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Miller: Dissecting the NCAA argument against paying college athletes

Forget Texas A&M-Alabama: The biggest showdown in College Station this past week was of the Oxford, not gridiron, variety.

You read that right: The real battle in Texas didn’t take place at palatial Kyle Field, or any athletic venue for the matter. Though it occurred in a meeting hall on A&M’s campus with only a slightly smaller capacity than the House That Johnny Built, it nonetheless featured two heavy hitters.

In one corner: Jay Bilas, former Duke basketball player and current ESPN personality; in the other, Oliver Luck, Executive Vice President of the NCAA, father of Andrew and former Director of Athletics at his alma mater, West Virginia. In a 90-minute debate sponsored by the Foundation for Individual Rights in Education (FIRE), the pair took up the question: Should college athletes be allowed to be paid? Bilas, a longtime supporter of athletes’ rights, argued in the affirmative, while Luck, on the job with the NCAA for less than a year, more or less walked the party line, defending his organization’s system of amateurism with little more than blanket statements and glittering generalities.

What follows is an analysis of and response to four of Luck’s main talking points throughout the evening.

“I believe it would be a bad mistake to create on campus an employer-employee relationship with student-athletes. That is a relationship I don’t believe has any role on campus.”

Except the employer-employee relationship already exists between students and their institutions on nearly every college campus in America — but it’s only an issue when athletes demand their rightful slice on the multi-billion dollar industry that is collegiate athletics.

What Luck, his colleagues in Indianapolis and his administrative peers around the nation seem to believe is that college athletes cannot be both students and employees for the reason that the act of working (and making money) while studying and pursuing a degree somehow (someway) erodes the integrity and value of the educational process.

Luck and his fellow suits seem to forget, however, that nearly 80 percent of American college students work while attending classes, a number likely due to the skyrocketing costs of higher education. While most students work off-campus, there are a portion that are technically employees — and students — at their institution. Here at Stanford, students work in the campus bookstore, in the gyms, in on-campus eating establishments and in various academic departments (remember those emails you received about being a paid research assistant during the summer, or a student intern during the school year?).

Not only that, athletics departments routinely employ non-athlete students (i.e. student managers), who act as both learners and hourly workers at the same time (gasp). And yet no issues are raised concerning the integrity of these students’ education — as if being an employee has any bearing on one’s status as a student. It doesn’t, of course, but Luck and the NCAA are too focused on controlling their athletes to realize the reality of the situation. A few questions to consider: If non-athlete students can be institutional employees, why can’t athletes (for performing sport-related services)? What’s so wrong with earning money via athletic ability?

“There are options — legitimate options [for athletes who don’t want to attend college]…in fact, even football, our most popular college sport, does have options for an 18 year-old. It’s called the Canadian Football League or the Arena League.”

Really? The CFL and AFL are legitimate options for high school athletes who don’t want to play school? When was the last time a 5-star recruit headed up north after graduation, or went to go play for the Arizona Rattlers? (Hint: Never.) The CFL is for NFL castoffs, and AFL is barely a functioning enterprise. Legitimate as alternative player development systems to the NCAA? Give me a break.

“I would also not support what many folks call the ‘Olympic Model,’ which would allow students to use their position or status as athletes to earn third-party revenue from companies or individuals…I believe with payment comes the very difficult task of motivating students to focus on what they really need to get out of their four, five, six year experience, which is an education.”

Leaving Luck’s spectacularly paternalistic tone aside for a moment, let me address the blatant and callous unfairness of his stance. Luck and the NCAA’s opposition to the ‘Olympic Model’ and “unwavering commitment” to amateurism has lead to college athletes becoming the most economically restricted cohort on college campuses.

Non-athlete students are able to “earn third party revenue” with impunity: An English major who writes a bestselling novel is able to profit from the sale without fear his/her financial aid will be slashed; artists can sell their work/pieces for whatever the market will bear; and coding geniuses can freely license their programs to tech companies.

The bottom line is that countless college students capitalize on whatever talents/skills they have without compromising their academic achievement as a result. Unlike their peers, however, college athletes are prohibited from monetizing their most marketable (i.e. athletic) skills, essentially destroying whatever earning potential they might have had. And if they’re caught signing autographs or endorsing products, their eligibility (and, by extension, their scholarship) is immediately jeopardized.

If the powers that be in college sports were really concerned about integrating athletes into the wider campus community, they wouldn’t differentiate those athletes by placing unreasonably burdensome and disparate restrictions on the economic activities in which they can engage. Again, though, the NCAA is far too concerned about exerting as much control over their athletes as they can too care about whether those individuals are truly getting the most out of their collegiate experience.

“But we also ask of many of our student-athletes to be active, to learn competition, to learn the values of persistence and teamwork and discipline and all those values we create.”

Sure, Luck wants the NCAA’s athletes to learn the value of competition — except in their marketplace for their services. Indeed, the “anti-competitive,” cartel-like practices of the NCAA have been the crux of the antitrust lawsuits filed against the organization.

While the NCAA preaches the importance of on-field competition, it does everything in its power to stifle it in the marketplace for athletes’ services. The most blatant of these offenses is the governing body’s per se illegal (in direct contravention of the Sherman Antitrust Act) price-fixing agreements: By mandating that schools may only offer scholarships that cover tuition, room/board, fees for required textbooks (GIA) and, now, a cost of attendance stipend (COA), the NCAA prevents schools from freely competing for the services of high schoolers.

This is pure, unadulterated cost control whereby the member institutions collude (agree) with one another to fix the price for athletic services at the level of GIA plus COA. So yeah, the NCAA thinks competition is great — but not when it would result in athletes getting anything more than what the organizations believe they deserve. The reality is that in the absence of the NCAA’s caps on pay, college athletes — especially those in the revenue sports — would receive a more lucrative package of benefits to play sports for their institution (employer).

 

Is Cameron Miller’s criticism against the NCAA’s decision to prevent college athletes from earning money valid? Let him know by sending him an email at cmiller6 ‘at’ stanford.edu.

About Cameron Miller

Cameron Miller is a sports desk editor for The Stanford Daily's Vol. 246 and is the men's and women's golf writer. He also writes on NCAA-related matters. Cameron is also a Stanford student-athlete, competing on the cross country and track and field teams. He is originally from Bakersfield, California, but spends most of his time away from the Farm on the state's Central Coast. Contact him at cmiller6@stanford.edu.
  • Puma_01

    You seem to be arguing that college athletics should operate in a true free-market system like any for-profit employer. Well, in the real world employees get paid what they are worth. So under a free market system most student athletes would end up being paid much LESS than they get now (with perhaps a few making significantly more). They would also be taxed on what they are paid, whether they choose to invest it in tuition or not (tuition tax credits aside).

    And in your system would you still require that the athletes actually enroll in college as a prerequisite to being paid to play football? If so, then most would end up having to pay their employer more than they earned. That doesn’t seem right. Plus, school is a distraction that prevents the school’s football service providers from playing at their best. So colleges should just hire whomever, right? Well, great. Now you have an unaffiliated minor league football team drawing about as much interest as the NBA’s D-league.

    Understand that this debate is NOT about switching to a free market system. It is about athletes trying to get increased benefits under the CURRENT system. It’s at best a hybrid system. You can’t just wax eloquent about free market principles that may be applicable in other contexts and assume they give you the easy answer here.

    Frankly, it is a lot harder to justify the LIMITED free-market system some athletes are asking for (where they get upside but no downside) than the amateurism model now in place. I have yet to hear any reasonable argument to support it.

  • Cameron Miller

    You seem to misunderstand the economics of college sports and implications of lifting the NCAA’s illegal amateurism system. In a free(r) market system free of NCAA restraint and collusion, schools would NOT a) offer fewer scholarships or b) award less financial aid per scholarship, because they can already do so under the current framework–and choose not to. There is no NCAA rule requiring schools to either fully fund each sport they offer are cover all of the components of a traditional GIA. If amateurism is a great as the NCAA and its member institutions claim it is, let it stand on its own without an enforcement mechanism. And of course, it wouldn’t stand. Schools would pay more in the absence of NCAA caps on the gross number of athletic scholarships than can be awarded and the amount of financial aid contained in each of those scholarships. Non-revenue sport athletes might not get any more than they currently receive, but they wouldn’t necessarily receive less, either. As you correctly point out, the primary beneficiaries of the lifting of NCAA restrictions will be a select few–likely those athletes who play football and men’s basketball. But the fact that only a certain class of individuals will benefit from the injection of free market principles is in no way an excuse for not instituting those principles. And, yes, athletes who are paid by their institutions above and beyond the value of GIA + COA might be subject to taxation–just like any other employee. College students file tax returns all of the time–that is the least of my concerns. Athletes are adults, so let’s start treating them as such.

    In my system, college athletes would sign four- or five-year contracts with their institutions and be allowed to attend class at the school and pursue a degree if they chose to do so. Again, your argument that “most would end up having to pay their employer more than they earned” is fallacious because schools would do no such thing. Right now, college athletes on scholarships are, in the eyes of their institutions, worth at least that amount because the institution is not forced to provide them anything–and yet they still do because the perceived value of that individual’s athletic services. As to your other concerns, I have no problem with schools essentially leasing their team names/facilities to a minor league-style team. However, I highly, highly doubt that interest would bottom out, because the popularity of sports on a college campus has nothing to do with the athletes’ status as students or whether they’re paid or not. College athletics is not popular because of amateurism; people would still watch even if they knew that the players on the field were making more than GIA + COA.

    Unfortunately, I don’t believe you understand the problems plaguing the “current system”, which is on increasingly shaky ground because of its blatant contravention of the Sherman Antitrust Act. If you read nothing else, read this line: The Sherman Act prohibits “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce…”. The NCAA’s member institutions have colluded (contracted) with one another to fix the price (wages) for the services of college athletes. That is classic cartel behavior, and antithetical to the (relatively) free market economic system that is enshrined by law in the U.S. What college athletes need is to free of the restrictions currently imposed on them by the NCAA–they need to be free to monetize their skills just like any other college student and American is able to do. Until that occurs, the current college sports model will be fatally flawed.

    Let’s be real: Amateurism–or the idea that college athletes should be unable to profit off their athletic skills during the prime earning years of their lives–is an unadulterated cost control the mechanism the NCAA instituted many decades ago in order to keep all of the revenues generated by college sports. It’s really that simple. To the NCAA, it’s a good business practice; for the athletes, it is a colossally unfair, borderline immoral/exploitative system to live under. But, I take it that you weren’t a college athlete and don’t understand what it’s like to be treated differently than the rest of the student population, but, all the while, the NCAA and your institution proclaim your status as a “student-athlete”. I’d encourage you to seek out an athlete or two and ask them how they really like amateurism. I think the answers might surprise you.

  • Puma_01

    I understand your concern about collusion, but when applying
    anti-trust principles you have to take context into account. Anti-trust laws/concepts do not apply equally in all markets. For example, we may give a drug company a 15 year patent (monopoly) because we believe it generates larger research investments. Or we me may grant a single disposal company the right to pick up trash in your neighborhood (natural monopoly) because it is more efficient to have a single trash truck pick up trash from all the houses on your street.

    In this case the amateurism market construct provides some unique benefits that a true free market couldn’t. Players receive tax free benefits (and an education). Universities receive tax free donations to support that educational mission while also supporting the players. Some excess revenues are able to subsidize low revenue sports (or other school activities). Alumni also have a unique incentive to support the teams – this support is not based on the quality of the athleticism (much of which is very low in a professional sense) but because of school affiliation.

    As to that last point, consider the end of that Michigan/Michigan State game, which was terrible football, but garnered lots of attention because it was a crazy end to an intense RIVALRY game. There is no way you are going to generate that kind of rivalry emotion with colleges simply licensing their names out to semi-pro minor-league teams.

    As beneficial as the current system may be in some respects, you are correct in that it is still an artificial market. And, as an artificial market, you need some way to control it (just as utility monopolies are regulated). That’s where the NCAA comes in. You can be angry with the NCAA and argue that they should draw their lines differently to give more of the benefits to the student-athletes, but it’s quite a different thing to say that you should throw out the NCAA regime entirely and go to a true free-market system.

    In any event, you have some interesting seeds of ideas here. Fortunately, you have the benefit of sharing a campus with some of the most brilliant econ and law professors in the country. Go visit their office hours, debate with them about this and write a follow-up article. I’d be interested to hear how your ideas develop on the topic. For example, if you were designing this regime from the ground up what would it really look like? Or if you want to just tweek the current system, what would you do to ensure that the most talented athletes receive more incentives without reducing the value the system as a whole is currently able to generate?

  • Cameron Miller

    I agree that we cannot look at markets in a vacuum, but if the NCAA wants to protect its practices from legal liability/scrutiny, it should seek an antitrust exemption (like the ones professional leagues enjoy). The bottomline is that amateurism distorts the market for the athletics services of college students by fixing the price (wages) for those athletes. That is a significant downside to the current system, and one not outweighed by whatever procompetitive benefits amateurism creates.

    I’m not sure what “benefits” you’re referring to that would be subject to taxation without the cover of amateurism, but the IRS has never considered athletic scholarships to be taxable income (regardless of whether college athletes are considered employees for the purposes of labor law). And I disagree that amateurism drives “a unique incentive to support the teams”. Consumer demand in the market of college sports is not dependent on whether the players are paid above GIA + COA or even whether they’re really “students” at the institution. Instead, as you’ve pointed out, the popularity of college athletics is keyed by factors including school loyalty and geography. To suggest that alumni support (the lifeblood of the Stanford Athletics Department) would dry up if athletes were paid any more than they are currently or aren’t required to be students is, I believe, utterly false.

    I believe college sports needs, a governing body with very limited authority, but that most of the regulation should be left to the conferences or individual institutions. Any lines the NCAA draws on athlete compensation will ultimately be to the detriment of the players because a price ceiling for athletes’ services will block transactions that would’ve otherwise occurred without it.

    The best reform the NCAA can implement right now would be the ‘Olympic Model’, which would allow college athletes to pursue private, third-party compensation (through endorsements, sponsorships, autograph signings, celebrity appearances, etc.)–just like any other college student is able to do with his or her skills/talents/abilities. In this way, athletes could truly recognize the monetary value of their name, image and likeness without altering the financial commitments of their institution. Athletes would be required to report all of these activities to their institution, but there would be no limit on how much athletes could accept and no need to “clear” any agreement with the school or NCAA. In addition, schools should be ALLOWED (not required) to award their athletes financial aid greater than the current cap of GIA + COA. Schools should be allowed to give their athletes whatever level of financial aid they believe appropriate–not what the NCAA mandates. In this system, college athletes would still be required to attend class and meet certain academic benchmarks in order to remain eligible to compete. Particularly marketable athletes would be allowed to hire agents/financial advisors to handle their business affairs (and thereby allow the player to focus on their academic and athletic responsibilities). Thus, the “student-athlete” ideal is maintained while also allowing those athletes to profit off their athletic skill set. That is most fair, balanced solution to the issues plaguing college sports.