Editor, Manteca Bulletin,
The courts have just ruled that football players from Northwestern can unionize and that they meet the standards of being employees. It will be appealed all the way to the Supreme Court by the NCAA. This is an interesting debate so let’s look at some of the facts and the questions that are raised.
The top football programs make 2.5 dollars in profit for every dollar invested according to “The Business of College Sports”. This equates to a 70% gross profits. Profits can be over $60 million a year including live gate, TV rights and merchandising at the top schools. This is more than the Green Bay Packers. These are monopolistic profits.
Head coaches make millions of dollars in annual salary and have incentives for winning.
Stadiums that hold over 100,000 fans such as Michigan and Penn State cost hundreds of millions just to renovate. Michigan spent $226 million in 2007 on renovations for ‘The Big House”.
Clearly there is a lot of money in this game so what are the questions?
• Are scholarship athletes paid? They receive the value of the cost of tuition, room and board, etc…which at some universities exceeds $50,000 a year. They are not taxed on this income so I would call it more of a barter for services rendered. Are non-scholarship athletes volunteers or are they making charitable contributions?
• What is the brand? One could argue that the university is the brand and it has monopolistic power. If you are an Oregon Ducks fan then the USC Trojans are not a perfect substitute and the Oregon State Beavers won’t do at all.. You won’t buy their jerseys, go to their games etc. On the other hand, the brand could be considered Duck football and have little affiliation to the school. Either way, they pretty much own their audience unless they put out a poor product. If the product is the school then maybe the football profits shouldn’t be looked at separately. The school creates the brand. If the product is football then the coaches and players create the brand and maybe the profits should be looked at separately. It is a very grey area and begs the question of whether the players are student/athletes or athlete/students which could affect their status as employees. Either way, everyone gets paid their market value except the players.
• Are the players in a low risk high reward situation? Few athletes get the reward of a pro contract. They work for low wages that are below market value or for free. They run the risk of permanent injury and the loss of scholarship if injured. Few could argue that Johnny Manziel was not worth a lot more than a scholarship to Texas A&M. Why is cheating by alumni organizations so prevalent? Why should the athletes be limited in their compensation when the school can make such huge profits on their labor? The schools make millions, the head coaches make millions but the athletes can’t realize full compensation for their risk and their labor. The school is in a low risk high reward business because the labor is CHEAP and they are actually restricted from paying more. The branding and the cheap labor combine to give them monopolistic profits. Football programs at the top schools make 70% gross profits while the Green Bay packers make 17%.Both Texas and Michigan made more profits,over $60 million, on less than 1/3 the Packer revenue. HMMM? Also, athletes peak at different times. An athlete that peaks in high school may be at his highest value to a program as a high school senior and his value may decline compared to other athletes who peak later. This kind of athlete can’t maximize his compensation in the current system.
• If scholarships are the compensation why don’t Cal Tech and MIT have the best football programs? If the reward is an education it would seem that the schools with the highest average salaries upon graduation would attract the best players. Again, are they student athletes or athlete/students?
This court case threatens the structure of college sports. Only football and basketball make money for the universities and they support the other athletic programs and the university. This reminds me of Curt Flood winning the free agency case in professional baseball where the rights of the individual won against the institution. It isn’t a simple issue but I’m betting that the recent court case has opened that bottle and it will be difficult for the NCAA to stuff that genie back in.