Did California Do the Right Thing?

California is leading the nation in allowing student-athletes to promote products and companies, trading on their sports fame for the first time. On September 30, Governor Gavin Newsom signed a bill (SB 206) that will take effect in 2023 to allow players to strike endorsement deals and hire agents.

Is this a good thing – the ethical thing to do? Are there likely to be unintended consequences? Is the action the first step down the proverbial ethical slippery slope? These are some of the questions that should be discussed to assess the rightness of the new law in California and whether other states should consider doing the same thing.

There is no doubt that the college sports industry is big business. The “Madness Inc” report that examines the size, scope, and nature of the college sports industry found that college sports programs took in $14 billion in 2018 through ticket sales, television contracts, apparel deals and merchandise sales. The report also notes that even in the richest conferences only 12 percent of revenue goes to athlete grants-in-aid whereas 16 percent goes to the salaries of coaches. Everyone is getting rich except for the athletes.

To be fair, it should be pointed out that most student-athletes get partial-to-full scholarships that cover tuition and fees, room, board and course-related books. In recent years, the NCAA changed some rules to allow new benefits for athletes including cash stipends of a couple of thousand dollars to cover athletes full cost of attendance and unlimited meals.

Historically, college athletes have been treated as amateurs and their compensation for services has been in the form of a good education. To be sure, that is worth a lot of money especially in rich, private universities but also state universities where out-of-state athletes recruited by the institution would escape the traditionally high tuition for out-of-state-residents.

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. The point is the rules of the game with respect to paying amateur athletes have already changed.

Of all the reasons to pay college athletes for their services, the one that stands out most for me is the colleges’ ability to trade on the use of athletes’ names, images, and likenesses via commercial opportunities and social media. It seems unjust to make so much  money that way and not compensate the athletes. How would you like it if your company used your name, image, and made deals with other companies to trade on your talents and you were not compensated at all?

To be sure, there are a lot of unanswered questions about paying college athletes. There’s no question there would be a disparity between what student-athletes could earn at the big sports schools versus smaller ones. Does that mean top athletes would be less likely to go to the smaller colleges? If so, how might that affect their competitiveness? Is it fair to students who attend these colleges to be deprived of rooting for a high-level collegiate sports team?

Another problem is some sports don’t generate enough funds for the colleges and universities to pay athletes, i.e., rowing, tennis, and so on. Some students who work just as hard as those in football and basketball would earn much less than the latter. Also, women’s programs produce less revenue so is at fair for them to be paid less than the men?

These are unintended consequences of arrangements such as those envisioned in California’s new law. Thankfully, California, and others states that might choose to go the same route, have a few years to work out the details and make the law as fair as possible to all concerned. Hopefully, the NCAA will work with the schools to craft a fair arrangement.

Drilling down on the numbers, on average the top ten grossing universities earn close to $200 million in revenue and $180 million in expenses (including coaches’ salary). Texas is number one with $2.20 million and $2.07 million in revenue and expenses, respectively, according to a report on NCAA finances for 2017-2018 published in USA Today.  

One way to approach the fairness problem is for each school to have a revenue-sharing program so that athletes in all sports participate in dividing the pie. 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.

Another issue is whether there should be oversight of how student-athletes spend the money they receive. Perhaps it can be placed in a trust fund while they are college athletes so they don’t spend it unwisely.

Paying student athletes has many obstacles not the least of which is there would be obvious Title IX implications. Title IX mandates equal access to school services regardless of gender. How would women fit into the conversation about compensation?

Another issue is that 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.

Questions can also be raised about whether paying student-athletes opens a pandora’s box in the sense of whether other students should be paid for their services. For example, should students who engage in the performing arts, perhaps by providing a variety of sources of entertainment for the community, be paid a share of the revenue from these activities? These kinds of performances are often an important cultural event in small communities. It’s an ethical slippery slope when student athletes are paid but not student-performers and others.

I believe the time is right to pay these athletes and equal consideration should be given to other performance-driven endeavors. A possible side benefit for student athletes, and all of society, is they stay in college for all four years, not be one-and-done, and get a good college education.

Posted by Steven Mintz, aka Ethics Sage, on October 1, 2019. Dr. Mintz recently published a book, Beyond Happiness and Meaning: Transforming Your Life Through Ethical Behavior, that explains how doing the right thing and being a good person can enhance well-being. The book is available on Amazon. Visit his website, sign up for his newsletter, follow him on Facebook and “Like” his page.