Compensating College Athletes for their Revenue-Producing Activities is an idea whose Time has come

Perhaps you have heard about former UCLA basketball player, Ed O'Bannon's, lawsuit against the NCAA, Electronic Arts and Collegiate Licensing Company, which challenges whether college athletes' likenesses can be used for profit without the athletes themselves reaping the financial benefits. Plaintiffs in the case, O’Bannon v. NCAA, argue that they are entitled to a portion of the revenue the NCAA earns by licensing the “likeness” of players in broadcast rights and video games.

The lawsuit, which is being considered for class action status, could change the entire economic model of college sports. – Two former NBA all-time greats joined in the lawsuit -- Oscar Robertson and Bill Russell. Now, six active college players have joined as well.

University of Maryland coach Randy Edsall supports the lawsuit and has said: "Kids are committed to institutions, not to the NCAA. And the NCAA is using their likeness to make money. And that money isn't going back to these kids."

Universities aren't the only ones benefiting from college athletics. Major sports leagues like the NFL are able to use the NCAA as de facto minor-league systems that save them millions of dollars a year. With the abundance of athletes enrolling in college solely because of the opportunity it presents to one day play professionally, at many schools the "student" component of label student-athlete is more symbolic than representative of the reality of college sports. 

The NCAA generated over $800 million in revenue in 2012, with about 90% of revenue projected coming from media-rights payments from the likes of Turner Broadcasting and CBS Sports. Universities also generate billions of dollars a year form college athletics.

It’s hard to understate the potential impact of the O’Bannon lawsuit against the NCAA that is currently moving its way through federal court in California. Some experts have called the case a “game-changer.” Others have gone further, predicting the suit could “result in the extinction of the powerful NCAA.

The NCAA, meanwhile, has defended its practice of profiting from players, arguing that revenues from hugely popular events, such as men’s basketball, are returned to the system to help fund less visible sports. As Mark Emmert, the president of the NCAA, told FRONTLINE in Money and March Madness:

“The NCAA runs 88 national championships, but it’s men’s basketball that allows the golf championship to go on or the volleyball championship to go on because those, of course, don’t generate the same kind of revenue.”

The issue about paying college athletes is a difficult one because for years it was thought as a training ground for collegiate athletes to learn the skills necessary to turn pro after graduation. For years collegiate sports were thought of as a place to build character, camaraderie, sportsmanship, and esprit de corps. This is still true but doesn’t negate the fact that universities are using collegiate athletes to line their own pockets and do things for the university that would not be possible but for revenue streams from television and sponsors such as Nike.

What about the salaries for college football coaches? An analysis by USA Today found that in 2006 the average pay for major-college coaches was $950,000. The average compensation in 2011 was $1.47 million, a jump of nearly 55% in six seasons. In the six conferences with automatic Bowl Championship Series bids, the average salary rose from $1.4 million in 2006 to $2.125 million in 2011. That's a jump of about 52%.

Last season, at least 64 coaches were making more than $1 million. Of those, 32 were paid more than $2 million, nine are making more than $3 million, and three are making more than $4 million. Average pay for major-college head coaches rose 7.3% from 2010.

Critics find it troubling that this rapid rise for coaches comes at a time when instructional spending at many schools has slowed or declined amid economic struggles and shrinking state education budgets.

Compare the average coaches’ pay to that of college professors, which was $198,200 in 2011-2012. The result is a disproportionate distribution of revenues to coaches when compared to college professors. With all due respect to college coaches, professors are molding young minds and developing our future leaders. All too often, star college athletes do not graduate from college or do so with a schedule that could be handled by a bright high school student.

My solution is to carve out a percentage of all revenues earned from these collegiate sports by the university to student athletes. On average, the top ten grossing universities earn about $100 million in revenue and $90 million in expenses (including coaches’ salary). I don’t know what the “ideal” figure would be, and one based on the fairness, but I do believe the time has come to provide a share of the income from sports.

Perhaps the amount of money allocated to student athletes can be placed in a trust fund while they are college athletes so they don’t spend it unwisely. Most players on a college athletic team will not be drafted by the pros and have nothing to show for their efforts.  At least they will have something to get started in life; compensation for giving four years of their lives to the game.

Doubters will say collegiate sports are corrupted by paying student athletes and such a practice turns amateurs into professionals while attending college. That may be the case but look at what has happened to Olympic athletes over the years. In the U.S., for years only amateur athletes were allowed to compete, and they went up against professionals from other countries. As other countries learned to train athletes to become better than U.S. amateurs and gain ground in Olympic victories, we changed the model and allowed professional basketball players to compete with professionals from other countries.

Steve Spurrier, University of South Carolina football coach, has said college athletes should be paid $3,500-$4,000 per year to help with expenses. This is not enough from my point of view, but the issue right now is whether to pay them, not the amount.

Paying student athletes has many obstacles not the least of which is there would be obvious Title IX implications and not every school nationally would be able to pay student-athletes as much. Plus, football and basketball couldn't be the only sports to pay student-athletes. It would have to be a national plan and it would have to be a plan for all collegiate sports.

The O’Bannon suit may hasten the day when college athletes are compensated for what they bring to the university in the form of money. “Old-school” sports observers may not like it but there is a fairness issue that weighs the contributions one makes to the university versus the return to those who make that contribution, and by this approach I am left to conclude the time is right to compensate college athletes. It may be that a certain amount of the payments is carved out for those athletes playing in sports without a national profile. These are details that can be determined at a later date.

Blog posted by Steven Mintz, aka Ethics Sage, on August 13, 2013