value under the current rules of the NCAA. With such a high value for college athletes, many would wonder how they are worth so much, and how they could live under the poverty line.
How are the athletes worth so much? The NCAA has become a great tool for generating revenue in the American Marketplace, through expanding television rights for college sports, and putting on some of the most viewed events in all of America. The NCAA has become a media giant that generates roughly one billion dollars annually to distribute to its member schools, but still remains a non-profit organization (“Where”). The NCAA generates $770 million annually from “March Madness” alone (Levine). On top of that, each school in a “power conference” in the NCAA makes anywhere from $20 million to $30 million annually (Hruby). With this mass amount of revenue generated each year, the question is brought about, how can college athletes not be compensated?
While most college athletes do not receive all the money that they need to live a comfortable life, the NCAA does use its funds to benefit players indirectly. One can’t forget that the majority of the NCAA’s revenue goes directly to athletes for scholarships. Each year, $2.7 billion go towards athletic scholarships for over 150,000 athletes (“Where”). Along with scholarships, the NCAA contributes significant funds to programs that focus on player health and safety. Each year the NCAA puts aside $57 million to research player safety and fund catastrophic injury insurance (“Where”). Finally, the NCAA has a specific fund set aside that could potentially be expanded to help athletes while keeping the principle of amateurism alive: The Student Assistance Fund. This fund has grown each year since its creation and now receives $73.5 in funding annually (“Where”). The fund is one of the NCAA’s hidden gems that seems to receive no recognition. It is designed to help athletes get home in times of crisis, buy clothes, cover medical expenses, etc. (“Where”). Athletes at the university of Minnesota have been using the fund each year and couldn’t be more appreciative of it. Take Harold Legania for example, used the fund to fly home for his aunt’s funeral when he had no money for a plane ticket. Or Nicole Ohlde, who used the fund to buy a dress for the night that she was drafted into the WNBA (McCoy). In the 2013-14 school year, 375 University of Minnesota Athletes used the fund taking $402,000 (McCoy). With such a nobel fund put in place by the NCAA, it would seem that paying athletes would be unnecessary. A possible answer to the problem of undercompensation is expanding the fund to cover more expenses of college athletes like food, shelter and entertainment.
It is clear that the current structure of the NCAA is not adapted to modern needs and desires of athletes, and change is sure to come in the next few years. The NCAA is already changing some policies due to pressure from outside sources. After winning the NCAA mens basketball national championship, star UCONN guard Shabazz Napier spoke out against the NCAA’s food policy saying that him and his teammates often had hungry nights (Ganim). Within the next month, the NCAA changed its strict rules regarding food, and allowed for athletes to have unlimited meal plans at their universities (Trahan). Other more binding pressures are being placed on the NCAA as well. Lawsuits are starting to go in favor of former athletes and giving more rights to the players. In August 2014, a monumental decision was made in favor of the student athlete. Former player Ed O’bannon sued the NCAA for the rights to players likeness and an Oakland judge ruled in favor of O’bannon, stating that it is unconstitutional to withhold money made off of their likeness from athletes (Martin). Not only does this ruling give rights to players, but some schools are even starting to treat players like employees. For the first time in college sports history, football players at Northwestern University we’re given the chance to unionize in order to gain more collective rights (Levine). Though the players chose not to unionize, that decision marked the first legislation that treated college athletes like employees. With the system as outdated as it is currently, it is only a matter of time before rules are changed whether the NCAA approves or not.
Of course, the question is posed, what would happen if NCAA athletes were paid? First, the money for college athletes would need to be taken from somewhere. The most popular proposition is to take money from coaches salaries and funding for facilities in order to pay athletes. With this model, other sports would not be in jeopardy of losing funding, and players would receive their market value (Fort). Second, many wonder what the athlete’s reaction would be to receiving compensation. Some scholars suggest that instead of leaving college for a shot at the pros, athletes would instead compete for their school for all four years because they wouldn’t be losing value annually (Hruby). Finally, the largest potential problem with paying athletes is the idea that all competition in the recruiting process would be eliminated. If schools were allowed to pay athletes, the schools with the most money would be able to buy their recruits with large contracts (Fort). The flipside to this, is that smaller schools could recruit one big name player with a large contract, making the competition even stronger and potentially leveling the playing field (Hruby). While all of these outcomes are merely speculations, it is clear that the face of college sports would change dramatically if players were paid.
The NCAA was founded on the noblest of principles- amateurism- but in the last half of a century, it has become a cartel that restricts the use of free market principles. Athletes are currently receiving less than they need annually, and the NCAA isn’t proposing any reforms that would change this. With the idea of paying college athletes emerging as a frontrunner to solve the problem of undercompensation, the question is no longer “Will the NCAA and its members pay college athletes?” but “How much?”
Works Cited
"Amateurism." NCAA.org. NCAA, n.d. Web. 5 Oct. 2014.
Branch, Taylor. "The Shame of College Sports." The Atlantic. Atlantic Media Company, 7
Sept. 2011. Web. 24 Sept. 2014.
Fort, Rodney, and Jason Winfree. "Why The Arguments Against NCAA Pay-For-Play Suck." Deadspin.
Stanford Economics and Finance, 12 Dec. 2013. Web. 14 Oct. 2014.
Ganim, Sara. "UConn Guard on Unions: I Go to Bed 'Starving'" CNN. Cable News Network, 8
Apr. 2014. Web. 23 Sept. 2014.
Hruby, Patrick. "The Free Market Case against the NCAA Chokehold on College Sports."
Washington Times. The Washington Times, 30 Mar. 2012. Web. 22 Sept. 2014.
Levine, Dan. "U.S. Judge Rules against NCAA, Says Athletes Can Be Paid."Reuters. Thomson
Reuters, 8 Aug. 2014. Web. 24 Sept. 2014.
Martin, Jill. "Judge Rules against NCAA on Compensation." CNN. Cable News Network, 9
Aug. 2014. Web. 24 Sept. 2014.
McCoy, David. "NCAA’s Little-Known Student Assistance Fund." CBS
Minnesota. CBS Local, 12 Jan. 2014. Web. 24 Sept. 2014.
"Where The Money Goes." NCAA.org. NCAA, 2014. Web. 24 Sept. 2014.
Staurowsky, Ellen, ED.D.Dr. "The $6 Billion Heist: Robbing College Athletes Under the Guise
of Amateurism." News. Drexel University, 20 Mar. 2013. Web. 24 Sept. 2014.
Trahan, Kevin. "NCAA Allows 'Unlimited Meals'" SBNation.com. VOX Media, 15 Apr. 2014.
Web. 23 Sept. 2014.
"2014 Poverty Guidelines." ASPE. USDHHS, 22 Jan. 2014. Web. 11 Oct. 2014.
Amateurism: A Chokehold on the Free Market
What would most scholars and economists consider the greatest monopoly of 2002? Microsoft? Opec? Neither, according to Harvard professor and economist Robert Barro. Writing for Business Week Magazine in 2002, Barro voted the NCAA his “monopoly of the year”(Hruby). Why? Because billions of dollars are funneled through the NCAA each year from television contracts and ticket sales, and the athletes who generate the revenue aren’t properly compensated for their work. Under the rules presented by the NCAA, it is strictly prohibited that student athletes receive any compensation outside of scholarship money. Under the Amateurism clause in the NCAA’s rulebook, athletes automatically lose eligibility if they have been paid for their sport (“Amateurism”). Through the use of two terms, “student athlete” and “amateurism,” the NCAA has made it legal to restrict fair market principles and deprive college athletes of compensation.
The NCAA is critical for the success of college sports and standardization of competition. The NCAA is the governing body of college athletics. Without it, standards of play would be dropped , and player safety would be sacrificed. Each year, the NCAA devotes tens of millions of dollars towards research on player safety. Tens of millions of dollars that another institution might not provide (“Where”). The founding principle of college sports was that the athletes and schools would compete for glory, rather than money. It wasn’t until 1905, thirty six years after the first college football game, that even the head coach of a program was paid. Bill Reid, the head coach for Harvard, became the first paid head coach in the history of college sports, and was paid twice as much as a full time professor. One year after the introduction of money into college sports, Theodore Roosevelt banded schools together to create the NCAA in order to make the game safer and preserve the noble idea of amateurism (Branch).
The first reported incident of under the table compensation for athletes occurred in 1939, when Pittsburgh was paying their players a stipend after each game. This forced the NCAA to establish the first official rule against pay for athletes: the sanity clause. The clause would later be repealed because of its harsh consequences, but it established that any school caught providing concealed benefits to players, would be banished from the NCAA (Branch). The modern structure of the NCAA first appeared in 1951, when Walter Byers was named the first executive director of the NCAA. Byers turned the NCAA into the corporate giant that it is today by doing two things: Signing the first television contracts for the NCAA regarding football and the NCAA men's basketball tournament; Coining the terms “student athlete” and “amateurism.” With unclear rules regarding compensation for athletes in the 1950’s, the NCAA was presented with a suit from the widow of a former football player. Ray Dennison was killed in a football collision and his wife was seeking workmen’s compensation death benefits from the the college that Dennison played for. The Colorado Supreme Court denied workers compensation for the widow because being a “student athlete” meant that Ray Dennison had forfeited his rights to compensation (Branch). This ruling set a precedent that the NCAA would follow for the next half of a century.
Regardless of a person's stance on amateurism and the NCAA, the statistics of college athletes and need for more money don’t lie. In a study done by Ellen Staurowsky for the National College Players Association, plenty of startling statistics were found. First, on average, the typical athlete with a full ride sports scholarship receives $3285 less than he or she needs for the cost of living. The full ride scholarship covers all costs provided by the school ie. tuition, room and board, books, but still leaves athletes short on living costs like gas, clothes, off campus living and entertainment. The shortage in scholarship money puts 80% of athletes that live on campus under the national poverty line when including their scholarship as a salary (Staurowsky). The average athletic scholarship is valued at $8,385 per year, and the national poverty line is $11,670 (2014). Up until 2012, instead of changing rules to help struggling athletes, the NCAA allowed players to file for food stamps and welfare to cover the gap between scholarships and living costs (Staurowsky). Second, the vast majority of college athletes will not go professional with theirs sport and won’t receive a payday for all of the hours that they have worked on their sport (Levine). This means that tens of thousands of hours have been essentially wasted away once an athlete graduates from college. Finally, not only are athletes in need of compensation for their work in sports, but they have a value in the free market. If college athletics were not tied to the idea of amateurism, and followed a professional model like that of the NFL, players would be compensated for their work like any other American (Hruby). In fact, if the NCAA followed a professional model, the athletes would be worth a large amount of money in their college career. On average, an FBS football player would be worth $456,612 in the span of a four year college career (Staurowsky). The value for an NCAA Division One basketball player is more than double that of a football player, coming in at $1,063,307 (Staurowsky). Not only do college athletes need the money that they generate for their universities, but they are being denied their free market value under the current rules of the NCAA. With such a high value for college athletes, many would wonder how they are worth so much, and how they could live under the poverty line.
How are the athletes worth so much? The NCAA has become a great tool for generating revenue in the American Marketplace, through expanding television rights for college sports, and putting on some of the most viewed events in all of America. The NCAA has become a media giant that generates roughly one billion dollars annually to distribute to its member schools, but still remains a non-profit organization (“Where”). The NCAA generates $770 million annually from “March Madness” alone (Levine). On top of that, each school in a “power conference” in the NCAA makes anywhere from $20 million to $30 million annually (Hruby). With this mass amount of revenue generated each year, the question is brought about, how can college athletes not be compensated?
While most college athletes do not receive all the money that they need to live a comfortable life, the NCAA does use its funds to benefit players indirectly. One can’t forget that the majority of the NCAA’s revenue goes directly to athletes for scholarships. Each year, $2.7 billion go towards athletic scholarships for over 150,000 athletes (“Where”). Along with scholarships, the NCAA contributes significant funds to programs that focus on player health and safety. Each year the NCAA puts aside $57 million to research player safety and fund catastrophic injury insurance (“Where”). Finally, the NCAA has a specific fund set aside that could potentially be expanded to help athletes while keeping the principle of amateurism alive: The Student Assistance Fund. This fund has grown each year since its creation and now receives $73.5 in funding annually (“Where”). The fund is one of the NCAA’s hidden gems that seems to receive no recognition. It is designed to help athletes get home in times of crisis, buy clothes, cover medical expenses, etc. (“Where”). Athletes at the university of Minnesota have been using the fund each year and couldn’t be more appreciative of it. Take Harold Legania for example, used the fund to fly home for his aunt’s funeral when he had no money for a plane ticket. Or Nicole Ohlde, who used the fund to buy a dress for the night that she was drafted into the WNBA (McCoy). In the 2013-14 school year, 375 University of Minnesota Athletes used the fund taking $402,000 (McCoy). With such a nobel fund put in place by the NCAA, it would seem that paying athletes would be unnecessary. A possible answer to the problem of undercompensation is expanding the fund to cover more expenses of college athletes like food, shelter and entertainment.
It is clear that the current structure of the NCAA is not adapted to modern needs and desires of athletes, and change is sure to come in the next few years. The NCAA is already changing some policies due to pressure from outside sources. After winning the NCAA mens basketball national championship, star UCONN guard Shabazz Napier spoke out against the NCAA’s food policy saying that him and his teammates often had hungry nights (Ganim). Within the next month, the NCAA changed its strict rules regarding food, and allowed for athletes to have unlimited meal plans at their universities (Trahan). Other more binding pressures are being placed on the NCAA as well. Lawsuits are starting to go in favor of former athletes and giving more rights to the players. In August 2014, a monumental decision was made in favor of the student athlete. Former player Ed O’bannon sued the NCAA for the rights to players likeness and an Oakland judge ruled in favor of O’bannon, stating that it is unconstitutional to withhold money made off of their likeness from athletes (Martin). Not only does this ruling give rights to players, but some schools are even starting to treat players like employees. For the first time in college sports history, football players at Northwestern University we’re given the chance to unionize in order to gain more collective rights (Levine). Though the players chose not to unionize, that decision marked the first legislation that treated college athletes like employees. With the system as outdated as it is currently, it is only a matter of time before rules are changed whether the NCAA approves or not.
Of course, the question is posed, what would happen if NCAA athletes were paid? First, the money for college athletes would need to be taken from somewhere. The most popular proposition is to take money from coaches salaries and funding for facilities in order to pay athletes. With this model, other sports would not be in jeopardy of losing funding, and players would receive their market value (Fort). Second, many wonder what the athlete’s reaction would be to receiving compensation. Some scholars suggest that instead of leaving college for a shot at the pros, athletes would instead compete for their school for all four years because they wouldn’t be losing value annually (Hruby). Finally, the largest potential problem with paying athletes is the idea that all competition in the recruiting process would be eliminated. If schools were allowed to pay athletes, the schools with the most money would be able to buy their recruits with large contracts (Fort). The flipside to this, is that smaller schools could recruit one big name player with a large contract, making the competition even stronger and potentially leveling the playing field (Hruby). While all of these outcomes are merely speculations, it is clear that the face of college sports would change dramatically if players were paid.
The NCAA was founded on the noblest of principles- amateurism- but in the last half of a century, it has become a cartel that restricts the use of free market principles. Athletes are currently receiving less than they need annually, and the NCAA isn’t proposing any reforms that would change this. With the idea of paying college athletes emerging as a frontrunner to solve the problem of undercompensation, the question is no longer “Will the NCAA and its members pay college athletes?” but “How much?”
Works Cited
"Amateurism." NCAA.org. NCAA, n.d. Web. 5 Oct. 2014.
Branch, Taylor. "The Shame of College Sports." The Atlantic. Atlantic Media Company, 7
Sept. 2011. Web. 24 Sept. 2014.
Fort, Rodney, and Jason Winfree. "Why The Arguments Against NCAA Pay-For-Play Suck." Deadspin.
Stanford Economics and Finance, 12 Dec. 2013. Web. 14 Oct. 2014.
Ganim, Sara. "UConn Guard on Unions: I Go to Bed 'Starving'" CNN. Cable News Network, 8
Apr. 2014. Web. 23 Sept. 2014.
Hruby, Patrick. "The Free Market Case against the NCAA Chokehold on College Sports."
Washington Times. The Washington Times, 30 Mar. 2012. Web. 22 Sept. 2014.
Levine, Dan. "U.S. Judge Rules against NCAA, Says Athletes Can Be Paid."Reuters. Thomson
Reuters, 8 Aug. 2014. Web. 24 Sept. 2014.
Martin, Jill. "Judge Rules against NCAA on Compensation." CNN. Cable News Network, 9
Aug. 2014. Web. 24 Sept. 2014.
McCoy, David. "NCAA’s Little-Known Student Assistance Fund." CBS
Minnesota. CBS Local, 12 Jan. 2014. Web. 24 Sept. 2014.
"Where The Money Goes." NCAA.org. NCAA, 2014. Web. 24 Sept. 2014.
Staurowsky, Ellen, ED.D.Dr. "The $6 Billion Heist: Robbing College Athletes Under the Guise
of Amateurism." News. Drexel University, 20 Mar. 2013. Web. 24 Sept. 2014.
Trahan, Kevin. "NCAA Allows 'Unlimited Meals'" SBNation.com. VOX Media, 15 Apr. 2014.
Web. 23 Sept. 2014.
"2014 Poverty Guidelines." ASPE. USDHHS, 22 Jan. 2014. Web. 11 Oct. 2014.