At Risk: Are Unpaid College Athletes Exploited While Others Reap Millions?

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They work long hours, report to an unusually demanding boss and risk significant bodily harm in bringing glory to their institutions. And yet the result of all this is not a paycheck, but a bill.

College athletes are not alone in performing at a very high level and getting no money for their efforts. Ask any college-orchestra violinist. But unlike arts departments, college sports programs generate hundreds of millions of dollars for colleges, universities and sports-related industries. The result: College athletes are becoming much more vocal in asking for a bigger slice of the pie.

For decades, the question of whether college athletes should be paid has simmered, but only occasionally and at low-level intensity. Now the issue is reaching a boiling point thanks to two high-profile cases, prompting experts to say that the long-stable business model of college sports is receiving its two-minute warning.

Football players at Northwestern University — with a little help from the United Steelworkers — are petitioning the National Labor Relations Board to form a union. If successful, the union would be a first, and would likely open the door to similar organizing drives across the country. “How can they call this amateur athletics when our jerseys are sold in stores and the money we generate turns coaches and commissioners into multimillionaires?” asked Northwestern Wildcats quarterback Kain Colter at a January press conference. “The current model represents a dictatorship.”

At the same time, former UCLA basketball power forward Ed O’Bannon is bringing a class-action antitrust lawsuit against the National Collegiate Athletic Association (NCAA), and will ask a jury after the start of a June trial to strike down longtime NCAA restrictions on athletes earning money from their own names and likeness.

These cases, as well as others, are raising consciousness about the hundreds of millions of dollars being made around college athletics by TV networks, coaches, associations like the NCAA and colleges and universities — in other words, everyone but the actual talent. Players generally get tuition covered, but not all the other expenses associated with attending college and no extra pay.

The NCAA has provided a long list of witnesses in the O’Bannon trial who say that paying players would force schools to choose between pursuing the best players and cutting programs for other student athletes. These commentators have also raised the idea that paying male players but not female ones might be illegal under Title IX, the 1972 law that prohibits gender-based discrimination in education. In the Northwestern case, lawyers for the university have argued that players are students, not employees, and in any case, the university can’t make any changes because of NCAA regulations.

But now that the inequity of the system has been questioned, it’s going to be hard to put the genie back in the bottle. “The conferences are getting all these millions, and players are not getting anything,” says Kenneth L. Shropshire, a Wharton professor of legal studies and business ethics and director of the Wharton Sports Business Initiative. “Because there is a lot more money, it is a great time to apply the pressure of asking the question: Where is [all that money] going?”

These cases are raising consciousness about the hundreds of millions of dollars being made by TV networks, coaches, the NCAA and colleges and universities — in other words, everyone but the actual talent.

“It emphasizes the aspects in which this is an unfair bargain, with big risks and small gains for student athletes, and large gains for the universities,” adds Wharton professor of legal studies and business ethics Nicolas Cornell. “It’s hard to know if the right way to deal with this is to force them to pay the athletes, or fairer bargaining conditions from the outset. These lawsuits are going to keep coming up. Maybe a better outcome is if some of the bargaining power of the NCAA and professional leagues was taken away.”

‘Overseers’ versus ‘Plantation Workers’

The lack of pay for college athletes has long had its critics, many in high places. In his book, Unsportsmanlike Conduct: Exploiting College Athletes, onetime NCAA president Walter Byers said the association was “firmly committed to the neo-plantation belief that the enormous proceeds from college games belong to the overseers (administrators) and supervisors (coaches). The plantation workers performing in the arena may only receive those benefits authorized by the overseers.”

But changes in the larger culture have opened a moment of opportunity, observers say. It may be seen as part and parcel of the call for reversing the gap between the rich and poor, as well as the push for a new system for setting a federal minimum wage. “The recent lawsuits are not occurring in a vacuum,” notes Drexel University sports management professor Ellen J. Staurowsky. “Things happening in the larger culture are impacting what’s going on around the athlete rights movement at the college level, and what’s going on with the athlete rights movement is echoing outside of sports itself.”

According to Staurowsky, social and online media have created a highly visible platform — one that did not previously exist — for public sentiment. The comments sections at the bottom of articles are capturing “hundreds or thousands of comments on any particular issue,” she says, “so all of these things are converging to contribute to the moment we’re in right now.”

Another dynamic at play, notes Cornell, “is a new trend of viewing education in a more corporate way: If athletes are part of a corporation, they are seen more like employees. There is an element of the sheer inequality involved, the scale of the numbers — it has gotten to be enormous. The commissioners of these leagues make huge amounts of money as opposed to the student athlete who [is at risk of] getting injured. Many of them are not going to get professional contracts, so there is a vividness to the inequality.” He points out that the agreements might be less consensual than they appear, since “professional leagues force the students to go to college before they can sign professional contracts. If leagues are using their power to pressure athletes, that may create a worry about how the system is set up.”

At the same time, the dynamics of inertia are being reinforced by the hundreds of millions of dollars changing hands between the TV networks, the NCAA and the more than 1,000 schools on its membership roster. The association’s 2012 tax return shows that it took in more than $841 million in the fiscal year ending August 31, 2012, most of that from fees for TV rights, in turn paying out more than $500 million in grants and scholarships to hundreds of colleges and divisions.

The NCAA also pays salaries to its executives that would be considered high among non-profit administrators — sums that seem even higher when compared to those at the bottom of the organizational pyramid. In 2009, the top 16 NCAA administrators received nearly $6 million in compensation, including $1,145,880 for its president, according to the Chronicle of Higher Education. Its 2012 tax return states that the NCAA employed 86 individuals earning salaries of $100,000 or higher. Coaches are also cashing in. The top 10 highest paid college football coaches in 2013 earned a combined $46 million.

Despite the fact that players understand the equation before signing on, “even mutual agreements can go wrong when there is something inequitable about it,” says Cornell. “The universities are getting so much money that it makes it feel like wrongful exploitation.”

“These lawsuits are going to keep coming up. Maybe a better outcome is if some of the bargaining power of the NCAA and professional leagues was taken away.” –Nicolas Cornell

How much money are athletes losing out on? A 2012 report Staurowsky co-authored with the National College Players Association concluded that NCAA rules deny Football Bowl Subdivision schools and men’s basketball players at least $6.2 billion they would otherwise have received under fair-market conditions between 2011 and 2015.

While players received full scholarships worth an average of $23,204 per year, the estimated annual market values of those players, in football and basketball, were $137,357 and $289,031, respectively. Projected over a four-year college career, a football player was estimated to lose out on $456,612, and a basketball player on more than $1 million, according to the report titled, “The $6 Billion Heist: Robbing College Athletes Under the Guise of Amateurism.”

Many colleges and universities argue that their sports programs lose money. A 2009 NCAA report concluded that just 14 of the 120 Football Bowl Subdivision schools made money. If some sports programs are actually losing money, why keep them? Because many economic benefits are intangible, stretching far beyond a profit-and-loss statement for a particular athletic department. Sports teams are a powerful recruiting tool, even — or perhaps especially — for students who will watch and never play. College games are a way to maintain contact with alumni. And they are a calling card when cultivating donors.

“None of us deny that probably many a deal has been closed in the president’s luxury box with the donor. Did athletics bring that money in? It probably didn’t hurt,” says Shropshire.

In addition, sports programs are responsible for a tremendous amount of economic impact in large cities where games jockey with other attractions, as well as in small towns where they sometimes provide the main locus of civic activity. Penn State football, with its enormous 106,572-seat Beaver Stadium often filled to capacity, brought $70 million in direct economic impact to Pennsylvania in 2009, according to research firm Tripp Umbach. What was once seen as a complement to higher education is now seen as an essential, and few colleges have opted to entirely drop sports programs in recent years.

When Is a Worker Not an Employee?

Can college players be considered students in the true sense of the word? Indeed, if you think of the journeyman template under which the system operates, it’s not unlike the way some other academic departments work. The violin player, for instance, follows a similar track, practicing long hours and performing for an audience that pays real ticket prices. He or she harbors hopes of landing a contract that pays real money with, say, the New York Philharmonic — sometimes, like the athlete, before graduation. There is an enormous difference, however, in the amount of money at stake. No college-orchestra conductor is making the $5.5 million made by University of Alabama football head coach Nick Saban in 2013.

One might also reasonably argue that for most athletes, sports programs are not tied to academic life. For one thing, fewer college athletes will graduate than their non-sports-playing college cohorts. According to 2012 NCAA figures, only 47% of NCAA Division I men’s basketball and 57% of football players graduate within six years. In this regard, Northwestern is not representative of the field, with a 97% graduation rate (a figure that includes transfers).

Still, the extent to which college sports is really a fig leaf for a separate, unequal sports league will factor into the Northwestern bid to form a union. Athletes have a better claim to being covered under the National Labor Relations Act than, say, graduate students, since their activities are not related to their studies, according to Wharton legal studies and business ethics professor Janice R. Bellace. The germane question, she says, is whether the relationship between a college and its athlete is primarily educational or financial. “It is hard to argue that playing football somehow furthers your education. Scholarships are almost a quid pro quo — I offer a student a scholarship on the condition that he plays football.”

“It is hard to argue that playing football somehow furthers your education. Scholarships are almost a quid pro quo — I offer a student a scholarship on the condition that he plays football.” –Janice Bellace

Dallas Mavericks basketball team owner Mark Cuban says that the current system is failing on many fronts, and he thinks elite basketball prospects should enter the NBA’s Development League instead of college. In a recent ESPN interview, he suggested guaranteeing college tuition to those players whether or not they end up in the NBA. “We can get rid of all the hypocrisy and improve the education,” Cuban told the network. “A major college has to pretend that they are treating them like a student-athlete…. It’s a big lie and we all know it’s a big lie, at least at most schools, not all…. But we can put more of an emphasis on their education. We can plan it out, have tutors. We can do all kinds of things that the NCAA doesn’t allow schools to do that would really put the individual first.”

In deciding whether Northwestern football players are employees or students, the NLRB will be looking at several issues, notes Jonathan L. Israel, a sports and labor lawyer at Foley & Lardner. These include the nature of the financial relationship, the relationship of students to faculty, the role of sports in relation to education and, he says, “What is the general status of the individual as a student — or are they really a worker?”

Israel suggests that the decision — anticipated within weeks at the regional level, but also expected to be appealed to the national level — might have been easy to predict five years ago, given the National Labor Relations Board’s mandate under the Bush administration. Today, he is not so sure. “If there were a different political environment, you would say no way [that the NLRB will rule in favor of a union]. I think with the Obama board, you just don’t know what they might do in terms of support for union development. Take it back to when [Obama] was first elected and all the promises he made to unions and didn’t deliver on. This is a way [administration officials] can effect a lot through jurisprudence. It’s right in their wheelhouse.”

The atmosphere now is also decidedly different given growing evidence that head injury can lead to deteriorating brain diseases, like Parkinson’s, that strike years after the initial injury. To the extent there are long-term injuries caused by playing college football, “I don’t see how you formulate the argument that colleges should not have some long-term responsibilities to the player,” says labor lawyer Stuart Davidson, whose firm, Willig, Williams & Davidson, has served as outside counsel to the NFL Players Association. “Do I think [colleges] have a moral obligation? Absolutely. A legal obligation? That’s an interesting question, because if [college athletes] were employees, they would be eligible for workers’ compensation.”

Hard work, long odds of going pro and a high risk of injury all add up to a structure that, under the kind of scrutiny provided by recent cases, starts to look more like a lottery than an apprenticeship. “One of the things that is crazy about the system as it is, is that players are risking injury and hoping to get through college unscathed to get these huge contracts,” says Cornell. “If players could essentially get a share of their potential future earnings, something that could guarantee income while they were in college, a system like that might mitigate the problem that these athletes are getting nothing. There is still a huge unfairness in the inequality. But that would at least protect against some of the big risk.”

 

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4 Comments So Far

shelly frank

The comment in the 1st paragraph of this article states “And yet the result of all this is not a paycheck, but a bill”. I’m totally confused by how getting a multi million $$ multi year pro sports contract to play a sport, endorse products or comment or coach can be construed as “getting a bill”? Isn’t it similar to those that get a business degree & then get a big salary on Wall St? Except the business degree person has to pay for the degree before they possibly reap any benefit while the sports persons get an all expense paid education.

Bill Huey

Fine, pay college athletes a stipend and then cut the number of scholarships by 50 percent.
And claw back the money if they leave for the draft before graduation.
Many of these players are treating the university experience as a business trip before the NFL or NBA. Cam Newton even called it that after he got kicked out of Florida and entered a community college in Texas.

George Block

The only reason this is an issue is that the NBA and NFL haven’t figured out how to monetize their minor leagues the way MLB does.

Baseball drafts kids right out of high school, then the kids can decide if they want to play college ball or go to the minor leagues. If you look at the College World Series, that arrangement hasn’t hurt college baseball.

The NBA is nearly there with the NBDL. They need to tie the DL teams directly to the NBA teams (like the San Antonio Spurs and Austin Toros) and use those teams to develop players. The the teams could afford to operate at a small loss.

The NFL could do the same with the Arena League (AFL). The NFL owners could use AFL teams to develop talent and they have plenty of money to do that with their very strict revenue sharing.

Once that is in place, the NCAA should go back to the option of a 4-year scholarship. If a player wanted to be released from his/her scholarship, the professional league would have to buy-out the university. That could start to create an endowment for the athletic scholarships.

The only reason this ridiculous concept is even a discussion is because the professional leagues CAN use the universities as their minor leagues. The real question shouldn’t be Why aren’t college athletes getting paid? The real question should be Why haven’t the NBA and NFL developed their minor league systems so that kids who want to go pro can go pro?

Joseph Chadwick

I think the first question that needs to be answered is what role do (or should athletics) play in an educational institution.

If sports are just entertainment sponsored by a university, then the employer (university) should pay the entertainers for the entertainment they provide and from which the university profits.

If college athletics are integrated into an educational experience for both the athlete and non-athlete students (and other institution stakeholders), the answer isn’t so clear. This is how they started.

I think educational institutions need to address this more fundamental issue before they try to make decisions on the “transaction” between the student athlete and the institution.