The Problem with Paying College Athletes

It seems pretty clear that we wont have much of a college football season, if any at all.  A fall without college football is as depressing as anything relating to this pandemic (I know the death toll).  The debate rages on about being able to pull a season off and whether these colleges should try.  Of course, much of the hand wringing is in regard to the economics of college sports.  For the Power 5 conferences, college football is a sacred cash cow and funds most of the other sports. College football creates its own economy in many a college town, bringing in millions of dollars to local businesses.  As universities look to find an elusive middle ground of trying to maintain a huge revenue source and also keep players, coaches and community safe, the discussion about college athletes and their treatment, exploitation and lack of voice is circulating once again.  I am not sure the discussion ever fully dies or goes away.  It hibernates for a time and then is awakened, usually in the fall as we start the season.  

Much of this discussion centers around the idea of paying the players.  Recently, California and some other states passed laws allowing college athletes to use their likeness as a means to earn income.  In other words, college players could be paid by third party businesses who want to use them to pitch their products or promote their services.  Some feel this is a slippery slope that will lessen the integrity of the college game.  They might have a point, but that is assuming the game has integrity.  Beneath the veneer of the tradition, the cliches, and carefully curated published product, is a highly competitive, cut throat, billion dollar industry.  Cutting corners, pushing limits, and stretching the rules is incentivized by this lucrative environment.  In reality,  players have little input, control, and access to the large profits, while coaches, administrators, and boosters are involved in all the decisions and reap much of the rewards.  This imbalance has led many to call for a change to protect the players and give them more of a voice and the ability to share in the benefits for the service they provide.  I get that argument.  However, I think this issue is complex and paying players will ultimately kill college sports as we know them.  Which may, in the long run, be better, I don't know (but I don't think so). I readily admit that I am viewing this selfishly and fear how this will change something I love, but something of which I am not involved personally.

First, a brief review of the argument of college athletes being paid.  Essentially, the claim is that colleges are making huge amounts of money of a product the players are supplying.  Thus players should have a least some monetary compensation for the revenue they help generate.  Furthermore, coaches and administrators have much more latitude and ability to promote themselves and acquire compensation more readily.  This leaves the 18-21 year old's in a vulnerable position with little power or voice, while doing most of the work, and making the institutions and their partners rich.

While I believe the above argument has merits, it does not fully provide an adequate description of relationship between players, universities, and the money generated by the sport.  The reality is many of these universities have a brand that generates its own demand for the product regardless of the players on the team.  This is an important point because the above argument assumes that the players alone generate more of the demand for the product and rarely considers the fact that the universities brand, their traditions, their history, help provide exposure and hype to many of these athletes.  For example, The University of Texas which has not been the most successful program in the past five years or so, is one of the highest grossing programs in the country.  Another example, last year's Heisman winner, Joe Burrows, helped LSU to a national championship.  In doing so, he helped generate a sizable portion of income for the university.  However, he benefited greatly by being on a team with a high power brand.  If he had transferred from Ohio State to, say Fresno State, regardless of how great his season was, he would have been a fifth or sixth round draft pick, not a first rounder.  His choice to attend LSU will continue to provide monetary compensation for a long time.  The idea that the athletes themselves generate the income, denies the truth that the university's brand does as well, and also helps promote those athletes for future compensation.  

Moreover, a college scholarship is of great value and often gets diminished in this discussion.  With tuition and room and board at most Power Five conferences averaging fifty thousand big ones, an athlete who stays four years will have received 200k worth of education that they wont be paying five hundred dollars a month in school loans for ten to fifteen years.  And by the way, that is a benefit-in-kind that the IRS does not consider income.  What happens if schools pay money to athletes?  Will it change the way the IRS looks at their free education?  I think there are many student athletes who have earned a college degree, they otherwise would not have if they were not a scholarship athlete.

Paying college athletes sounds simple enough, but in fact is actually quite complicated.  First, how does a school determine a fair and just compensation for its athletes?  It is interesting to note that the argument for paying student-athletes is that schools make millions of dollars from the work these players do.  But that is not entirely true. Most schools only make money on football and men's basketball.  Those two sports, through ticket sales and TV deals, subsidize all of the other sports.  So logically, the sports that contribute no revenue, and usually operate in the red, and are subsidized by football, should not receive any compensation, right?  I also think if the door opens to pay the athletes, you will see schools shrink the sports they offer due to sharing revenue with athletes.  The only way to maintain such a system is to eliminate sports that bring in no revenue.  

I think you could, and will , run into a huge Title IX issue.  Because college sports must meet Title IX requirements due to federal funding, it seems that if a college pays male athletes, it is going to have to pay female athletes.  I could be wrong on this, and there could be a loophole.  But I can see lawyers ready and willing to get into this fight.  If this happens, schools will have to find a way to navigate the huge financial constraints this would impose.  Universities will save large amounts of money by eliminating sports that bring in no revenue.  

Paying athletes will no doubt create a financial issue for Power 5 conferences, but it will all but destroy the Group of 5 conferences.  Many of those schools barely make it in the black currently.  Paying athletes will only be sustainable by schools with hefty profits, and that is not as many as some may think.  Smaller conferences will shutter, especially as it relates to recruiting, which in turn will prevent those conferences from being competitive, which in turn leads to less money in TV deals, which will ultimately end in some sort of cancellation of sports.  

And here is the deal, which is often the case with ideas like this...the intent of the policy is to help student athletes, but in reality and in the long term is will hurt far more than it will help.  The long term consequence, I fear, is college sports will transform (perhaps slowly) to a more semi-pro concept and/or many universities will opt out of sports all together, or will only have a small offering.  Once college sports becomes Triple A, it will no longer make the money that it did when it was tied to the university and seen as an amateur sport.  As this happens, the athlete will now end their athletic career with no education to show for it.  

I am not saying that reforms are not needed, nor am I pro college administration or pro-NCAA.  I think policies that give athletes greater freedom in transferring schools, ensuring scholarships for players who get injured, or providing post-graduate scholarships for students are great places to start.  I just fear that many people who want to reform the system have not measured the long term consequence, or are deliberately choosing not to, wanting merely to inflict harm on the NCAA and its universities.  In the end, I just want to watch college football.