Category Archives: Pay-For-Play

NCAA Tables Stipend for Student Athletes

The NCAA announced yesterday that over 125 schools have called for an override of the legislation that would give schools the ability to provide a $2,000 stipend to student-athletes, which is enough to suspend the legislation until the NCAA convention in January.

The NCAA’s press release on the matter says the main reasons schools cited were: “how quickly it was implemented, perceived impact on competitive equity, application of the allowance for student-athletes in equivalency sports, and implications for Title IX.”

In January, the Board can proceed in one of three ways. First, it can choose to do nothing, which would keep the suspension in place until an override vote. Second, it can choose to eliminate the rule. Or, third, it can alter the proposal, which would create new legislation that would require a vote and would be subject once again to a 60-day override period.

Nearly 10,000 prospective student-athletes signed National Letters of Intent during November’s early signing period. Any allowances offered in writing to those prospective student-athletes will be honored. However, prospective student-athletes signing during signing periods in February and April cannot be offered the additional monies unless action is taken at the January meeting that allows the legislation, or similar legislation, to go forward.

Why College Athletes Will Never Be Paid

Today is the first in a series with Ruling Sports on the NCAA presidential retreat currently taking place. There are three major issues on the agenda: finances, academics and integrity. Today I’m posting on the financial discussion. Tomorrow, Alicia Jessop of Ruling Sports will write about academic issues, and Friday both Alicia and will post about integrity issues.

Yesterday, NCAA President Mark Emmert met with over 50 university presidents in the first day of a two-day retreat. The topic of the day was finance and it seemed there was a genuine desire to work toward revising NCAA regulations to allow for scholarships that cover full cost of attendance. To coincide with the discussion, I showed you how much it would cost athletic departments to increase scholarships to cover cost of attendance.

“There was an absolute, complete consensus that we would never move to pay-for-play. No one, including me, believes that paying student-athletes is even remotely appropriate in the collegiate model. We talked directly about that and there’s not a single president that I’ve ever met that thinks that’s an appropriate thing to do and certainly not this group here.”

Why the firm rejection to the idea of paying players? Perhaps because it would change the entire landscape of college athletics. I’ve been working through a chapter in my upcoming book, Saturday Millionaires: why college athletes will never be paid and other uncomfortable truths about college football, and I want to share with you something I’ve explored that I think effectively ends the discussion on pay-for-play (if Title IX wasn’t enough).

No one can say for sure, but somewhere not far beyond cost of attendance is employment status, either as an employee or as an independent contractor. The definition of “employee” varies according to various federal acts and also state legislation. It’s unlikely a court, Congress or the National Labor Relations Board would find a student athlete is an employee based on a scholarship that covers cost of attendance, as many academic scholarships and other financial aid cover up to cost of attendance. However, any amount paid over that amount could surely be used to make a strong case that a college athlete is an employee. 

If a court, Congress or the National Labor Relations Board ruled college athletes were employees, a host of new issues arise, as do costs. In addition to the compensation provided to athletes, as an employer the athletic department would have to pay the following for each athlete: Social Security at a rate of 6.2% on the first $106,800 of compensation (in 2011), 1.45% for Medicare, with no cap, federal and state unemployment tax and worker’s compensation insurance, which varies in expense by state by averages 2-3 percent. 

 The real cost, however, is in the athletic department losing its tax exemption under Internal Revenue Code Section 501(c)(3). Currently, athletic departments (which are generally a separate legal entity from the university), athletic foundations/booster clubs and bowl games enjoy tax exempt status because they “promote amateur athletics,” an exempt purpose under the Code. If college athletes were compensated and found to be employees, revocation of this tax-exempt status would surely follow.

This would also be the case if college athletes, instead of being compensated by the athletic department, were allowed to profit from endorsements. It would only take a finding by the Internal Revenue Service that these athletes were no longer amateurs (ad I’m sure they’d hate to add another revenue source). And if college athletes are no longer amateurs it’s not just athletic departments who lose their 501(c)(3) status, it’s bowl games as well. 

In addition to the taxes each athletic department would have to pay on any income, they’d likely lose large amounts of revenue as a result of donors no longer being able to make tax-deductible contributions. How would that impact athletic departments, which rely heavily on donor contributions to survive? A CFO at one FBS school told me a “very conservative estimate” would be athletic departments losing 50% of their current donations. I polled ten athletic department executives in total and the range was 25-50 percent. 

Not only would donors no longer be receiving a tax deduction for their donation, an important reason for donations, but they could be paying for the pleasure of donating to the university, because their donation could now be considered a gift. The Internal Revenue Code prescribes a gift tax on any transfer of property (including money) for which something of equal value is not received in return. Ticket-related contributions would likely be immune to the gift tax, at least partially up to the fair market value of the ticket, but any portion that is currently tax-deductible would no longer be.

Other donations for which nothing is received in return would be subject to the gift tax, payable by the donor. The Internal Revenue Code allows for gifts of up to $13,000 to be tax-free (according to 2010 rates), so the largest decline would probably be in gifts above that amount for endowments and capital campaigns. Gator Boosters, Inc. tells me approximately $2.5-2.7 million of last year’s contributions were from gifts totalling over $13,000 for endowments or capital campaigns.

For an idea of the impact reduction in contributions would make, first consider that contributions are generally a larger source of revenue than conference distributions and NCAA March Madness combined.

Another area where expenses would be affected by a loss of tax exempt status would be capital costs. Currently, most athletic departments use tax-exempt bonds to finance renovation and construction costs. The interest on tax-exempt bonds is exempt from federal tax, and sometimes from state and local tax. In addition, the interest rates are generally lower than commercial lending rates.

If the university were a tax-exempt entity, it could issue the bonds, or be the beneficiary of an issue, and build athletic facilities. However, that could impact a university’s ability to build academic facilities. There is a limit to the amount of bonds that can be issued, based on revenue stream, before the university’s rating is impacted.

Combining the added cost of obtaining commercial loans for facilities and no longer being able to solicit tax-exempt donations could cost an athletic department tens of millions of dollars each year, on top of the cost of compensation for the new employee athletes.

The school isn’t the only one with new expenses. With compensation come expenses for athletes. Not only will they be taxed on the new income, they’ll also now be taxed on the value of their scholarship. It is unlikely the scholarship would fall under the exception for work-related education, which requires what it implies, that the education be related to the work. Hard to argue you need classroom education on sociology in order to play college football.

In my book, I detail examples of costs to universities and students. In some scenarios the student-athlete would owe 50-150% of his new compensation in taxes (before any deductions or credit), because he’s also be taxed on the value of his scholarship.

And don’t forget, if college athletes are employees, there’s the possibility of collective bargaining, lockouts and strikes, as I detailed last month.

Is it a certainty that it would all play out like this if student-athletes were paid above and beyond cost of attendance? No, but it’s a possibility – one that’s far too risky for college athletics.

As I’ve said many times before, it’s not as simple as deciding tomorrow that student-athletes should be paid.

What Would Cost of Attendance Scholarships Cost?

It has been widely reported that both Jim Delaney, Commissioner of the Big Ten, and Mike Slive, Commissioner of the SEC, have made statements supporting the increase of scholarships to cover cost of attendance. Currently, athletes on full scholarship receive free tuition, room and board. Cost of attendance is often described as the amount necessary to cover all of a full-time student’s reasonable expenses for the year. It would cover things like gas or other transportation costs and laundry money.

Each school individually determines its cost of attendance. Some use figures from the federal government and some use student surveys to determine the amount. There’s also variance for expenses like health insurance or a computer, if the school requires students to have a computer. For example, University of Florida includes the cost of a computer and related equipment in its cost of attendance figure:

Computer costs built into student budgets are “annualized.” This means the figure is derived from one year’s monthly costs for purchase or lease of equipment (including printer, modem/ethernet, CD ROM drive) and annual software purchases/upgrades. These costs are figured over a two-year period.

Florida determines the transportation cost by not only calculating local transportation costs but also the cost of “three round-trips to Miami per two semesters”. Book costs are calculated “with 25% of books purchased used at 75% of new book price, and assuming resale of 50% of texts at 50% of cost.”

Housing is also a consideration when calculating cost of attendance. Obviously this figure is much higher at a school located in an expensive city like Los Angeles than one in Bowling Green, Kentucky.

One concern in raising scholarships to cost of attendance is the opportunity for schools to artificially inflate the figure to gain a recruiting advantage. This could be eliminated by creating some sort of standard for calculating cost of attendance.

The potential for artificially inflating the figure aside, cost of attendance increases would be considered a part of the athlete’s scholarship. The Athletic Financial Assistance requirement of Title IX requires that scholarships, both in terms of the number of scholarships and the value of scholarships, be allocated proportionately in accordance with the number of female vs. male athletes. Thus, increases in scholarships to cover cost of attendance would essentially be necessary across the board in the athletic department, with athletes in every sport being treated equally. Football isn’t treated differently just because it’s oftentimes the only profit-producing sport. Title IX doesn’t distinguish between sports based on profit.

This is where it starts to get expensive for athletic departments. At SEC Media Days in July 2011, Commissioner Mike Slive noted the difficulty some institutions would have if scholarships were increased to cover cost of attendance: “We recognize that this proposal may be a financial hardship on some, yet at the same time economics cannot always be the reason to avoid doing what is in the best interests of our student athletes.”

Only five of the SEC’s twelve member institutions are self-sustaining. That means that right off the bat over half of Slive’s members cannot afford to pay increased scholarship costs in their current budget.

USA Today recently posted figures showing the cost of increasing scholarships at each university. However, these figures are based on an average of in-state cost of attendance and out-of-state cost of attendance, so they’re not exact:

School Cost Per Scholarship Total Cost
SEC
Alabama $3,940.00 $1,020,145.00
Arkansas $3,576.00 $835,354.00
Auburn $5,432.00 $1,352,514.00
Florida $3,290.00 $826,119.00
Georgia $3,272.00 $813,419.00
Kentucky $2,610.00 $664,405.00
LSU $2,880.00 $715,824.00
Mississippi $6,008.00 $1,299,230.00
Mississippi State $4,800.00 $1,096,080.00
South Carolina $6,844.00 $1,678,080.00
Tennessee $6,482.00 $1,581,738.00

South Carolina, who would incur the most expense according to USA Today’s loose figures, already takes in over $2.1 million in student fees to balance its athletic department budget. If you were the AD, where would you get the extra $1.7 million for increased scholarships? As non-athletes to pay it via student fees? That seems absurd. Ask the university to cover it? According to the University’s audited financial statements, its operating expenses already outpace its operating income by $192.2 million. It takes state and federal appropriates and income from investments and endowments to get its financial statement back into the black.

How about eliminating sports? Cutting men’s indoor and outdoor track and cross-country, tennis and swimming would produce just enough savings to cover the $2.1 million in additional cost of attendance costs. Unfortunately, it would also put South Carolina below the required number of sports for Division I. If they had to cut one or more women’s programs, it could put them out of Title IX compliance.

Or, maybe it’s as simple as increasing football ticket prices.

Mike Slive said economic detriment to some members isn’t a good excuse for not looking into increasing scholarships to cover cost of attendance. So, if you were the athletic director at one of the seven SEC institutions that’s not self-sustaining, how would you find the money to cover this new expense?

You can see USA Today’s full charts on cost of attendance here.

Related pieces on BusinessofCollegeSports.com:

Sports: The Best Paid Internships For College Students

I’m often asked why I am not in favor of paying college athletes. It’s simple: they already get a pretty sweet deal. Note: I’m talking about just the athletes on full scholarship, and particularly college football players.

While I’m busy paying back over $1,000/month for the next 26 years for both my college and law school education, college athletes on full scholarship graduate with zero student loan debt.

One of the arguments I hear most frequently is that college athletes can’t get jobs like other college students. Maybe not, but I think they have the best paid internships of virtually anyone on campus. As a student, I interned for two law firms, for the WTA Tour, and for a judge. While I received invaluable career training, I still have those pesky student loan payments. The same is true for students who want to work in radio, accounting or dozens of other fields. Most do internships for little or no pay and perhaps school credit. Which means in the latter situation the student is actually paying for their internship in the form of tuition for those credits!

Meanwhile, the athletes on campus are getting paid anywhere from $56.25 to $83.25 per hour, at least that’s the calculation Jay Paterno came up with for Penn State’s student athletes. That’s not counting the value of a degree and their future earning power, or the value of the world-class strength and conditioning training or medical treatment they’re receiving.

A Division I strength and conditioning coach tells me he would charge at least $60 per hour if he were training in a private gym. He says in a group situation it would be $30/hour for each person at the absolute minimum. He tells the minimum number of hours per year a football or basketball player would spend training is 124 hours, with 145 hours being very possible. That would make the range of value anywhere from $3720 (124 hours x $30 discount rate) to $8700 (145 hours x $60 rate) for strength and conditioning training alone. And that’s if each workout is only an hour. Double those numbers for two-hour workouts.

Now that we’ve taken a glimpse at what a student-athlete would pay in the private sector for all he or she receives, let’s look at what an athletic department actually spends on each student athlete. Using the University of Florida’s audited financial statements, I have broken down some of the items the athletic department pays for on a per student basis using Florida’s figure of 547 student-athletes for the 2009-2010 school year:

Scholarship $14,810.00
Meals over break, postseason and training table meals $1,552.00
Training Room $5,359.00
Office of Student Life (career and academic counseling and support for athletes) $3,615.00
Strength  & Conditioning and Equipment Rooms $2,458.00
     TOTAL $27,794.00

That’s nearly $30,000 per student-athlete the athletic department writes checks for each year. Not included in the above is team travel, coaching salaries, compliance staff salaries, facilities (construction, improvement and maintenance), marketing, or administrative expenses and salaries, all of which are necessary in order for the athletic department to operate so each student-athlete can compete in his/her sport. Those numbers would greatly increase the amount spent per student.

My chart above also doesn’t include the world-class medical treatment received when a student-athlete sustains an injury. For example, renowned doctor James Andrews is a team doctor for both Alabama and Auburn. Dr. Andrews has performed surgery on famous professional athletes like Drew Brees, Michael Jordan and Roger Clemens.  

A friend who works in college athletics recently told me about a trip he took to visit a Division I football practice. He described the lavish breakfast buffet set up for the players (which included a carving station – we’re not talking about the powdered eggs and dry cereal you get at the local hotel breakfast buffet), the indoor practice facility to protect players from the heat, the world-class weightlifting equipment and the smoothie bar where athletes could get some refreshment between workouts. Tough life, huh? And this wasn’t even at what I would consider a top Division I football program. This athletic department isn’t even on the self-sustaining list

So why is public sentiment so strong that college athletes deserve to be paid above and beyond what they’re already receiving? The problem is the amount of money proponents of paying athletes believe each athlete is bringing into the school. However, this is not limited to college athletics. Plenty of interns do valuable work for companies. For example, during my time at one of my law firm internships, I spent months pouring over discovery. I flagged the documents that eventually led to the plaintiff settling the case for$2 million. The law firm’s cut was roughly $600,000. I received nothing but the experience. I believe that experience helped me succeed in law school and boosted my resume so I could obtain other jobs in the legal field as I continued down my career path. The value of most internships is in the experience, not the paycheck.

College athletes play for one of three reasons: (i) experience and exposure for a future career in the sport, (ii) a free education, or (iii) because they love to play. If it’s the first reason, they’re essentially doing an internship, just like I did and many other college students do each year. Many internships are unpaid, regardless of how much money the company makes. Athletes on full scholarship are getting tuition, room and board on top of access to some of the best facilities, strength and conditioning staff, medical treatment, academic support and sometimes far better lodging and dining than other students. Sounds like the best paying internship I’ve heard of.

Why then has the debate over paying college athletes reached an undeniable roar? Likely because of posts like this, where I showed you the profit made by the top football and basketball programs. Fans see those numbers and find it shocking that athletic departments are banking that kind of cash while the athletes go unpaid. Let’s not forget that football or basketball or any other profit-producing sport (of which there aren’t many others) is just one unit of an athletic department. Just like the Coca-Cola Company funds Mr. Pibb even though Coca-Cola is its best-seller, an athletic department uses funds from football and other profit-producers to fund golf and swimming and baseball.  

All that being said, I’m not completely opposed to paying athletes when there is a direct correlation between them individually and the school making money. If there’s a way to compensate them for jersey sales and other uses of their likeness without running afoul of Title IX, that makes sense to me. The rest of it is a lot of indirect correlation that can’t be measured. There might be one football player on a team who gets the most media attention, but no one football player gets a team to a bowl game or convinces Nike to sign a multi-million dollar contract with the school.

I’d also be in favor of allowing them to work (which the NCAA currently regulates) to earn extra money, but you have to find a way to allow it without opening the system up to abuse by boosters and other interested parties who overpay for a “job” or “internship” that doesn’t really exist. Skip Oliva at Saturday Down South had a great idea in a futuristic piece he set in the year 2021:

“It also helped that the National Football League, after years of ignoring the problems with its de facto developmental system, took an active role in changing college football. “The big question was always, ‘Do you pay the players?’” ACF’s Meyer said earlier this week. “What we eventually realized was, it’s not whether you pay the players; it’s whether you maximize their professional educational opportunities. And that’s when the NFL stepped in by creating the Spring League.”

Since 2016, the NFL Spring League has provided ten-week internships for college upperclassmen and recent graduates to play an exhibition schedule in NFL cities under the direction of longtime pro coaches. “The kids get paid a stipend for the internship without altering their ‘amateur’ status within ACF,” Meyer said, adding, “It provided a necessary safety valve to relieve the pressure built up under the NCAA.”

For more on this topic, you can read my explanation on why Title IX presents a serious roadblock to paying college athletes. Also, I’ll be posting something in the next week or two about the resources available for student-athletes who are struggling to get by, including the funds I mentioned in yesterday’s post about March Madness money (which, as a sneak preview, include funds for things such as attending family funerals or completing your degree after eligibility or after injury).

Collective Bargaining, Lockouts and Strikes: The Unintended Consequences of Paying College Athletes

Yesterday, my friend Lisa Horne over at FOX Sports published a really interesting piece on how paying college athletes could lead to them being classified as employees and capable of collective bargaining. Horne interviewed me for the piece several weeks ago, and I’ve been eagerly awaiting its publication.

As Horne says in her article, “If the rules-makers can’t stop a kid from trading pants for tattoos, how can they expect to prevent an 18-year-old — with maybe $100 in his checking account — from listening to a union rep’s lure of riches?” She makes an excellent point. If student-athletes were classified as employees, there’s no reason to believe they wouldn’t form a players association and collectively bargain for everything from safer working conditions to their share of the revenue pie.

And they would have every right to do so as employees. But can you imagine the impact of a strike or lockout in college football? It would make the NFL lockout look like child’s play. As I said in Horne’s article, every Saturday an average of 5 million fans pack Division I stadiums. Compare that to just 1.1 million on any given Sunday in NFL stadiums. Add in the economic impact to each city on gameday, which for top programs is in the tens of millions of dollars, and the numbers are staggering.

Increasing scholarships to cover cost of attendance is not going to trigger a reclassification of student-athletes as employees. However, any pay over that very well could. Here’s how it might go. Let’s say college athletes are being paid some amount, any amount, over cost of attendance. One or more players decide schools, conferences and/or the NCAA are violating antitrust laws. Essentially, antitrust laws disallow business practices that discourage competition or restrict an employee’s ability to make a living. So, for example, players could sue over the requirement that they sit out one year when transferring. Similar issues in professional sports have been considered by courts such as the franchise tag in the NFL and the reserve clause in Major League Baseball.

Restraints such as not allowing a player to reach free agency for a specified number of years are only allowed in professional sports because they’ve been collectively bargained. The product of collective bargaining between an employer and unionized employees is protected by the non-statutory labor exemption.

So, back to our scenario. One or more players sues a conference or the NCAA for a restraint like the rule regarding transfers. If players were classified as employees (which could be determined in a suit like this), it’s highly likely the court would find this to be a violation of antitrust laws. Much like we’ve seen in the history of each professional sport, the players would form a players association and collectively bargain these issues with the NCAA, assuming the NCAA was still the governing body for collegiate athletics. If not the NCAA, it would be whatever governing body we have for collegiate athletics.

What would collegiate athletics look like then? Maybe there would be a salary cap for each athletic department or even each football program. Players would likely get a share of licensing revenue. Health insurance and maybe even post-career benefits might be covered by schools or the governing body. Since schools would be receiving less revenue than they currently receive, they’d likely have to cut sports that don’t turn a profit in order to make the finances work, which generally means any sport outside of football and men’s basketball. And remember, Title IX still applies. Women have to have similar opportunities. This is true even if you take football out of the NCAA. As long as football is still associated with the school, Title IX (a federal law) applies.

Another area where you begin to see the system doesn’t work is when you talk about having a draft or trading players. Those things wouldn’t fit in collegiate athletics. It might be contrary to what you think, but I would imagine most players have an opinion about where they want to go to school. One that’s much stronger than say a prospect in the MLB draft who wants to play for his hometown team. Brett Hundley at UCLA is said to have chosen UCLA for its pre-med program. Because many of these athletes are taking advantage of the academic opportunities afforded to them, it doesn’t make sense to have a draft or allow trades. What if they ended up at a school that didn’t have their major?

None of this is to say that a system couldn’t be created that worked. However, it’s not as easy as simply deciding tomorrow that college athletes should be paid. There are a number of ramifications to that decision, from figuring out how to comply with Title IX, to finding the money in the majority of athletic departments who aren’t self-sustaining, to the myriad of issues that arise if college-athletes are reclassified as employees.

How Title IX Relates to Paying Players

I’ve previously written about some of the impediments to paying college athletes. One of the roadblocks I mentioned is Title IX.

Most of you know Title IX requires comparable treatment of women when it comes to collegiate athletics, and a great many of you also know about the so-called three-prong test for compliance. What some of you seem to not know, however, is that the three-prong test only covers one of three requirements for Title IX compliance.

The three requirement areas are Participation, Athletic Financial Assistance and Treatment of Athletes.

Let’s start with the three-prong test many of you now, which falls under Participation. This area basically measures the opportunities for female vs. male athletes. Institutions can show they comply with this area by meeting one of the following prongs:

  • Proportionality: the institution can show that it offers opportunities for females and males based on their respective enrollment numbers at the university.
  • History and Program Expansion: the institution can show that it has continued to offer new and additional opportunities as the needs of the underrepresented sex have risen.
  • Full accommodation of interests and abilities: the institution can show that the current offerings fully meet the interest level of the underrepresented sex.

The second requirement for compliance deals with Athletic Financial Assistance. The only express requirement under this section is that scholarships be allocated proportionately in accordance with the number of female vs. male athletes. There are two things to discuss here: (i) cost-of-attendance increases for scholarships, and (ii) other types of payment.

Here’s the bottom line for increasing scholarships to cover cost-of-attendance: if scholarships are increased to cost-of-attendance, as suggested recently by Big Ten Commissioner Jim Delaney and SEC Commissioner Mike Slive, they’ll have to be increased for all student athletes in order to stay in compliance with this requirement.

Ohio State already pays over $15 million back to the university for grants-in-aid. Could they afford a larger number? Sure, although it would mean pulling even more money than they already do from boosters or interest on their endowment, or it could even mean choosing to cut some of the non-revenue sports, most likely men’s sports. 

But what about a school like Western Kentucky? They already spend $5.6 million on grants-in-aid, and it takes $8.2 million from the University to balance their budget. How do they afford to pay players?

I use Western Kentucky as an example because I have their budget in front of me, but there are plenty of programs in AQ conferences who rely on assistance.  Virginia, for example, relies on over $12 million in student fees to balance their budget. Florida State? $6.9 million. How do those programs afford to pay players? And if they can’t find a way to afford it, how do they recruit against the programs who can?

Another wrinkle with increasing scholarships to cover cost-of-attendance is that it might actually disadvantage the student athlete financially. I recently spoke with a member of a compliance department who explained the situation like this:

If you took the federal guidelines for financial aid, schools are not allowed to award a student beyond their COA.  

But currently, a full scholarship student-athlete with an COA of say $20,000 and a full athletic grant-in-aid of $17,000 would be able to receive an additional $5500 in Pell Grant (if eligible) bringing his/her total scholarship/financial aid package to $22,500 without being in violation of federal law. Pell Grants are excluded and can allow a student to go over COA. Now if schools offered a 100% COA athletic scholarship, the same student would only be able to receive $20,000. They would have a shortfall of $2,500. In order to maximize this for the “good of the student-athlete” you would have to reduce the 100% scholarship in order to award the student his/her entitled Pell Grant.
 
This works differently with other grants, scholarships or loans. Under the same scenario but with a student who is not Pell Eligible, they would only be able to receive additional financial up to the COA.

For those who aren’t familiar with Pell Grants, they do not have to be repaid by the recipient.

What if players are paid in some other fashion outside of their scholarship? In the eyes of Title IX, it’s all really the same. The Office of Civil Rights has previously offered this interpretation with regards to boosters or other donors who donate funds for specified sports: a school cannot use earmarked funds as an economic justification for discrimination. The school can honor the sport-specific designation for such donated funds, but it still must comply with the proportionality requirement. It cannot dedicate  those funds to say football, throwing the proportionality out of whack, and then say they had to do so because the funds were earmarked. The excess funds that cannot be applied simply have to be put aside for the future. 

Similarly, those types of funds cannot be used to provide greater benefits to male athletes than female athletes under the next requirement: Other Program Areas.

Other Program Areas basically looks at how athletes of both sexes are treated in terms of facilities, support and benefits. The following eleven criteria are looked at in their totality for each sex:

  • Locker Rooms, Practice and Competitive Facilities: this factor is pretty self-explanatory. It looks at the facilities provided for both practice and competition from the locker room to the playing surface to practice facilities.
  • Equipment and Supplies: again, pretty self-explanatory. The quality, amount, availability, etc. of equipment and supplies will be reviewed.
  • Scheduling of Games and Practice Times: this factor looks at everything from opportunities provided for practice, competition, pre- and post-season to the time of day practices and competitions are held.
  • Publicity: this covers everything from the publications produced for each sport to the resources devoted to promoting each sport.
  • Coaching: this factor encompasses everything from the number of coaches for each sport to the expertise of those coaches, their compensation, etc. When compensation is considered they look to a number of factors, so don’t get carried away with the fact that football and men’s basketball coaches tend to make more. Not only are there a number of things considered under just this factor, but this factor is only one of eleven that are viewed in their totality.
  • Travel and Daily Allowance: this factor is another one that comes into play in the debate over whether athletes should be paid. Not only are the monetary figures considered, but also the length of stay before and after a game or competition.
  • Academic Tutoring: this factor considers the availability of tutors for men’s and women’s programs, the qualifications of those tutors, the compensation provided to them, the number of athletes tutored per session, etc.
  • Provision of Medical Training Facilities and Services: everyone from medical personnel to athletic trainers are considered under this factor. Also included is weight training and conditioning facilities. Expenses and the qualifications of such personnel are all reviewed. 
  • Provision of Housing and Dining Facilities and Service: this one is self-explanatory but covers everything from the type of housing provided, the number of people per room, the laundry services available, parking spaces allotted and housekeeping services.
  • Recruitment of Student Athletes: under this factor there must be equal opportunities to recruit for coaches of both male and female athletes. Monetary expenditures are reviewed as well as the overall treatment of athletes in the recruiting process.
  • Support Services: this factor reviews the administrative-type services provided to each men’s and women’s sport. 

Hopefully you can now see why Title IX provides an enormous road block to paying college athletes. Let me remind you that Title IX is a federal law, not an NCAA regulation.

Problems with Paying College Athletes

Heisman Trophy Winner Cam Newton

I recently attended a conference where I heard a very intelligent attorney contradict himself over the course of an afternoon. His diametrically opposed opinions are ones I think are not uncommon amongst college football fans. Early on in the day, he admonished college athletic departments for relying on direct institutional support and state government subsidies to in order to operate in the black. Later that afternoon, he made the case for why college athletes should be paid.

I’m not sure you can have it both ways.

The first question I ask people when they say college athletes should be paid is: where is the money going to come from? If you’re unaware, the NCAA released data showing that only 14 programs are turning a profit without having to rely on institutional support (like student fees or a check cut directly from the university coffers).

Although the NCAA did not list the 14 schools turning a net profit, Notre Dame is one of them. Athletic Director, Jack Swarbrick, has revealed that Notre Dame actually pours money back into the college’s coffers, to the tune of about $10 million in 2009. LSU tells me they are also one of the 14, having sent about $8 million back to the university last year.

Other schools that have been confirmed to be part of the 14: Alabama, University of Missouri, University of Texas, University of Florida, University of Tennessee and Ohio State University, and Nebraska. BYU’s athletic director also recently confirmed that BYU has operated in the black for the past three years.

So, where is the money supposed to come from to pay these athletes?

Even if we could get past this issue, I see a number of other problems. Here are some of my questions:

How do you decide which athletes are paid? Is it just in revenue-producing sports? Is it every athlete playing in those sports or just the elite?

Here is the second big problem. Actually, it’s probably the first, but I chose to focus on the issue of finances first. You cannot pay players without invoking Title IX. Safely assuming that any pay-for-play plan would pay male football and basketball players, you run into huge issues with federal law. More money will have to be devoted to women’s sports and it’s highly likely it’s men’s sports outside of football and basketball that will suffer. And, again, where is all this money going to come from?

Even if Title IX weren’t an issue (and let me just say, without revision to these federal laws, college athletes will never be paid), there are plenty of other problems standing between college athletes and their big pay day:

How much do you pay players? Is it one set amount for every athlete no matter the sport or the school in order to keep things fair? At least within a sport I think it has to be the same, otherwise schools with more money will have the advantage.

If you let athletes get paid for endorsements (which could avoid the first problem I outlined above), will it give some programs an unfair advantage? Playing for Alabama or Ohio State is bound to give you more endorsement opportunities (and more lucrative ones) than playing for Tulsa.

I see the same problem with allowing athletes to profit off merchandise sold with their name or number, like jerseys. Playing for Florida is going to give you greater opportunity to make money off merchandise than playing for Western Michigan.

Another way to pay player and avoid the first problem I outlined is to allow agents to pay players. Darren Heitner over at the Sports Agent Blog recently wrote a post advocating the lifting of all regulations against agents paying players. Heitner believes there would be no harm to the athletes from this situation and that it would allow the market to dictate what a player is worth.

Aside from the initial concerns I have regarding the influence these agents would have and the types of promises they could elicit from players about being paid back in the future, I have another bigger concern. Could these agents pay a player to choose a specific school? And what’s to stop a big car dealership in Athens from slipping money to an agent so he can encourage a player to attend the University of Georgia? (Thanks to @BrotherhoodSpt for pointing me to his blog on the subject, which included a link to Heitner’s piece.)

Will sports that pay athletes have to break from the NCAA? I think so. Tack on new administrative costs as those sports are forced to form new leagues to manage their sport.

There are far too many serious questions to answer for me to jump on the pay-college-athletes bandwagon. Without even getting into whether college athletes should be paid, I just don’t see a scenario where college athletes can be paid without allowing the gap to grow between the have and have-nots.