NCAA president Mark Emmert, speaking Wednesday at the IMG Intercollegiate Athletics Forum, pooh-poohed the idea of paying collegiate athletes. "There's certainly no interest [among college presidents] in turning college sports into the professional or semi-professional," Emmert said. He added: "I think the key issue for members is, how would you have such a model that doesn't become a recruiting debate." The following essay, adapted from 15 Sports Myths and Why They're Wrong (Stanford University Press), offers a rejoinder.
Let's start from an indisputable point. College athletes generate millions of dollars for their athletic departments and their universities. Nobody will pay to watch administrators administer, or coaches coach. Athletic directors collect the value generated from boosters, sponsors, media providers, and the university administration through institutional support. Under current amateur rules, athletes see some of it in the form of a grant-in-aid (tuition, room, board, and books).
Thus, all of the money that can be generated by athletes is, indeed, being generated and collected. So it is quite true that there is no more money to be had in the event of a regime change dictating payment to athletes in addition to their grants-in-aid. Glossed over in that observation, however, is that the amateur requirement reduces actual compensation to some college athletes to a level that is below the revenues they generate for the athletic department and the university at large. This is especially true for star players. As a result of the amateur requirement, athletic directors keep a pot of money generated by star athletes. It is this pot of money that represents the most that athletes could possibly be paid, since it is the money they generate in the first place. If pay-for-play were ordered tomorrow across all athletic departments, not one of them would go bankrupt. Athletic directors would simply redistribute this pot back toward the athletes, paying coaches less and spending less on facilities.
Some have argued that in fact the athletes really are not worth very much. The argument goes that college sports fans are very loyal and will spend money regardless of who is on the field—that is, they root for uniforms. The purported evidence that gives credence to this is that some athletic programs show no variation in revenues over time; some programs appear to sell out tickets regardless of whether the team is winning or losing. Football programs at places such as the University of Nebraska or the University of Michigan see little difference in attendance in good years and bad.
We make three points here. The first is simply prima facie: Apparently college athletes do have a large value, since colleges put a lot of effort into getting top recruits. If it really didn't matter, they wouldn't. This leads directly to the actual fact of the matter, our second point: Anybody can point to a few teams that do sell out regardless of team performance, but they should also admit that these are the exception, and typically good teams that still have winning records. A "bad" year at Nebraska or Michigan is when they have to settle for anything less than a BCS bowl. They are just not as good as fans expect.
Fans of FBS teams outside the elite know for a fact that attendance varies dramatically with team fortunes. We can remember sitting in the "crowd" at Washington State Cougar football games both before Dennis Erickson and after Mike Price, when they quit playing the "guess the crowd size" game. There was no reason to guess, because you could count them. So most schools see a severe drop in revenues when athletic programs are unsuccessful. Even when currently premier programs slip so can their attendance, and even the teams that do continue to sell out will see a drop in merchandise sales and TV appeal. Furthermore, the programs that sell out with bad teams cannot do so indefinitely. Athletic directors at these schools understand that there are very tangible long-run consequences of fielding a bad team.
Finally, if it really is all about the university brand name, and players do not have much value to the university, then the market will determine that they will not be paid much. Of course, there is little to fear from pay-for-play if that is true. It seems unlikely that university officials are so dumb that they would pay athletes exorbitant amounts if in fact the athletes bring in little revenue.
A common argument against paying players is that it will ruin competitive balance—the biggest, most successful athletic departments have the most money, and they would simply buy the best players. But this is all relative, since these departments already get almost all of the best players now. So the question is not if the biggest departments will get the best players (they clearly do already), but rather if the bigger departments would have an even easier time of it under pay-for-play.
Long ago, economist Simon Rottenberg pointed out that the distribution of talent in baseball wouldn't change just because players, rather than owners, receive a larger share of the revenues generated through league play. His discussion was about free agency, but the logic is just as clear for college sports. Currently, grants-in-aid are larger at more expensive, prestigious schools that also happen to have a concentration of the best football programs. Thus, in addition to grooming their talent "for the next level," there is already differential compensation that players consider when choosing those athletic departments where they can make the most of their athletic talent. If the amateur requirement were removed, pay would also rise to higher levels at these departments than at the rest. Why would any of the athletes find it in their best interest to move to another department? Rottenberg's logic (he didn't address college sports) is that they wouldn't. So not much would really change in terms of competitive balance.
Impacts on women's sports
A common pay-for-play fear is that the ability of football and men's basketball to support the rest would be reduced. If one believes that paying college athletes will bankrupt the athletic department, or at the very least put an even bigger strain on the athletic department's financial situation, then perhaps low revenue-generating women's sports will be the first to get cut. There might be similar effects on other low-revenue men's sports such as wrestling or baseball.
However, since the impacts will largely be a transfer from coaches and facilities to players, there would be little impact on other sports. Regardless of whether athletes are paid or not, decisions should be made based on all of the benefits and costs associated with each team. If it makes sense to have a women's gymnastics team with no pay-for-play, then is should make sense to have a women's gymnastics team with pay-for-play. The value of the women's basketball team to the athletic department does not change because money needs to be redirected from coaches and administrators toward football players.
One additional feature also is typically ignored in the argument that women's sports will be under the knife in a pay-for-play world. Federal and state laws require athletic departments to ensure gender equity. The penalty is threatened federal spending and lengthy, expensive, and embarrassing legal action. Thus the value of women's sports is much higher than the revenues they generate, and the cost of cutting them is much higher than ever has been admitted.
Infinite value of a free education
Some critics of pay-for-play finally reach the end of their rope, throw their hands in the air, and cry, "Enough already! They're already being given a free education!" (or logically equivalent, training for the next level). And the truly evocative version usually throws in "a priceless free education." It's true that grants-in-aid are all about the educational side of the student-athlete. Having their tuition, room and board, and books covered allows them the chance to earn future income and enjoy the nonmonetary quality of life of a college graduate. But used as an argument against pay-for-play, this has at least three shortcomings.
First, what's so "free" about this "free education"? The life of a scholarship athlete has been cast by Gary Funk in Major Violation as equivalent to that of students who must work full-time in order to pay their way through school. In addition to their course load in pursuit of their degree, all spend the rest of their waking hours working on their sports, 24/7/365.
The second shortcoming is that the argument takes as given that all athletes value the educational opportunity in the first place. Even the casual observer knows that this is true for some athletes but not all athletes. While this irritates some people, the preferences of those athletes who are only in it for the sports opportunity cannot be invalidated just because some people think they should value it more. In fact, for all students, athletes and their classmates, the value of an education is an entirely subjective exercise. It follows then that for all students receiving them, athletes and their classmates, they are the only persons who can know the value of their individual scholarships. And if you think that a college education is "priceless," think again. If the price of tuition increased 20 percent, some sizable portion of the general student population who could still afford the higher price would still not pay it.
This word "priceless" often leads to astonishing judgments by those wielding it. Take the case of the college athletes who leave school early to take their shot at the pros. They are simply assessing the value of staying in school, including both the enhancement to their nonsport and sports earnings plus any quality-of-life values, versus moving on to the usually short-term but high return at the pro level. Whether they prize their education highly or not, often the size of pro returns swamps the value of staying one more year. And, apropos one of the most basic logical components in economics, it is unfair to judge the decisions of athletes after the fact if they should not work out. At the point in time that they make their decision, there is clearly a price of continuing on with their college education. And that price is the lost income of their pro shot.
There is certainly nothing wrong with some people placing a value of "priceless" on education. However, it becomes a problem when those values are imposed on others in order to make the case that they should not be paid. After all, even if the benefit of an education were infinite, the cost is still the price of tuition plus the opportunity cost of the student's time. So it is difficult, and a bit hypocritical, to claim that the value given to the athlete is infinite when the university has literally put a price tag on it. Surely it is the case that some athletes are not generating revenue in excess of tuition, but it is also surely the case that some athletes are generating much more revenue than their tuition bill.
The third shortcoming is that even the people making the argument would not want it to apply to them. Just ask people making this argument if they would be willing to accept less than the competitive outcome for themselves. That is, would they be willing to accept a world where they must take less than they are contributing to the value of the firm in which they work? Most would cry foul. But that is exactly what they are pushing onto student-athletes with their argument that a free education is enough compensation.
Some have argued that one drawback of paying college athletes is that it might lead to an even more exploitive recruiting process. As it stands now, colleges are becoming increasingly competitive in signing high school recruits. Two years ago, USC accepted a commitment from an eighth-grade quarterback, and this year LSU and Washington offered scholarships to eighth-grade youngsters. This leads some to worry that with actual signing money waved in their eyes, parents of young athletes will offer them up at an even younger age, robbing them of even more of their childhood. This seems completely backward to us, especially since it is already happening without pay-for-play.
As it stands now, college coaches enjoy both a program building value and a direct monetary value from recruiting. For the former, recruiting a strong athlete makes a better team. For the latter, recruiting a strong athlete generates a higher revenue value for the athletic department. Under the amateur requirement, the athletic department keeps that value over and above the grant-in-aid. Part of that net value goes to the coach. Under pay-for-play, that portion going to the coach would go back to the player. Since the value of the players to the coach would be reduced, so is the value of intense recruiting, and that activity should be reduced.
Related to this point is that much of the policing of colleges and universities by the NCAA would be superfluous under pay-for-play. As with any enforcement issue, making something legal reduces enforcement costs by definition. A whole host of so-called sleazy practices would go away. For example, college basketball head coaches sometimes hire the relative of a prized recruit as an assistant coach. Under pay-for-play, if players choose to put part of the value that would otherwise go to them in the hands of a relative, that would be up to them.
Should college athletes be paid?
One seemingly reasonable argument against pay-for-play is that it would change the nature of play. Fans would perceive it to be professional, just like the pro sports leagues in North America. The implication, typically unstated, is that the value of college sports would fall. And it might. But this is really just a value judgment disguised as an argument: The amateur version of college sports is somehow fair or otherwise desirable, and the claim follows directly from this assertion that any other form would be worth less. So the deciding issue is not the differential value that might ensue, but what is more desirable in the first place. This is the realm of value judgment that also governs the question of whether college athletes should be paid more than their grant-in-aid.
Economics is not the realm of dueling value judgments. Economists speaking from their own value-judgment position might voice their opinions. Some might say that college sports are already viewed by fans as highly professional, and the damage done by pay-for-play won't be significant. Some might say that paternalistic justifications are overblown. After all, we are talking about (for the most part) legal adults responsible for every single one of their other choices. In addition, it is all well and good to try to protect young people, but we don't protect them from criticism on the field, sometimes to the point where they are humiliated in front of national TV audiences. But these are all just opinions, not economic logic or reasoning. The best economists can do is to illustrate the effects of different economic conditions or policy choices.
We are agnostic on whether players should be paid more than their grants-in-aid. But we are far from noncommittal on the myth being foisted on fans and the general public. It is certainly one's right to believe that college athletes should simply not be paid more than their grants-in-aid (if at all!), but both the value to those espousing the view and the ramifications of such a view should also be made plain. On the former, it is no accident that those foisting the myth are also those who earn very high return if it is believed—athletic directors and college coaches. It would be naive indeed to ignore that the entire machinery of the NCAA has been brought to bear to see to it that the amateur requirement is maintained.
On the latter, the myth that pay-for-play will bankrupt athletic departments is used to justify player compensation restrictions. While this fairness issue is important, we think, there is also something missed by focusing on fairness only. From society's perspective, the myth leads to over-investment by athletic directors in coaches' pay and facilities relative to their actual values to the university. If resources are not to be wasted, people should understand that the result of not allowing pay-for-play is that it inflates the salaries of other employees in the athletic department and results in more spending on facilities.
This brings to the fore the question of what to do with the money generated by college sports. Perhaps a sincere debate on the question would generate the result that athletes continue on with just their grant-in-aid. But busting the myth that pay-for-play will bankrupt athletic departments would shed new light on such a debate. It might even send the money to other worthy causes at the university besides coaches' pay and facilities dedicated to varsity athletes.
And remember that we seldom hear from the players who don't make it big. There are thousands of former players who generated thousands, if not millions, of dollars for their alma mater and never really saw any tangible benefit. Injuries may have precluded the big payoff for some, while others simply never made the cut at the next level. It is true that there are amenities that are associated with being a college athlete. That may be a good reason not to pity college athletes, but it seems to us a weak reason to allow a large part of the revenues they generate to go to administrators and coaches.
Adapted from 15 Sports Myths and Why They're Wrong, by Rodney Fort and Jason Winfree.
Rodney Fort is professor of sport management at the University of Michigan. He is internationally recognized as an authority on sports economics and business. Fort is co-author of Pay Dirt and Hard Ball. His best-selling textbook, Sports Economics, is in its third edition.
Jason Winfree is assistant professor of agricultural economics at the University of Idaho. He is co-author of Sports Finance and Management.