Should the NCAA Own the Monopoly on Athletic Kids?

August 1, 2011 4:27 pm, CDT

By: Gary Ritter

Jay Paterno thinks student-athletes are getting a good deal as is.

There has been a great deal of media attention over the past several months focused on the question of whether Universities should be paying salaries or stipends to student-athletes. Some, including Jay Paterno (the son of Penn State football icon Joe Paterno) have opined that the players are already getting a great deal that other students around campus “would gladly take”. Many others argue that top-level college sports is indeed big business, but relatively little money flows down to the athletes. This question has recently become even more interesting as big-name football programs like USC and Ohio State have been sanctioned for payments to players or profit-seeking activities by the players that are against NCAA regulations.

So, what’s the truth? A basketball-buddy of mine, who is himself an aficionado of college sports, Flint Harris added his $.02 to this debate recently on this web site. Flint’s article sheds useful light on this question by simply providing the data regarding how much money athletes actually receive (or can receive within the existing rule structure) during their college career. In my view, any discussion is more useful with real data as the foundation. It turns out, according to Flint, that players can receive approximately $17K each year in living, eating, and clothing expenses (this does not include scholarship money that goes toward the cost of tuition and books and fees).

This information is helpful, but does not by itself settle the question of whether players should be paid additional dollars for their efforts. But it does allow us to dismiss the exaggerated claims that we simply must pay stipends otherwise these players can’t afford to buy a pizza or go on a date. This seems not to be the case. However, it certainly seems reasonable that college athletes, like most college students, may mismanage their funds and at times find themselves out of pocket money. But this situation, in and of itself, is not a justification for paying players stipends.

However, the arguments from the far end of the other side should also be dismissed. That is, it is also wrong to stick by the claim that athletes are getting what they “deserve” and much more in terms of a free college education. The key word here is “deserve”. How can we quantify this? Some, like Jay Paterno, claim that all is just fine because “other students would gladly take the deal that the full-scholarship student-athlete is getting“. The problem with this logic, of course, is that the schools are not making that offer to those “other students” because if we just placed random students on the football field, we would not get 80,000 ticket-holders spending lots of money to sit in the seats each week!

Allstate Sugar Bowl - Florida v Cincinnati

Nike and Florida made millions off of Tebow. Photo by Kevin C. Cox/Getty Images

So, the key question that we might consider is what do the student athletes “deserve”. In the USA these days, we generally answer that question based on what other people (or, the free market) will pay for that skill. Indeed, while there are many flaws with the free market, the market remains quite good at sorting out what society values and enjoys. Adrian Peterson makes a great deal of money because he brings a lot of joy to a lot of people who like to watch him play football. These people are willing to pay a great deal to see him play; it seems that they value what he does, they would like him to keep doing this, and so they compensate him to do it. I am glad he plays football. As best as I can tell, he gets paid what he “deserves”.

How can we bring this back to the question of college athletes? Well, many of these athletes have some of these very unique skills that are highly valued by society and will result in wonderful paydays for them in the future. In fact, college athletics is very big business because we fans like this so much. We choose to spend lots of money to go the games, buy our team’s gear, and otherwise pay for this enjoyment. And many adults, most notably head coaches with annual salaries in the millions of dollars, make a good deal of money thanks to their participation in this so-called amateur sport. In the end, it is quite clear that lots of $$$ is being generated by college football (and basketball) and it is not being shared proportionately amongst all of those whose skills make the profit possible. So, strictly defined, this is not an economically efficient set-up because the rewards being reaped are not consistent with the contribution to the enterprise.

However, this also does not lead to an obvious answer with respect to the question of paying players. If we simply gave each player a $20K stipend in addition to current benefits they receive, this would remain “unfair” to those who contribute the most to the enjoyment of the fans. Indeed, a system which pays the same stipend to the Heisman winning running back as to the 3rd string punter also raises questions with respect to fairness. Or, if we chose to award stipends to all football players, what do we do with volleyball players, or soccer players, whom (according to federal regulations) must be treated the same despite the fact that they are not generating the same total amount of fan-fun as are the best football players???

All of this to say, although it is quite clear that college athletics are not fairly allocating rewards amongst those responsible for generating the revenue, there is no simple answer to the question of paying players. But I can offer one humble suggestion. Why don’t we at least remove the monopolistic barriers that limit the earning potential of these players outside of college football?? That is, perhaps we could unleash the free market by tearing down the NCAA monopoly that restricts the job prospects of talented athletes.

NCAA President Mark Emmert has said about student-athletes, "They are our students, so we don't pay them."

As most people know, the NCAA (in conjunction with the NBA and NFL) has establish a minimum age rule which mandates that, to enter the professional drafts, players must spend some time in college sports. The supporters of this monopolistic limitation on player rights claim that this is done for the good of the players — they should not enter the professional leagues engaging in battle with real men until they are old enough to do so. But we all know this is not the real reason … the real reason is that the NCAA likes having access to amazing 18 year old athletes who have no other employment choices in their field of interest for a year or two. The best of these young men help generate millions of dollars for the Universities, but we only have to pay them thousands of dollars for this effort. Seems like quite a deal for the colleges!

Do supporters of this self-serving monopoly really believe that, if we opened up the market for Professional Football and Basketball, these teams would suddenly begin drafting lots of players who weren’t indeed ready? Of course not. The future of these franchises depends on the ability of their managers to figure out who is ready to contribute and who is not. Moreover, while it is certainly true that some young people with lots of money will make some dumb decisions, there is no reason to think that these youngsters will make much better decisions after a year or two of living on a college campus being treated like a superstar.

Finally, and most importantly, since when are we (or, at least the NBA, NCAA, and NFL) in the business of disallowing people from pursuing employment according to their skills because we have judged (arrogantly and paternalistically) that they are “not ready”? If we truly abided by these standards, perhaps we should have made Bill Gates go back to school for a while rather than changing the face of computing — was he really ready to handle all of this fame and money? Perhaps my computer would get fewer error messages if we had done this to young Mr. Gates! Perhaps we should also garnish the wages of young Taylor Swift or the younger Justin Beiber? Can’t the NCAA figure out how to make them sing for college money for a year or two till they’re ready go pro?? This would be quite a coup!!

For most college athletes, this monopoly doesn’t matter. They would not be drafted at 18 and will not be drafted even after some seasoning in college. However, it does matter for a few superstars; in fact, it is exactly these players whose autographed jerseys are highly valued by fans. It is these players whose earnings are being limited by this collusion between the NCAA/NBA/NFL. Why don’t we simply get rid of the monopoly and let the players earn what they’re worth??

Sure, the college game will be of a slightly lower quality than it is today — but do we really want to increase quality by simply forcing high quality people to play in our league by shutting down their other options? Perhaps we should ban all Arkansans from going to other states to live and work … in that way, we would keep our best people here and increase the quality of our workforce .. right? Of course, this example is silly .. why don’t we find it silly in the context of the NCAA?

Even if we do this, we’ll probably still hear from those concerned that college players aren’t getting their fair share of the revenue in college athletics. However, if we tear down the monopoly, we could respond in good conscience that the players have entered this agreement by choice and with full knowledge. And, most importantly, they would have done so with full freedom to pursue their dreams of earning more money in the Pro Leagues at whatever age they want!

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Editor’s Note: Gary Ritter is the Endowed Chair in Education Policy at the University of Arkansas. Ritter has a Ph.D from Penn in Education Policy and Leadership. Ritter also has a Masters from the Wharton School at Penn in Public Policy and Management to go along with an iffy jump shot.