I think the best way to get corruption out of college sports is to compensate the players better. In the ESPN’s 30 for 30 documentary “The U” 2 Live Crew Rapper Luther Campbell insinuates that if he did (and he’s not saying he did) illegally give money to University of Miami players, it may have been so they could buy food.
In my opinion a compensation package that includes the following is more than fair:
- Food money
- A nice stipend
- A Car
- Laptop every year
- Real deal tutors
- Financial education*
- 401k/retirement plan.
- Long term healthcare
Here is what I’m thinking on the retirement plan end: each athlete gets a 401k when they first start out (and maybe a ROTH IRA too), and a portion of their stipend is diverted into the 401k to provide for them later in life.
I think the above is more than fair and it might even motivate players to work even harder. Either way, you don’t have situations like Reggie Bush at USC if players can receive the benefits legally that they often currently receive under the table. To look at it from another perspective, how much would schools like USC, Ohio State and others have saved if they weren’t hit with sanctions either due to being to pay players OR not punishing players for selling their own memorabilia for exchanging autographs for tattoos and food money?
The caveat here is that only a small fraction of schools generate profits from sports and the cost of these benefits could lead to schools cutting non-revenue sports UNLESS the NCAA makes rules forbidding them from doing so. Remember the pool of money is finite so if you increase costs in one area, the natural thing is to reduce them in another. Furthermore the overwhelming majority of NCAA athletes aren’t playing revenue sports.
All that being said boosters provide a lot of the above benefits illegally anyway, if you make it out in the open and regulate it properly it very well may not be a problem.
This could also have “some” impact on competitive balance. If I’m being recruited for Football and I know I have little chance of playing at U. Oregon but could be a starter at say a non-major conference school that maybe can’t afford to pay me as much, I might go to Oregon anyway.
Finally, it stands to reason that there are going to be unforeseen consequences as the laws of thermodynamics apply to money too, in other words: there is no free lunch.
Either way, I’ve seen Autzen Stadium in Eugene Oregon – it’s a pro caliber facility if not better than most NFL facilities. I.e. let’s stop pretending that some college teams aren’t economically on par with many pro ones.
After all the Cleveland Browns made $17.1 million during the 2012-2013 season, and the U. Oregon made about $30 million ß the department of education provides terrible guidelines around what to count as an expense, but still….
That was a long ass preface I know, moving on….
It’s a refrain we hear all the time, “The NCAA Makes Billions”, you hear it on social media, one of your friends might say the same at the proverbial water cooler, at happy hour, etc. There is also plenty written saying same:
Even business publications are in on the act of noting the NCAAs Billions
There is just one thing, in some cases the billions are actually referring to ad spending – which, is what the television networks rake in. In essence a TV deal works via paying an organization a certain amount to televise a sporting a event, and then trying to make a profit off the delta between ad dollars and the cost of the broadcast rights.
In other cases the numbers are just an aggregate of all the revenue generated by all member schools, which, again, is not the money comes directly into the NCAA itself.
As for the NCAA’s actual money, you can easily find it as they make ALL of their audited** financial reports public. You can see some of that data via the links below:
In fiscal year 2012*** (the fiscal year ends on August 31) – the NCAA took in $849,722,358.00 and had $780,951,834.00 in expenses. Of the ~$849 million in revenue, the NCAA paid out ~$745 million***( or 87.72% back to the schools, and spent ~$35.5 million or 4.18% on operational expenses. The net surplus for the year was ~$71 million.
In other words: it’s not billions, it’s 100s of millions going to the schools, 100s of millions going to broadcast partners and tens of millions to the NCAA.
You could argue that the second half of this blog post contradicts the first, but, hear me out:
If we’re going to have this conversation we need to have a concrete financial one. E.g. “How much do the big money schools generate in profits, how much do the smaller schools LOSE (most D1 schools operate at a loss) and how do we distribute the money fairly?”
When it all shakes out is probably not going to be the player windfall many are thinking of, which is okay, I think. I’d much rather have big school vs. no name school in the regular season blowout games or bowl games involve players on both sides getting paid, rather than “they’re going to murder us and drive away in their new cars, while we go home to eat ramen”.
Looking at the numbers I wonder if the real reason the schools are pushing back is that they know that for this to work they have to subsidize the schools that are losing money, which may be a bigger issue for them than paying players.
Especially since, we all know schools break the rules on benefits, enable boosters to pay players, etc., all the time.
Either way, concrete numbers and realism is the key, because trying to base policy on hyperbole is a losing proposition.
*By financial education I don’t just mean teaching them about managing a checkbook and credit cards. I mean teach them about the real world of wealth, about real deal financial advisors, how wealth = your net worth/net liquid assets and not your income. Get these guys to the level where if they get that $20 million contract and the $10 million endorsement deal, they think about establishing or joining a family office.
**This means a 3rd party, an accounting firm goes over the NCAA’s books and verifies/audits books and certifies them as accurate.
***You can find this data on page 21 of the 2nd link, I used the NCAA column to not revenues and cash out to the schools and the total column for the surplus as it aggregates data from other NCAA related entities.
****Roughly 2/3rds of the payout number was for DI football.