It’s Time to Pay College Athletes

The Texas A&M Aggies opened their 2013 football season on Aug. 31 without the most captivating player in the game. Three days earlier, the National Collegiate Athletics Association (NCAA) and Texas A&M had suspended Johnny Manziel, the sophomore quarterback who last season became the first freshman ever to win the Heisman Trophy, for the first half of the Aggies’ home opener against Rice University. Though the NCAA and the school determined that Manziel had not personally accepted money when he signed autographs earlier this year, they nonetheless slapped Manziel on the wrist for failing to realize that trinket brokers would surely profit from his signature.

Like most college-sports critics, Manziel responded to this punishment by mocking it. He threw for three touchdown passes in the second half of A&M’s 52-31 blowout victory over the Owls in front of almost 87,000 fans at Kyle Field in College Station, Texas. He mimicked signing an autograph while jawing with an opponent and pointed toward the scoreboard in the fourth quarter, earning an unsportsmanlike-conduct penalty and another benching, this time from his coach.

Manziel’s alleged crime and televised punishment have teed up a debate that has been simmering for decades but is now more intense than ever. Why shouldn’t a player worth so much to his school, to his town and to the college-football brand be able to sign his name for money, just as any other celebrity has a right to do? How much longer can everyone else make money from college athletes like Manziel while the athletes themselves see their cash compensation capped–at $0? According to a recent study, if college football operated under the same revenue-sharing model as the NFL, each of the 85 scholarship football players on the Aggies squad could see a paycheck of about $225,000 per year. Manziel is surely worth a great deal more.

The uncomfortable question has surfaced just as college sports are booming. Thanks to plush television-rights deals, like the 12-year, $3 billion contract the Pacific-12 conference signed with ESPN and Fox in 2011, vast revenues will keep rolling into university coffers. Coaches, admissions offices and university alumni operations profit from the stars.

All kinds of people beyond campus are also making money from this lopsided system. Football-game days in particular drive college-town economies. Souvenir hawkers, bars, burger joints, hotels, ticket brokers, stadium vendors, parking attendants and others rely on home games for revenue. According to a 2012 study from Oxford Economics, a global research firm, a season’s worth of Texas A&M home football games generate $86 million in business for Brazos County, where A&M is located.

But the players with the talent remain out of the money simply because a group of college presidents, athletic directors and conference commissioners set their wages at zero. “Universities are quick to lecture society,” says Charles Clotfelter, an economics and public-policy professor at Duke University and the author of the probing 2011 book Big-Time Sports in American Universities. “But here is a situation where we’re not living up to our best selves.”

The historic justification for not paying players is that they are amateur student-athletes and the value of their scholarships–often worth in excess of $100,000 over four years–is payment enough. But a growing number of economists and sports experts are beginning to argue for giving athletes a fair share of the take. The numbers are too large to ignore. College athletes are mass-audience performers and need to be rewarded as such. “The rising dollar value of the exploitation of athletes,” says Roger Noll, a noted sports economist from Stanford University, “is obscene, is out of control.”

How We Got Here

The athlete is the most available publicity material the college has. A great scientific discovery will make good press material for a few days, but nothing to compare to that of the performance of a first-class athlete.

No statement better explains why American colleges are so invested in modern-day sports–and why college athletes have a right to a paycheck. It was written in 1929, part of a Carnegie Foundation study on American college athletics. A college, said the authors, “wants students, it wants popularity, and above all it wants money and always more money.”

The Morrill Land-Grant College Act of 1862 and post–Civil War industrialization sparked the U.S.’s unique obsession with college sports. “As large public institutions spread into sparsely populated states, the competition for students grew fierce,” says Allen Sack, a business professor at the University of New Haven who has written extensively on college-sports history. A new sport, a bastardized version of soccer and rugby that was uniquely American–football–happened to be catching on at this time, and it emerged as a tool to draw students, and spectators, to campuses.

The game professionalized rapidly. The University of Chicago hired former Yale football star Amos Alonzo Stagg as coach in 1892: the university president told Stagg to “develop teams we can send around the country and knock out all the colleges.” The 1894 Harvard-Yale football game, for example, generated $119,000, according to the New York Times. That’s nearly $3 million in today’s dollars. By 1905, President Theodore Roosevelt felt compelled to step in to “save” college football from its then violent format. Chicago dropped football in 1939.

Few schools followed. Today college football is a booming profit center for many institutions at the top of Division 1, the highest level of NCAA sports, and is a growing portion of the regional economy in college towns like Boise, Idaho; State College, Pa.; College Station; and South Bend, Ind. According to the most recent federal data, the University of Texas football team netted a profit of $77.9 million in 2011–12, on $103.8 million in revenue. Michigan made $61.6 million from football, on $85.2 million in revenue. Any business would kill for those profit margins.

In fairness, many college athletes are compensated–with an athletic scholarship. This attractive carrot drives today’s intense competition in youth and high school sports. With tuition costs escalating, these scholarships are a serious meal ticket and for many families are the only way their children can afford to go to a four-year school.

Most scholarships are revokable, so if an athlete doesn’t perform well on the field, he can, in a sense, be fired from college. But academic work for some athletes is secondary: top men’s basketball and football players spend 40 hours per week on their sports, easily. During football season, former Georgia tailback Richard Samuel, who earned an undergraduate degree in sports management in 2011, said he was an “athlete-student,” not a “student-athlete,” as the NCAA wants people to believe. “In the fall, we would spend way more time on sports than academics,” says Samuel.

Players are essentially working full-time football jobs while going to school; they deserve to be paid more than a scholarship. Because even full-ride athletic scholarships don’t cover the full cost of attending school, athletes are often short a few thousand bucks for ancillary expenses on top of tuition, room and board, books and fees: money for gas, shampoo and, yes, maybe a few beers. Some athletes are on only partial scholarship or are walk-ons still paying full tuition.

While many players scrimp, their head coaches don’t. Average salaries for major college football coaches have jumped more than 70% since 2006, to $1.64 million, according to USA Today. For major-conference men’s hoops coaches who made the 2012 March Madness tournament, pay is up 20%, to $2.25 million, over that of coaches who made the 2010 tournament, according to the Journal of Issues in Intercollegiate Athletics. “It’s nuts,” says Michael Martin, chancellor of the Colorado State University system, who was chancellor at Louisiana State University from 2008 to 2012. LSU hired Les Miles to coach its football team in 2005; Miles now earns $4.3 million annually. “It’s time for people to step up and say, We think this is the max that a football coach ought to get, and we ought to stick to it,” says Martin.

It is harder to calculate the exact value of the p.r. dividend that big-time college athletes deliver to their alma maters. College presidents and conference commissioners are fond of calling sports the “front porch” of their campuses. Schools would have to spend millions of dollars to buy the advertising and media mentions that a team making regular appearances on ESPN or the networks provides. There are countless examples of schools’ seeing big jumps in applications after a high-profile championship season–or even a near miss. For example, in the two years after Butler University’s basketball team made its first Final Four run in 2010–the Bulldogs made a repeat appearance the following year–undergraduate applications rose 43%. And don’t imagine for a moment that universities harvest their athletes’ celebrity for only four years. After a truly memorable championship season, veterans are brought back to campus on a regular basis for reunions and tributes, sometimes for decades. The work never ends.

Aggie star Manziel was under fire for potentially seeking to recoup just a sliver of the economic value he helps create. The son of an oil-rich family who played his high school ball in Texas hill country, Manziel exceeded even Texas-size expectations when he nabbed the Heisman in his first year. NFL rules prohibit him from going to the pros, giving him no options to sell his skills. So he was forced to return to College Station and earn more money for the Aggies. Manziel can be as mischievous on the field, where his twitchy legs and laser arm make fools of opposing defenses, as he is off it; he’s a party animal and makes no apologies for enjoying his life. The NCAA investigated Manziel because ESPN reported–inaccurately, says Texas A&M–that he signed his autograph for money, which is against the rules.

The real question is, What’s the problem with that? “That’s crazy to me that it’s not allowed,” says Minnesota Vikings running back Adrian Peterson, who starred at Oklahoma. “Actors, actresses–these people can sign things and get paid for it. How come this kid can’t? How come a kid that’s at a high level, that’s going to be offered a big amount of money, can’t sit down and be like, ‘Damn, this is my decision.?'”

Manziel has not commented on any aspect of the NCAA charges. But his case has exposed some of the minor hypocrisies of not paying players at the big-league schools. The NCAA looked silly when Jay Bilas, a veteran ESPN analyst, former Duke basketball player and vocal critic of the NCAA, took to Twitter to point out that although schools cannot sell a player’s jersey with his name on the back, if you typed Manziel into a search box on ShopNCAASports.com a No. 2 Texas A&M jersey pops up, available for up to $64.95. (Manziel wears No. 2.) Bilas’ critique went viral; the NCAA temporarily shut down the site, saying it would no longer sell individual college and university merchandise there but only NCAA-branded stuff.

A court case may also shake up college sports. Four years ago, former UCLA basketball star Ed O’Bannon sued the NCAA, video-game maker EA Sports and a licensing company after realizing that his likeness was being used in a video game, while he saw none of the royalties, years after he graduated from college. NBA and NCAA legends Bill Russell and Oscar Robertson joined the suit, which reached the class-certification stage this summer. Though a federal judge in California hasn’t stamped the case as a class action, she allowed the plaintiffs to add current players to the complaint, which significantly raises the potential damages for the NCAA. The plaintiffs are seeking a cut of the licensing revenue tied to video games, as well as a much richer revenue stream: the money schools receive from broadcast-rights contracts. If the former and current players somehow prevail–or even reach a settlement–college jocks will receive some kind of payday. “I think in this day and age, as opposed to yesteryear, the concept of what they consider amateur basketball is gone forever,” says Robertson.

A Modest Proposal

The time is right to give schools the option to share their rising sports income with college athletes. Not every school would–or could–participate. Only the 60 or so schools in the power conferences, which have the football and basketball revenues to support such payments, would likely even consider such an option. With conferences and schools set to see record television payouts for the next decade and beyond, the idea of paying players is no longer just fodder for academic debate. It’s an ethical imperative.

Schools could either pay players whatever schools want in a free market, or salaries could be subject to regulation. In reality, universities probably aren’t going to go from $0 in compensation, where they are now, to allowing an unlimited amount. Salary caps exist in the NBA and NFL; they’re fair game for college sports too.

Here’s how things might work. All athletes would be eligible for payments in addition to any scholarship. But most schools would pay only football and men’s basketball players, since those sports produce the bulk of the revenues. A Southeastern Conference (SEC) school like Alabama could pay 50 of its players up to a limit of $30,000 a year. The best players would get near the maximum while others would get less; it would be up to each school to distribute the funds as needed. And schools could pay athletes in other sports, of course. A star baseball player, or a women’s basketball player at a powerhouse like Connecticut, could also get a paycheck. But the total amount any school could pay out would be capped at $1.5 million. Experts think this is a conservative number given the millions in revenue that sports and TV deals provide. Any cap won’t placate the free-market supporters; $30,000 per year, however, is a huge improvement over nothing.

Plus, athletes can make money in other ways. Universities should also give athletes at least the right to secure sponsorships, star in a commercial or, yes, offer their signatures for money. The schools could demand their cut too. “Lifting the restriction on athlete commercial opportunities is a great step toward compensating them for the value they generate,” says Warren Zola, assistant dean of the Carroll School of Management at Boston College and an expert in college-sports business and law. “And it doesn’t cost the schools anything.” Since schools would cap athletes’ salaries, it would be only fair that they not cap sponsorships. Players can give schools the right to reject sponsorships on moral grounds. No beer deals. Also, schools could require that players remain academically eligible in order to receive any kind of payments. Schools would in effect be adopting the Olympic model. If a gold-medalist like Apolo Ohno wins mainstream appeal, he’s free to cash in on his name.

Sponsorships could especially benefit female college stars, who don’t have access to the same professional opportunities that men do. Sponsorships for star players shouldn’t upset team dynamics on campus. Deals among Olympic athletes are uneven, but such economic disparities don’t seem to hamper Team USA’s success.

Reforming college sports won’t be simple. Paying only men, for example, could face a challenge under Title IX, the federal law requiring gender equity in sports. Salary caps require collective bargaining, which means athletes would likely have to unionize; some states offer limited bargaining rights for public employees. These challenges, however, aren’t an excuse to keep a broken system. Smart people can figure out a way to make fairness work. “Amateurism is under attack,” says Gabe Feldman, director of Tulane University’s sports-law program. “There’s an incentive for schools to redesign the model themselves rather than have the Congress or the courts do it for them.”

Paying players has risks. Richer schools could buy up talent and disrupt competitive balance. Alumni and fans could be turned off by an even more professionalized game. Paying players could make even more of a mockery of education. Right now, for example, many athletes cluster into easy majors in order to stay eligible on the field. If they’re making good money while still in school, they may not care one lick about learning. “I just don’t think we ever want to go down the path of creating an employee-employer relationship with student-athletes,” says Bob Bowlsby, commissioner of the Big 12 conference. “This is higher education, and it always ought to be higher education.”

But too often, it’s not. The federal graduation rate for football players at Big 12 school Oklahoma, for example: 38%. (Federal rates count athletes who transfer out or leave school for the pros as nongraduates; the NCAA’s more generous “graduation success rate” for Oklahoma football is 47%; Oklahoma’s federal rate for the entire student body is 65%.) At some schools, it’s difficult to know what graduation really means: at the University of North Carolina, for example, grades were changed and bogus classes were offered for athletes and nonathletes alike. College sports are already impure; paying players can’t make things much worse. At the highest levels, the games are mass entertainment.

As for the less crucial worry about competitive balance, it doesn’t really exist in college sports right now since the best players are already going to the top schools. SEC schools have won the past seven national football championships. Nearly every top-ranked high school football recruit goes to schools in the SEC, Atlantic Coast Conference, Big 12, Big 10, Pac-12 or Notre Dame. Payments for basketball players wouldn’t harm the NCAA’s crown jewel, the March Madness men’s basketball tournament. We could still see Cinderella. The kids who wind up at, say, Lehigh University go to Lehigh because Duke doesn’t deem them good enough for a scholarship–and certainly wouldn’t deem them good enough for a scholarship plus more. So if Lehigh could upset the big stars from Duke back in 2011, they could still upset the big stars from Duke tomorrow, even if the Duke guys got some extra cash.

Most important, player payments would force schools to operate in an environment in which they’re honest with themselves. Sports are a big business, and we value the exposure and revenue that it brings to our schools. But let’s stop saying one thing–“we care for our student-athletes”–while doing another: preventing them from benefiting monetarily. “Living a lie,” says Richard Southall, director of the College Sport Research Institute at the University of South Carolina, “is hard to do.”

Within higher ed, there’s clearly momentum to give athletes at least a little more than what they’re getting now. “I think there is change likely on the horizon,” says Nebraska chancellor Harvey Perlman, who is chairman of the Bowl Championship Series oversight committee. The NCAA membership has stalled a plan giving schools the option to offer a $2,000 stipend to cover expenses beyond tuition, room and board, books and fees. Many schools at the lower levels of Division 1 said they couldn’t afford it.

But at this point, the power football conferences seem determined to offer at least some kind of extra. “I think we will find a way to provide all scholarship student-athletes with the full cost-of-attendance scholarship,” says Perlman. As for anything above that, don’t expect radical change, but universities’ leaders are at least discussing it. “I don’t think there’s any doubt about that,” says Martin, the Colorado State chancellor who was recently chancellor at LSU. “With the O’Bannon thing hanging out there, we’re going to see a great deal more of a conversation about this than we’ve had before. Because we have to fix it one way or another.”

Athletes are starting to speak up too. Chris Brunette, an offensive lineman from the University of Georgia, is pursuing an MBA during his final year of athletic eligibility. Though his pro prospects are strong, Brunette knows he can suffer a career-ending injury at any point. “The NFL is not promised at all,” says Brunette. “For so many college athletes, at no other time in our lives will we be as valuable. To be able to capitalize on that would be great.”

When he first arrived on campus in 2009, Brunette says, “I thought a scholarship was more than enough.” During his freshman and sophomore years, Brunette opened a business on the side giving $5 haircuts to his teammates to help pay expenses. (Brunette checked with the NCAA compliance officer before launching his dorm-room barbershop, just to be on the safe side.) Georgia football–which started the season ranked fifth in the country–generates $75 million in annual revenues.

“I don’t want to seem like a troublemaker or greedy,” he says. “We’re marketing tools for the programs but can’t see the proceeds. In this country, it just seems backwards.”

The U.S. has enjoyed a long, deep love affair with college sports. It’s about time we finally paid for it.