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The Logistics of Paying College Athletes

Since I was traveling yesterday and didn't have a chance to write something new, I decided to pull something out of my pre-TSK archives again for a weekend discussion. Enjoy.

This week saw plenty of discussion about the BCS and how fair the system is monetarily. Eventually, if you follow the money arguments about college athletics far enough you inevitably end up on the topic of whether or not players should be paid.

In the wake of the OJ Mayo scandal last year, I wrote about the what I saw as the seven biggest issues that will have to be addressed when it comes to paying players. The purpose was not to take a side one way or the other on the issue, but to lay out all of the challenges that any player paying scheme faces.

Personally it does seem unfair that player compensation (scholarships, meal plans, room and board, etc) is so small compared to athletics department income (at least in the revenue sports). To get to a place where college athletes get paid beyond what they are now though is a long and tortuous road, as I tried to lay out here.

Just remember: for the NCAA, image is everything. Whatever system is set up will have to have the image of being equal to both large and small schools, even if it breaks down in the details. That’s why the Patriot League still gets an auto-bid to the NCAA tournament. True, the BCS does not have the appearance of being "fair," but it's also not run by the NCAA either.

If the NCAA touches it, the appearance of fairness is an absolute requirement.

Issue 1: Scholarships

Scholarships, and their accompanying benefits like housing and meal plans, are the compensation that college athletes currently receive. They have real value, and the money to pay for them comes from somewhere. Just because athletes can’t convert their meal plan allowance into cash to buy a TV doesn’t mean scholarships don’t count as compensation for playing.

Will they count as a part of the salaried athlete’s total compensation package? After all, a scholarship to FIU and a scholarship to Stanford are drastically different in value. If so, then expensive schools will have a disadvantage because they won’t be able to pay as high a salary. If not, then expensive schools have an edge since they will be offering a more valuable total package than less expensive schools.

For simplicity’s sake, I’ll assume that scholarships won’t count towards the payment. Athletes don’t pick schools by trying to get the greatest amount of free tuition, and the NCAA doesn’t seem to mind right now that scholarships have unequal value. I still would expect the issue to come up in any serious internal NCAA debate.

Issue 2: How much?

This issue is the most critical. The professional leagues set salary caps based on total league revenue, but college athletics are a lot less centralized. Plus, the professional clubs have only one team and sport to worry about.

TV contracts in college are done with conferences, not the NCAA, so each conference starts off with a different amount of TV revenue. Add to that the differing sizes of fan bases and drastically different sizes of stadiums and arenas, and you have a huge financial puzzle to try to solve.

The NCAA won’t let some conferences pay more than others, because that would not be an equal system. It might go with a salary cap and floor, but some schools will have no choice but to pay the minimum while others take advantage by paying the maximum. With that in mind, how do you set the pay rate?

If you base it on the conference with the least ability to pay, then you get a large gap between revenues and player compensation at the big money makers and little has changed. If you base it on the conference with the greatest ability to pay, then you price out the little guys even more than what we have today.

Once you’re done figuring that out, how do you determine where to set the pay rate for each different sport? And how do you know which sport generated a hat or shirt purchase if it just has the school logo and nothing else on it?

Issue 3: Revenue Sharing

Revenue sharing does exist on some level in college football, since smaller conferences get a cut of the BCS money whether they had a team in the BCS or not. It will probably have to exist in a much bigger way if player salaries get approved.

The revenue sports provide the money that allows all other sports to exist. Even with football and basketball being generally profitable ventures, some schools’ athletic departments struggle just to break even. Others don’t even come close. If the NCAA is going to force teams to pay players on top of everything else, some sort of revenue sharing will have to occur.

The money disparity within even major conferences can be pretty large. The amount of money that Florida, Georgia, and Alabama can spend is significantly greater than what Ole Miss and Mississippi State can spend. Beyond that, I have a hard time seeing Jim Delaney wanting to allow any profits generated by his baby, the Big Ten Network, paying for player salaries at Bowling Green or Akron.

When a pro team doesn’t spend a lot of money, a new owner can purchase the team and spend more on players. You can’t tell a small university to suddenly expand its student base to bring in more athletic fees, graduate more future boosters, and better pull its weight in generating money. Let’s also not forget that colleges generally have to build and maintain all their own facilities; pro teams get city, county, and sometimes state taxpayers to pay for theirs.

Then you get the issue of donations. The big money schools make a lot of money off of donations. There’s no way whatsoever that the NCAA can take donation money away from one school and give it to another. How heavily do those gifts factor in the revenue sharing equation when divvying up TV money?

Issue 4: The Star Treatment

I don’t know if it would ever come up in real NCAA discussions, but I know a lot of fans have expressed an interest in having star players get more money than others. If the NCAA did talk about uneven play scales for players, it would probably get dismissed pretty quickly because that’s not equal for everyone.

I can’t imagine the schools supporting it either. Inevitably, someone will promise a pile of money for a high profile recruit. That will cause everyone to have to do the same to have a chance of landing the kid. Then, someone like Tim Floyd or Billy Gillespie will start promising money to ever younger athletes as they already have done with scholarships. I doubt many coaches will want to get into bidding wars over middle schoolers.

If you try to make pay adjustable based on performance, you would open a Pandora’s box of lawsuits. If Jimmy Benchwarmer is upset that he doesn’t get to play, he might suspect his lack of playing time is because the coach has secret deals ensuring levels of payment to other players. There have been many coaches in college football’s history that would do that very thing, and it would get very ugly if Jimmy’s dad is John Benchwarmer, Esq.

Issue 5: Pay All the Divisions’ Athletes?

How many divisions are going to have to pay players? Will I-AA football teams have to pay players too? What about the bottom of Division I basketball? Will Binghamton of the America East Conference have to pay as much as Wichita State of the MVC will? And will WSU have to pay as much as Duke will?

If the NCAA tries to make some sort of rule saying a program has to make a certain amount of money in order to pay players, there could be some interesting cooking of the books to avoid that threshold for schools that don’t want to pay players. Or, aspiring schools might fudge some numbers to appear above that threshold to get the recruiting benefits that come with paying players.

The NCAA already doesn’t spend enough on rule enforcement. I can’t imagine it wanting to spend a fortune on auditors too.

Issue 6: How Many Sports?

How many sports will the payments extend to? Football and men’s basketball are the obvious targets, but other sports could be revenue generators at other schools.

Until Bruce Pearl showed up, I’d bet that Tennessee made more money off of women’s basketball than men’s basketball. UConn probably makes a nice amount off of that sport too. However, most schools don’t make money off of women’s basketball.

Will only some schools have to pay their women’s basketball players but not other ones? If that happens, all of the best players will all sign exclusively with the schools that pay players. The barrier to putting together a successful women’s basketball program will have been significantly raised.

What about the non-revenue generating sports? It’s not the swimmers’ faults that thousands of people don’t flock to meets. Universities are non-profit organizations, so the usual rules of capitalism don’t strictly apply to them. And what if a school voluntarily wants to pay athletes in non-revenue sports? Will that be allowed?

Issue 7: Title IX

Title IX is the biggest issue, primarily because federal law is now in play. The law states:

"No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance."

That’s right; violate Title IX and you can lose federal funding. No university wants to play with that fire. A school can prove it is in compliance by passing any one of the "prongs" of the "three-prong test":

  1. Prong one – Providing athletic opportunities that are substantially proportionate to the student enrollment, OR
  2. Prong two – Demonstrate a continual expansion of athletic opportunities for the underrepresented sex, OR
  3. Prong three – Full and effective accommodation of the interest and ability of underrepresented sex.

The sudden new spending on player salaries in revenue sports – generally football and men’s basketball – would require a proportional increase of spending on women’s athletics to stay in compliance with Title IX. The alternative would be continuing to eliminate other men’s sports to help bring back balance.

Neither of those alternatives is appealing to universities. Even the most cutthroat football factories still do care about fielding teams in as many different sports as they can afford, but they are not going to want to have to pour huge sums of money into sports that don’t provide financial returns. Until and unless Title IX is amended to exempt football, paying players a salary is very unlikely to happen.

* * *

If anything, I hope I have showed that the issue of paying players is a lot more complex than just increasing stipends for football and basketball players. Plus, one of the reasons the BCS plus-one system was rejected was that it would make college football too much like a professional league. There’s plenty wrong with that statement, but "preserving amateurism" is a big deal for the NCAA and the conferences.

It certainly seems unfair that athletes in revenue sports bring in a disproportionate amount of money compared to the value of their scholarships. However, I honestly think we’ll see a college football playoff before we see college athletes get salaries. In other words, don’t hold your breath.