How About a Free Market for College Athletes?

In 2010, CBS and Turner Broadcasting agreed to pay $10.8 billion to broadcast the NCAA men’s basketball tournament from 2011 to 2024.  As a result of this contract, fans of this tournament can watch these games on four different networks.   And perhaps more importantly (for those of us who work during the day), we can see these games on our computers in our offices.

Certainly all these games make us fans very happy.  And all that money has to make coaches, athletic directors, and other university administrators happy.  But what about the people we are actually watching?  

The people on the court are referred to as student-athletes.  And according to the NCAA rules, these athletes are supposed to be amateurs.  In other words, other than a scholarship, these athletes are not supposed to be paid.

A few days ago, CBS News did a story on whether the labor market the NCAA employs should be changed.  This story focused on a lawsuit filed by former college star Ed O’Bannon, which disputes the NCAA practice of not compensating players for using their likeness in video games.  The discussion, though, quickly turned to the issue of whether or not college players should be paid (more than a scholarship).  As one can see – both in the article and in the four videos included in the story – I tend to think the scholarship is not adequate compensation for many athletes.

To illustrate, consider the Indiana Hoosiers this season. An examination of the player statistics reveals that Victor Oladipo produced 7.37 wins for Indiana (the Wins Produced calculation for college basketball was similar – in fact, amazingly similar — to what has been done for the NBA).   We are working on the economic value of a win in college basketball, but a conservative estimate is that a win is worth at least $100,000 for a program like Indiana.   Given the number of wins Oladipo produced and the conservative value of a win, Oladipo’s production was worth (i.e. his Marginal Revenue Product) about $737,000 (and again, this is a crude and conservative estimate).

The following table reports the same calculation for each player Indiana employed this season. 

Indiana 2012-13

Wins

Produced

Wins Produced

 per 40 minutes

Marginal

 Revenue Product

Victor Oladipo

7.37

0.318

$737,129

Cody Zeller

5.66

0.233

$565,992

Jordan Hulls

4.56

0.189

$456,377

Kevin Ferrell

3.23

0.139

$323,131

Christian Watford

2.92

0.128

$291,740

Will Sheehey

2.42

0.133

$242,386

Remy Abell

1.64

0.160

$164,178

Jeremy Hollowell

0.60

0.082

$60,374

Maurice Creek

0.43

0.094

$42,661

Hanner Mosquera-Perea

0.28

0.105

$28,060

Jeff Howard

0.25

0.278

$24,976

Austin Etherington

0.24

0.208

$24,457

Derek Elston

0.14

0.050

$13,742

Raphael Smith

0.10

0.225

$10,139

Taylor Wayer

0.02

0.086

$2,138

Peter Jurkin

-0.03

-0.165

-$2,879

TOTALS

29.85

 

$2,984,604 

A scholarship to Indiana is valued at less than $30,000.  So at least nine of these players were exploited (which simply means they were paid less than their Marginal Revenue Product).

So should the NCAA re-write the rules so that Oladipo gets paid $737,000?  This is not what I would propose.  Historically, the NCAA has seemed intent on writing as many rules as possible to regulate college sports.  And such rules – not surprisingly – benefit the groups who have the biggest influence on the rule-writing (i.e. university administrators, athletic directors, and coaches). 

What I would propose is stop with the rule writing.  Simply allow each team to compensate its players in whatever fashion necessary to get the athlete to come to campus.  I would suspect that for most athletes, the current system would continue.  In other words, most athletes (across most sports) would simply receive a scholarship to play sports and attend school.

For a few players, though, the situation would be different.  A player like Oladipo generates far more revenue for a college program than his scholarship is worth.  Consequently, in a free market some school would be willing to pay more for Oladipo’s services.  

One might wonder where this money might come from. After all, the NCAA claims that many college sports programs are not profitable.  Such claims, though, seem dubious.  Colleges are generally not-for-profit, and therefore, excess funds tend to get spent (since an owner can’t claim these profits).  With respect to college sports, one obvious place these funds get spent is in the pay of college coaches.  For example, Tom Crean – head coach at Indiana –  was paid $2.24 million in 2011-12.

The salaries paid to NBA coaches are somewhat difficult to find.  But there was a report that Erik Spoelstra – head coach of the world champion Miami Heat – is being paid $2.75 million in 2012-13.   In sum, Crean is being paid a salary that is not much different from an NBA coach.  But NBA teams make far more in revenue than a college team (sports economist Andrew Zimbalist has argued NBA teams earn 10 times more in revenue than a top college team).  So how can Indiana afford Crean’s wage?  Obviously the restrictions on player pay are a big part of this story.

So if we paid more to the players, coaches like Crean would likely get less.  But wouldn’t the fans also suffer?  After all, if the players can be paid, the top teams will simply get all the top talent.   And that would ruin the competitiveness of college basketball.

That would be a great story, if the current system looked very competitive.  But college basketball – under the current system – is hardly competitive. Consider the players Kentucky has been able to recruit in recent years.  For example, four of the top 40 recruits signed with Kentucky in 2012.  In 2011, Kentucky signed four of the top 20 recruits.  And in 2010, Kentucky nabbed four of the top 30 recruits.  In 2013, Kentucky is even more dominant.  So far, Kentucky has commitments from five of the top 18 recruits.  This is the pattern we see without paying the players more than a scholarship (at least, we assume Kentucky isn’t paying anyone more). 

Would Kentucky be able to get even more players if it could pay more than a scholarship? I suspect that the opposite is more likely to be true.  It seems likely that Kentucky recruits this many players because the pay for each is well below free market rates.

And the players go to Kentucky because they suspect – despite the outcomes observed this year – that they have the best chance to win games at Kentucky. In other words, because players can’t choose a college based on compensation, they must sort themselves on some other criteria.  And the big attraction appears to be whether or not the player is likely to win in college.  So when one top player commits to a program, other top players have an incentive to follow.

As a consequence, the NCAA has never been that competitive.  A few years ago economist Jim Peach* looked at the distribution of Final Four teams from 1950 to 2005.  Peach found that 12 teams – out of the more than 300 Division I teams – accounted for 48.7% of all Final Four slots.   So the current system employed by NCAA men’s basketball – with player pay capped at the value of a scholarship – has not led to much competitive balance. 

And if the restriction on pay isn’t promoting balance, why should this system persist?  We already pay students to do other work on college campuses (as I told CBS News, we pay someone to grade my exams).  Why not consider college athletics as just another student job?  Again, for many of these students on campuses around the country, this job is probably not worth more than a college scholarship.  So the current system can stay in place.  But for the players who bring in most of the fans and produce much of the revenue, colleges should be allowed to compensate these student-workers with higher wages.  And such a system would eliminate many of the resources currently spent policing the NCAA system of restricting athlete pay.

Let me close by noting that virtually everyone objecting to the NCAA adopting a free-market approach to college sports, currently works and benefits from a free labor market.  And if these people were told that their wages were capped by a rule their employer created, they would likely object. In much the same way, people should also object to the current system of compensating college athletes. 

Again, it is these people we are watching this weekend.  And if the NCAA adopts a free labor market, more of the revenues our watching is generating will actually go to the people we are watching.

*Peach, Jim. “College athletics, universities, and the NCAA,” The Social Science Journal, 44, (2007): 11-22

Leave A Comment

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COMMENTS: 52


  1. Courtney says:

    Hidden due to low comment rating. Click here to see.

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    • Jonathan says:

      A) Most athletes do not receive benefits from outside groups. Those are impermissible benefits that can get a program shut down if done with willful intent. Yes, boosters do pay some players but it’s done under the table and done without NCAA permission and oversight. The fact that boosters do play some players isn’t an argument against paying athletes legitimately. Regular students can receive gifts from friends and family, athletes cannot. Athletes should, at least, be able to receive gifts openly and free from scrutiny and scorn.

      B) So athletes should not be paid because they are not prepared for college? Why do schools have remedial programs? Many students are unprepared for college. Many students cannot handle college level coursework. The students who cannot are allowed to leave the systems. Athletes are given a list of classes to take and are handed grades for do subpar work. They aren’t allowed the ability to even flunk out of college. They’re shuttled through college so that they can play a game to make money for the school. Many leave college in the same condition they entered. Try taking a full 16-18 hour course load while working a 40 hour/week job that requires weekly travel and little sleep. See how well you perform. Sure, athletes”choose” this life, but how hard is it to choose a chance at a professional sports job versus almost anything else. The very least the NCAA could do would be to allow athletes to major in their sport. They could learn training, diet, and coaching skills that would give them a skill when they graduate. Rather than the degrees they currently get in general studies.

      C) I agree here. The money colleges make from athletics should be used to educate. But the NCAA, coaches, and athletic directors will never allow that to happen. The best solution is to compensate the players beyond a scholarship they aren’t even allowed to use.

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      • Mike B says:

        I would love to see a Mark Cuban type make a public announcement that he will guarantee some amount of money to whatever college player plays for some specific team under some terms. The money would come after the player graduates and there would be no contract, just a verbal pledge. The NCAA can’t hold schools responsible for the actions of private citizens and they can’t punish players for actions taken post graduation. Such an action, if then followed up on over a number of years, would destroy the NCAA’s cartel.

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      • Ja says:

        Agreed. But it’s not. In many cases, those funds find their way into disloyal coaches’ pockets and administrations seeking the next conference money-driven defection. Simply put. These are free minor league systems. Baseball has no such conflict becaus MLB has a viable minor league.

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    • Seminymous Coward says:

      (A) violates NCAA rules and, therefore, shouldn’t be used to reason about how those rules are set. Enforcement is a separate issue from rule-making.

      (B) is an argument for other forms of pay for student-athletes. If they aren’t getting maximum benefit from a scholarship, that makes it a less suitable form of payment.

      Finally, whatever your employer’s main purpose is, Courtney, I’m confident that purpose is not paying you. Therefore, I presume under your point (C) that you’re willing to take a pay cut to a ceiling defined by a cartel of organizations operating in the same industry? This would free more funds for your employer’s main purpose, after all.

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      • Enter your name... says:

        I dunno about the assertions that receiving all “benefits” is a violation of the rules. I’ll bet that the NCAA doesn’t prohibit athletes from receiving free tutoring for classes they miss, and that’s a “benefit” that most students cannot receive without paying for it. All athletes at my non-NCAA school received free laundry services (theoretically, just for practice clothes and uniforms, but the actual rule was “whatever fits”). I’ll bet that the NCAA doesn’t prohibit that benefit, even though all the other students have to not only pay for detergent and coin-op machines, but do the washing, drying, and folding themselves.

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      • Seminymous Coward says:

        My claim only regarded “benefits from outside groups.” My understanding of the rules is fairly superficial, but you can read the full wording at http://www.ncaapublications.com/productdownloads/D113.pdf . That’s specific to Division I, but the other divisions’ manuals are available if you look around the NCAA site. The whole document is 444 pages, but the most relevant parts are Articles 12 & 16. A condensation of the rules regarding boosters (i.e. virtually all potential outside groups) is available at http://www.ncaa.org/wps/wcm/connect/public/NCAA/Enforcement/Resources/Role+of+boosters+in+intercollegiate+athletics .

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  2. Peter says:

    The money generated by D-I Football and Basketball is also used to subsidize all the other NCAA sports, including all the D-II and D-III championships which don’t generate enough revenue to fund themselves.

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    • Jonathan says:

      So close. D-1A football money does not go to the NCAA. It is used, to some extent, to fund Olympic sports. But it’s naive to think that the University of Texas requires $600M+ to run an athletic program. Last time I checked, coaches don’t need more money than university presidents and professors. Or do ADs need huge salaries because its so vital to the mission of the program?

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      • Seminymous Coward says:

        If you want to compare about cost-benefit ratios, university presidents are probably not the best example. Coaches, at the very least, bring in more than they’re paid.

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      • Enter your name... says:

        The “benefit” in the “cost-benefit ratio” for an educational institution is supposed to be how much educational benefit is received by society, not how much revenue is generated.

        On average, first-grade teachers probably win the competition.

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      • Jonathan says:

        Unable to reply inline for whatever reason, Seminymous Coward.

        A major research university president is worth more than the salary paid in most cases. While they may not perform in the lab, they direct the research goals and aims. Presidents and chancellors are the ones acquiring the lab space and supporting grant and funding initiatives. A great president can increase research dollars by a few hundred million while increasing economic impact by a few billion.

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      • Seminymous Coward says:

        To be clear, I do think that university presidents are highly paid and contribute little to educating the students. Here’s the first “osu organization chart” that comes up in Google: http://oregonstate.edu/admin/aa/ir/sites/default/files/orgchart-university-oct-2012.pdf . I think most of the people in that chart and its equivalent at other schools are deadweight overhead. (Compare the other charts at http://oregonstate.edu/admin/aa/ir/org-charts to see that even the administrators aren’t sure who does what under whom.)

        Football coaches may not contribute to academics, but at least they generally don’t divert money from better uses, since almost all generate more money than they’re paid.

        Jonathan:
        I’m not sure in what way you think professors need their research goals directed by a university-wide official. Furthermore, “supporting…funding” is not exactly a concrete work product. I’d be extremely interested in a specific example, though. Perhaps I’m undervaluing some kind of major behind-the-scenes impact.

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      • Jonathan says:

        I thought by using “directing goals” it would seem to imply that I meant that the president was saying what to research and how. Not my aim there.

        I was using my university as an example. Before the previous president arrived NIH funding was decent but not top 10. After her 10 year term the university expanded its impact on the local and stare economy to over $4B annually.

        As far as directing research goals, I meant specifically her focus on young, barely more than post doc researchers who could provide valuable research cheaply and creating spin-off businesses from their work. Her value exceeded her pay.

        Now our football coach’s value can be debated. The football program runs a ~$200k deficit. His salary is around $400k. The athletic department as a whole receives a direct subsidy of $6M to “create” a profit of $400k.

        Every D-1A program receives similar, some smaller and some larger, subsidies from the academic end of the university. Many programs give $1M gifts to the academic end to show how charitable they are.

        The last USA Today study had about %60 of programs running profits. Many whose profit didn’t cover the subsidy.

        You could say that a successful coach increases applications and enrollment, generating more revenue to the university. So essentially my entire argument is a wash. However it was never that presidents and professors should be paid more, rather that athletic departments have room to pay players without running up massive debt or killing off non-profit sports.

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    • Mike B says:

      A better system would be to prohibit direct compensation by schools, but lift all other restrictions on amateur status and payment by outside parties. Basically “boosters” and other sponsors would be the ones to pay for the athletes and universities could continue to spread their revenue around to the other sports. In this way the NCAA would help promote the use of public funds for education, not entertainment.

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  3. Nic V says:

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    • Mike B says:

      Europe needs closed leagues and a strong players union that can negotiate with management with the league’s long term health in mind. North American sports are highly driven by “show me the money”, but also by collective action to improve the sport.

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  4. Brent says:

    I would propose that the simplest way to go about paying players more is to allow Universities to make money off of jerseys, images, etc of the players that play for them. So in this instance, at a University like Indiana, a star player like Zeller would no doubt have many of his pictures/jersey’s sold — and then he could earn royalties off of these items. This would prevent a true “free market”, giving many universities a huge advantage, and would allow revenue from sports like basketball and football to help subsidize non-revenue sports. However, it would also allow a star player to earn incremental income off of his own popularity (and perceived value). Sure, there would be advantages to a star player going to a power school like Kentucky where fans would buy more jerseys, earning him more money, but he’d also have to compete with other star players (ie, a university with only 1 “star” player, even a smaller number of fans there would be more likely to buy mostly the same jersey).

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    • Andrew says:

      Even universities with more than one star player has one player who is the focus. That player will get all the jersey sales while the other players who are helping the team win but not getting the headlines will not. That star player, BTW, might be the ball hog the team who gets the most points but isn’t the best producer.

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  5. Clint says:

    A pareto effecient solution, which would make one party better off without hurting the other, is for the NCAA to adopt the olympic model. The olympic model allows for athletes to get compensated Via marketing (Wheaties Boxes). The olympics don’t pay their athletes, but those athletes with marketability, can use this get get compensation.

    Say if the colleges allow athletes to “sell” their autographs, there is no money being filtered from the athletic budget, and the player recieves the revenue from selling their autograph. Seems like a win – neutral solution.

    Also, the current scholarship system is completley broken and should be re-done. Players can’t even sign a 4 year contract, but they have to sign a 1 year contract 4 times, that has the option to not be renewed, and can not be canceled without a 1 year no compete clause, unless an NCAA waiver has been approved. That is most ludricous thing I have ever seen in labor economics.

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    • Lauren says:

      I like the Olympic model idea. Actually, it was the Jeremy Bloom case that converted me to pro-student-athlete compensation. While universities balance revenue sports and Olympic sports, I do think it’s a fair societal question to ask if football and basketball are so important that we condition young athletes to only pay attention to these? I’d rather see a Missy Franklin collect a check than Peter Jurkin (and I’m even an IU alum!).

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  6. Taylor says:

    Actually, Kentucky nabbed 6 of the top 18 recruits for next season. #BBN

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  7. Mike B says:

    Even if the NCAA doesn’t change it’s only a matter of time before some group of mid-major school that cannot compete under the current system jump off the NCAA ship entirely and start offering $ in a new semi-pro college related league. How many of the best players would choose to play for free vs getting paid right out of the gate? After the NCAA programmes have all of their talent sucked out of them they will be forced to change the rules to compete.

    Another good solution would be for the NCAA to simply create a new division system where schools have a set amount of $ they can spend on their ENTIRE programme, but have a free hand in spending it as they please. This way you can tackle problems of coach salary inflation and facility inflation and player compensation all in one go.

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  8. nol says:

    I can reconcile college coaches being paid almost as much as NBA coaches despite the fact that NBA teams generate more revenue because a college coach plays much larger role than an NBA coach in bringing in talent for their team.

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  9. Tommy says:

    “And the players go to Kentucky because they suspect – despite the outcomes observed this year – that they have the best chance to win games at Kentucky. In other words, because players can’t choose a college based on compensation, they must sort themselves on some other criteria. And the big attraction appears to be whether or not the player is likely to win in college. So when one top player commits to a program, other top players have an incentive to follow.”

    Dave – interesting article, but I disagree with this statement. Of course athletes want to win, but the main reason that many of the best come to Kentucky is because of John Calipari’s outstanding track record of getting his players from Kentucky drafted into the NBA very quickly. The elite basketball players want the quickest route to the NBA since they are forced to play for one year due to the one-and-done rule, so they’re going to play for the coach that gives them the best opportunity to do that. This actually supports the premise of your article better, anyway. #BBN

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  10. Gary says:

    There is already a D league where players are better and the overall quality of play surpasses that of college. They receive less compensation. The revenue is generated from the name on the uniform and the players are a tiny ingredient. In any given year there are maybe 5 players at most who are attracting attention greater than the school.

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  11. Ed C says:

    I just read an article on Marketwatch.com that lends me to believe that it would perhaps be prudent to view NCAA basketball as a legit way to obtain a degree that otherwise would not have been attainable to people due to financial constraints, academic performance, or simply a systematic lack of opportunity being made available to obtain a generally competitive secondary school education.

    Only as a way to make the point, and assuming that economic opportunities available to African-American families in regards to their children’s education are in a strictly free-market sense going to be less than those of Caucasian families as a whole, the numbers indicate how this perception is fostered.

    The article (http://www.marketwatch.com/story/10-things-ncaa-basketball-wont-tell-you-2013-03-22?pagenumber=6) actually tries to make the point that there is a racially associated graduation gaps that persists due to only 65% of African-American Men that play in the NCAAB graduate vs. 90% of “white” Men, but overall the number is 70%. A quick run of the numbers shows that this data also shows that there are around 4 African-Americans for each Caucasian playing NCAAB.

    If one considers the 2009 US estimated demographics (not the most recent data, but the most recent I could find quickly and theoretically the data that describes the graduating class of 2013 as they entered university), the ratio of Caucasian males to African-American males is around 6.4 to 1.

    (I have no numbers that can be used to adjust for the relative sizes of the under 18 age groups, so the following is indicative at best) This means that as an African-American male you are 25.6 (=4×6.4) times more likely to obtain a degree by focusing on basketball as a means to get a college education than it is as a Caucasian male. This is I am sure not lost on a lot of people, and in itself would be put into jeopardy but making the system a free market system.

    Of course this is all about perception, because a few players with the high profile, successful teams are likely thinking that they have a chance at the NBA, and real money. But, the majority must realize that the real prize should be the degree.

    The shear numbers of player slots available in NCAAB is such a small number (2000?? guess) that this perception has a double edge: opportunity is generally better for male African-American basketball players over their Caucasian teammates, but this opportunity advantage is available for very few people.

    For everyone else, another sport, a non-strictly academic performance based scholarship, or strictly academic success in an education system of reasonable quality if made available, are the ways that most people can get into school to earn a university degree. Until this is the case across the US, programs like NCAA athletics need to have academic standards and provide opportunities to learn and graduate, without the free market taking over and reducing the league to another professional sport.

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  12. NY says:

    A proposal like this is great in a vacuum. Unfortunately, you cannot simply ignore the legal consequences of a pay-for-play proposal.

    For starters, you are going to have a huge Title IX problem with a scheme like this. If you decide to give more money to players on the mens basketball team, you better allocate an equal amount of money for the women in the athletic program. Or would you rather cut a bunch of mens teams and scholarships?

    Next, your compensation is going to take the amateurism out of the game and begin to make this look like a commercial venture. The result of this is the risk that college players will be viewed as employees. You do not want this! If they are employees, suddenly schools will have to pay for workers compensation insurance, might be liable for vicarious liability of athletes on the field, and athletes will then receive the right to form a union under the NLRA.

    There is not enough room for a real discussion on these issues, but just know that proposals like this are not simple; nobody seems to understand the legal hurdles.

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    • Mike B says:

      If there are Title XI issues then spin revenue sports off into a non-academic for profit venture and include in player compensation packages some number of free years of school per season played that can be redeemed at any time.

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  13. Ja says:

    NY, you make some valid points especially the legalities. However, where you are wrong on asserting that the pay-for-play model would remove amateurism. It’s already gone. That’s why the Ivy League-the best, original, sports conference got out of major college sports…it saw what is was going to become. And they were right. For profit sports being run by schools. Not good.

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    • NY says:

      Hey Ja,

      I agree that this is already big business. I think, however, that there are some circles that believe amateurism still exists (not you, not me). So let’s just split the difference and call it a veneer of amateurism. That is, by giving athletes “scholarships,” colleges make a last ditch effort to keep things amateur. But, once we add “compensation” on top (i.e. non-scholarship money), all ounce of amateurism goes completely out the window.

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  14. Hayes says:

    What about all those other school? Heck what about all those other sports? If the NBA wanted a professional minor league system they would create one, like baseball has. Till then get your education first and hope basketball pays off.

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  15. Ja says:

    Hayes, minor league will never happen. NCAA and NBA and NFL are in cahoots-mutually beneficial, exploitative setup that overly benefits the coaches and admins over the people who generate the revenue. I theoretically get your point, but theory ain’t reality. The reality is that cfb and Cbb have evolved into heavily for-profit, semi-professional entities and they should be treated as such. And if not, then they definitely need to scrap the age limit (a clear case of collusion between the nba and its unofficial minor league-why create one if college provides it to you fit free?). It would be better for all parties involved-itd yield more genuine student athletes like baseball (if you wanna do homework and play sports and get a degree, you have that option…if you wanna join the army, try at a sport for a honest wage at the age of 17/18…you should have that right too. It’d eliminate this convergence of school/grades/violations and sports/money. The line would be clearly drawn. But no, the nba and NFL like it just the way it is…offer an education (that is no longer guaranteed for four years by the way, ie if you fail in classroom or coach wants to use it on another hotshot recruit after a couple of years-making it clear that your education ain’t the priority) that pales in comparison to the sports money generated by jocks and not have to invest in a full-fledged minor league system. It will change. The system was originally well-intended but is now broken. And the government and upcoming court decisions will drive that for better and/or for worse. The days of scholastic athletics in the major sports (excluding baseball) are long gone and will be addressed. Side note: someone explain to me how the head if the NCAA (which somehow is a non-profit) makes way more than the head of larger and more impactful non-profits like the united way? Don’t worry…I’ll wait (lol).

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  16. Ja says:

    NY, but why fake amateurish. Then the very questionable (they so play favorites) NCAA oversight looking into so-called improprieties would not even need to exist. Kinda like the bogus war on drugs. We know schools are compromising academic standards significantly, aren’t committed to educate many of these kids (who have been poorly guided and are often ill-prepared to complete degree work in the first place), paying these kids sometimes through “other channels,” yet they pass off this charade to hide behind amateurism when it’s not that. I’m like c’mon, “we’re not that naive!”

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  17. Calvin says:

    Interesting article that brings up some great points. I do have a few issues with this philosophy, however. This is an incredibly intricate issue, and I don’t pretend to have all the answers, but I feel that there are some major issues involved in paying players. My thoughts and areas of disagreement with the article are listed below:

    1. If you allow programs to set player salaries/stipends, there will be a massive inflation of these amounts over time. We have already seen this with college coaches. I don’t know of a place that has yearly historical data on top coaches salaries, but they have skyrocketed in the last 10 years. We have seen an arms race of sorts with respect to coaching salaries, and player salaries would likely experience a similar trend if not capped at some level. This could be addressed with some sort of tier-based system, but putting a cap on player salaries runs contrary to the idea that college sports should adopt a free-market philosophy. Further, the article doesn’t address the fact that the salaries of most high-profile coaches are paid for through high-level donor contributions specifically intended to fund the coach’s salary. If there is a free market system, donors and boosters would essentially be allowed to bid on and ‘buy’ recruits. College sports may be coming to a crossroads here, but I personally don’t think such a system would be healthy for college sports, and I certainly can’t blame the NCAA for resisting such a change.

    2. I am a huge college sports fan, and (somewhat sadly I admit) follow recruiting very closely. I disagree with the assertion that recruits choose a school based solely on their ability to win. Women’s basketball players for example, probably do chose a school based on their ability to win, but quite frankly high level male athletes have much more at stake in terms of picking a school. I don’t mean to put down women’s athletics in any way, but a lucrative career in professional athletics is far more realistic for male athletes. For many of the highly recruited athletes that shape the top-level competitive landscape, factors such as immediate playing time, exposure, and the ability to distinguish themselves in the eyes of professional scouts are heavily considered when choosing a school. Women’s basketball has leveled out a bit recently, but there was a time during Pat Summit’s stretch of domination that they were getting literally the 5 best players very year. Not 5 of the top 18, but the top 5. Female athletes are going to play for 4 years, because there isn’t a strong financial incentive for them to leave. On the other hand many of the top male athletes hope to stay for 1 or 2 years, before cashing in on the professional option. My point is that at the end of the day, most high-level male athletes (who account for the vast majority of college sports revenues) heavily consider financial factors in choosing a school. This is why we often see top 10 recruits choosing to play at schools like Baylor, Providence, etc. instead of perennial powerhouses such as Kentucky, Kansas, North Carolina, etc.

    3. As an extension of my second point, I disagree with the assertion that a free market system wouldn’t change the competitive landscape. If I am correct that many players choose to attend non-dominant schools based on financial incentives relating to their ability to get drafted, then the introduction of actual cash incentives provided by schools/boosters would change the competitive landscape. For example let’s say that there is a top 10 recruit that wants to go to one of the major schools, but is afraid that he won’t play over the current starter at his position on these teams. Under the current system, he would likely choose to attend a less prestigious school, because he will be able to play immediately and hopefully be noticed by NBA scouts. However if, say Kansas, can offer him $500,000 for a commitment, compared to the $50,000 offered by the smaller school, he is without question more likely to attend Kansas (this doesn’t mean that he will definitely choose Kansas, but it certainly increases the likelihood that he will). I think you would eventually see a situation where every one of the top 30 recruits commits to one of the top 5-8 programs, separating them further from the competition in terms of talent.

    4. Finally I think that saying an Indiana player is only receiving $30,000 in value from the program is completely inaccurate. The ability to play for a college program, particularly one as visible and prestigious as Indiana, adds tremendous value to the player’s position. Indiana is on national TV almost once a week and is covered heavily in the national media. ESPN runs highlights several times a day following a game. NBA scouts are very aware of who the pro prospects are on Indiana’s team, and are able to watch them often. The coaching staff is comprised of some of the best developers of basketball talent in the country (which is worth thousands of dollars alone in my opinion). I have two pretty clear examples that illustrate how valuable playing for a prestigious college program can be. The first involves Brandon Jennings, who is currently playing in the NBA. He was the number 1 recruit in the country out of high school, and according to most would have been one of the top 3 players selected in the NBA draft, if not the first, out of high school. However, the NBA had just changed their draft rules by barring high school players from entering the draft. Unable to qualify for college, Jennings spent a year playing basketball abroad (as a 17 year old kid), where he struggled to even see the floor through the strenuous 9 month season. Concerns over his poor performance during the year abroad caused him to drop to the 10th pick on draft day. NBA rookie salaries are set, based on draft position, and Jennings received a contract worth $2.2 million per year, while the first player selected had a contract slotted at $4.9 million. This isn’t exactly proof that going to college would have made him $2.7 million, but it does illustrate my point that playing in college provides the best possible exposure for a player, as well as an environment that is far more conducive to an 18 year old player’s success than that of living and playing abroad. My second example involves Victor Oladipo, who was the 144th ranked recruit out of high school. This ranking indicates that scouts had very little regard for Oladipo’s pro potential. However, he spent 3 years learning, developing, and playing in Indiana’s system. He broke out this year, and is projected to be a top 5 pick in the NBA draft, which would earn him a contract in the ballpark of $3.5 million. Of course, it can’t be proven that he wouldn’t have developed in the same way at a smaller school, but I think most college basketball experts would agree that the development and exposure he has received at Indiana will earn him millions of dollars.

    Like I said I don’t have all the answers, but I think a middle ground can be found. In a round table discussion featuring Jay Bilas, Bill Self, and other media members in Lawrence a few months ago, an interesting idea was proposed that I am a fan of. I forget whose insight this was (I think it was Bilas), but the idea was put forth that players could be required stay in college for 3 years, but would be eligible to be drafted by the NBA. This system is similar to the NBA’s approach to European players. For example, a team could draft the rights to Nerlens Noel and offer him a contract. He would be allowed to receive at least a portion of his contract immediately, but would be allowed to stay in school and develop/mature as a player and person (to clarify I’m not saying that Noel individually needs to mature as a person, just that college players in general would benefit from a few more years of maturing).

    College sports is coming to an interesting point. The exploding popularity of the once purely amateur college athletic system is forcing us to re-evaluate the role sports should play in the college landscape, and how they should be governed. I’m a Kansas fan, and I love college sports.Maybe I’m just being resilient. Maybe I’m just trying to hold on to the system that has allowed my team to thrive (as a Kansas City sports fan, KU is the only one of my teams that thrives). I do think some change is needed, but I am not a fan of a full-scale free market/pay-for-play system.

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  18. Clint says:

    If you want to put this in perspective, take into account the O’Bannon case. One of the plantiffs, while in college, was a basketball superstar. He went to a sports shop and saw his jersey (jersey number) on sale for around 100$. Since he couldn’t recieve any monetary compensation for his work, he couldn’t afford to buy his own jersey. Pretty messed up system right?

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  19. Samuel Fang says:

    I think one of the biggest hurdles to this proposal would be Title IX restrictions. As Title IX is now interpreted by university and athletic administrations, a female athlete would also need to be paid a higher-than-scholarship wage to the same amount, otherwise the university could be sued under Title IX.

    Now, I think universities are gun shy with respect to Title IX. The actual language allows for equivalent or proportional spending, but universities have worked hard to make it equal spending (even at universities where the men outnumber the women) to avoid messy court cases over “equivalent” or “proportional”. But I don’t think that’s going to change, which will cause this proposal to simply not be adopted.

    I think the proposal is otherwise workable and even laudable, but I don’t see how to get universities over their Title IX fear.

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  20. Jared Thompson says:

    So this is obviously a large issue of interest now and most certainly for the years to come as the universities continue to make more money off of their athletes. While a change is definitely in order, many of the ideas suggested are overboard. There doesn’t need to be a free-market economy or a much larger sum given to the athletes. That being said the athletes do deserve more money and often go much under recognized for their contributions to the university. What I suggest is that they have ruling allowing additional sums to be given to athletes that contribute greatly to the university. This additional scholarship would be given after the athlete has gone and preformed for the university as not to taint the traditional recruiting process but would recognize the athlete for it’s contributions.

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  21. sally says:

    let’s not forget about those colleges that are subsidizing athletics via student fees. why do students have to take on more student loan debt to subsidize their ncaa team? surely they would benefit more from lower debt loads rather than supporting mediocre teams. if college athletics is so important to the ncaa, then they should spend some of that tournament broadcast $$ to support the smaller d1 teams rather than exploiting the students and student athletes,

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  22. Scott P. says:

    If you pay players, universities lose their tax-exempt status as non-profits. They will then pay tax on every dime in revenue, from whatever source, from the athletics program to donations to the scholarship fund to tuition proceeds.

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    • Seminymous Coward says:

      Why do you think paying players would cause universities to lose their tax-exempt status? They pay their other employees.

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  23. M Wade says:

    Facilities costs are not factored into these calculations, nor is the demonstrable improvement in skill level that results from these facilities combined with coaching, conditioning, nutrition, etc. Nor are the federal requirements that colleges and universities offer sport opportunities to all students. These types of zero-sum calculations do not even work in the business world: why are so many paid minimum wage, allowing the CEOs and CFOs to earn two orders of magnitude more? If each minimum wage worker did not bring in many times his/her hourly wage, then the business would not be profitable.

    It would be better if the NBA, like MLB, established a minor league if money brought in during a season is the only criteria on which to base arguments for and against the existence of school teams.

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  24. Ben says:

    I love the proposal. Let’s stop with the hollow NCAA rhetoric about student athletes. Some are, but, please, some aren’t.
    One major hitch is that we have to also acknowledge that a lot of these student athletes who are being used to make money for their schools are also being developed in a fairly cheap minor league system for pros. Pay an athlete all you want, do it above board, keep your receipts. Then when a big league team drafts one of your players they repay you for the “stipend” you provided that player beyond the value of the scholarship.

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  25. Armando says:

    Has anyone considered the possible effect this would have on the spectators as far as viewership? Would some people stop watching because the players are now paid? Would more people watch? Would there be no significant difference?

    I think it would be interesting to ask that question.

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  26. meredith says:

    I think that college athlets should just be happy that they were talented enough to recieve a generous scholarship. No one should be payed to play a sport in college, especially when there is such a large number of students who can not afford to attend college. Athletes are amateurs and should not be paid. they will have time for that later in life.

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  27. Ja says:

    Jared Thompson, I really like your idea.

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  28. Ja says:

    meredith, i respectfully disagree, in the major DI-A sports…many are not really amateurs/student athletes anymore…grades were secondary as to why they got in and are not the school’s priority once they are there, the scholarships are now not guaranteed necessarily for 4 years, and they travel and spend more time on the fields and in airports than your typical amateurs. Times have changed, i.e. in big-time college basketball and football.

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  29. Justin Davis says:

    Great article with some exceptional ideas. The thought of a free market in collegiate athletics as described here seems to be a very valid option.

    The major issue here is the distinction between practical ideas and “best” ideas. I agree that a free market as describe here would be a potential “best” idea. However, the practicality of it must also be considered within the social, regulative, and institutional constraints that are already in place. The author(s) discus two of these major issues in the article – media contracts and NCAA big school leverage. However, they base the recommendations of free market outside the realm of realism given these constraints.

    The true question is what incremental and effective changes can be proposed that would be economically beneficially that would also be acceptable to parties with the voting stake in this scenario. I’m interested in what “true” ideas are out there for effective change propositions.

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  30. greg says:

    You could also stop making university level athletics a serious thing (outside of the US it really isn’t that serious) and just replace it with professional athletics and a non-insane more competitive and market based approach like in the European sports leagues? Most athletes in big sports shouldn’t pretend to have to get an education to play competitively.

    The utterly bizarre way sports leagues have developed in the US still baffles me. No relegations/promotions? Are you kidding me? I find the idea there isn’t a progression or regression to be made a bit insulting. A team should be able to be set up starting at the basic grassroots amateur level and theoretically advance to the highest league or that the worst team or two in any league doesn’t face demotion.

    At least the one thing about the US college sports thing is they don’t up and move to a city that offers them a better deal and rename themselves.

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  31. Jamie Scharf says:

    This has been an issue that college basketball should have corrected by the 2000′s before college athletes were getting paid on the outside. With that being said, I still think college athletes should be paid on some sort of scale or the one proposed in the article above. This should happen because during march and april they are the most watched athletes in america and deserve some kind of pay. The article also mentioned that the NCAA has a 10.8 billion dollar deal. That’s a lot of money. The NCAA needs to sort this out before it gets even worse.

    Jamie Scharf, Tulane University: Freeman School Student

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  32. Adam says:

    Why do you assume Olidapo should be paid something near 737,000? Water has infinite value to me, but I don’t pay much for it..

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  33. Francesca says:

    I agree with Courtney. The purpose of college athletes and the sports that they pay isn’t to bring in money for themselves, it is to show their passion for the game that they play for a school that they love. If college athletes were getting paid, there’s a very good chance players who really love the game won’t come around as much because their spots will be taken by athletes who just want to receive more than a scholarship.

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