Cam Newton, Amateurism and the NCAA: What's Wrong with Paying Them

Don't ever take a fence down until you know the reason it was put up.--G.K. Chesterton

In the wake of the Cam Newton controversy and AgentGate, a number of people have talked about paying players "fair market value" for taking the field. This series will look at why they're wrong, why amateurism is important, and how to fix the problem.

Part I of III: The Problem with Paying Players

The story that roiled college football for the entire 2010-11 season started simply enough. It was July 15, and the season was a month and a half away. The (Raleigh) News & Observer had a story about one of the expected contenders in the always wide-open ACC.

The NCAA is investigating two University of North Carolina football players in connection with possible improper involvement with sports agents, according to multiple sources familiar with the situation.

Within days, two of the expected contenders for the SEC -- Alabama and dark horse South Carolina -- were also roped into the burgeoning investigation of agents' ties to college players. Unrelated stories about agents and players at Florida and Georgia also emerged. Before the season had begun, the complicated relationship between colleges, players and amateurism was shaping up to be one of the off-field issues of the year.

Then, the bombshell hit. The father of superstar quarterback Cameron Newton, who had seemed to be the epitome of what college football and amateurism was all about, had reportedly asked for money from Mississippi State before he and his son decided that Newton's future was at Auburn. Deserved or not, the logical extension was that Auburn had decided that it would put a smile on Cecil Newton's face instead.

And all of that brought us to where we are now: A Heisman Trophy winner that could become "a former Heisman Trophy winner" with one story from a contractor for Cecil Newton's church; a UNC program that had once been looking forward to its best season ever instead trying to pick up the pieces after losing several players for at least a game and ushering an assistant coach through the door; and yet another round of questions about the NCAA's rules on amateurism. A season so notable for so many things could still go down in college football history as one more interesting for its investigations instead than for its on-field match-ups.

[Editor's Note: The NCAA later announced that it had found no evidence that anyone associated with Auburn offered or gave illegal benefits to Cam Newton, and the case was closed.]

The major question looking forward, of course, is what to do about all of this. (Note: we're excluding moronic ideas from self-serving agents.) And one of the main arguments -- one that drives me to distraction -- is the notion that college football players should be able to earn their "fair market value" during their time in college. Not because I think that paying college football players is bad in and of itself, or that pegging those salaries to fair market value would be the end of civilization. But it is using a Howitzer to kill a fly -- a Howitzer that also manages to destroy the tradition and espirit de corps that makes college football unique.

We don't need to end amateurism in college athletics. The definition needs to be modified to fix some longstanding inequities. That is not a distinction without a difference, and pretending that it is could undermine college football, not fix it. There is a case to be made for giving some extra money to players in an effort simply to put them on par with other college students. But that doesn't mean we have to drown the sport in money and corrode the link between school and team that lies at the heart of college football.

The economics of college athletics

Part of the problem boils down to a view of the economics of college athletics that is simplistic in the extreme, one that includes something that is factually incorrect (college athletics departments are sitting on buckets of money that could instead be used to pay players) and one that is an illogical extension of that (college athletics departments and the NCAA are not "really" nonprofits).

First, there's the misperception that the massive amount of money in play in college athletics means that athletics departments are simply hoarding profits. That's not true. Your average athletics department is run like a Wall Street bank during the height of the financial crisis -- it takes in a lot of money but spends even more. The median athletics department in the Football Bowl Subdivision took in $32.3 million in 2009, according to the NCAA. It spent $45.9 million. The remainder came from support from the college and student fees. Seven of the 120 FBS athletics departments were profitable from 2004-09.

Now, there are a lot of reasons for that, some of which we'll discuss later. But it's important to know that college athletics departments are losing money, and that allowing players to make "fair market value" could tip even more of them into the red.

Let's argue, for example, that you simply want to play a college football players an average of $1,000 a semester. (That is nowhere near the figures tossed around by advocates for fair market value, but that in some ways makes it work even better to illustrate the point.) That $1,000, multiplied by 85 scholarship players and then doubled to account for two semesters a year, turns into a $170,000 hit per athletics department. That might not be much to a school with a $100 million athletics department budget -- but it would affect one with, say, a $22 million budget, right?

Before you think that this is a problem that would affect only Sun Belt teams, think again. In 2007-08, the year after its historic win against Oklahoma in the Fiesta Bowl, Boise State's revenues totaled $21.8 million. For comparison's sake, Vanderbilt brought in $44.5 million -- more than twice as much. Texas topped the list with $120.3 million.

Now, we've had a lot of debates on this site and around the larger college football fan base about how good Boise really is. But to argue that the Broncos are just half as good as Vanderbilt would be ludicrous. Which gets to the point that the earnings of an institution are not always tied to how "good" their teams are. Alabama football is going to make more money in an 8-5 year than Boise is going to make in a 13-0 season, because of better television deals, a larger fan base, etc. That's not wrong, it's just the market. It's also one of the reasons why paying players hundreds of thousands dollars is such a bad idea.

Because you start to make things unsustainable for smaller athletics departments -- even those like TCU or Boise State, where they play pretty good football. Some have argued that this doesn't make that much of a difference because college football already has a class system in place -- the reason that Alabama has fielded a lot more SEC Championship teams than Ole Miss in recent years. But the point here is not that we would be creating a system of haves and have-nots; it's that we would be obliterating the ability of some schools to compete at all. And those schools that would no longer be able to compete would not be put in that position by any merit system. They would be in that position because of their conference or the size of their alumni and fan base.

The more money you layer onto that system, the more athletics departments you would be taking out of the picture. Pay players an average of $10,000 a semester, and you're talking about $1.7 million a year on football alone. Suddenly, maybe even a school like Vanderbilt has to take a second look, because the lack of profitability becomes unsustainable.

Profits and non-profits

Which brings us to another point opponents of amateurism like to make: The NCAA is not a non-profit-- just look at the huge amounts of money pouring into college sports. Which is simple-minded and nonsensical. The amount of money raised by an organization doesn't decide whether it's a non-profit or not. For example, the Red Cross' 2011 budget is $1.2 billion (give or take the current exchange rate). To be clear, I'm not arguing that college sports' value to society is on par with the Red Cross, though in some ways both are charities. (The vast share of the money generated by college sports goes either to scholarships or facilities. Scholarships provide the ability for students who otherwise wouldn't to go to college. That's charitable, whether you like the vehicle for that charity or not.)

Look at the money the administrators and like make, the opponents might then say. The point? The CEO of the Red Cross made $500,000 when she took the job in 2008, and no one is saying that the Red Cross is a for-profit organization; any criticism is instead pointed at whether the head of a nonprofit organization should be making that much money.

Again, all of that is not just to issue a blanket defense of all spending by college sports departments or the salaries of administrators. But it is to say that the NCAA's status as a non-profit organization is not defined by the amount of money pouring in; it's defined by what the Association does with that money. To say that there is waste and exorbitant salaries in a large, human institution is redundant, because large, human institutions are all marked by waste and exorbitant salaries.

College athletics departments, though, plow the lion's share of their money into scholarships or improvements to the facilities that all athletes use. That might not be quite as personally profitable for individual athletes as paying those athletes, but it still benefits them in very tangible ways.

Which is how college athletics differs from professional athletics. Unlike NFL or NBA teams, the primary function of a college athletics department is not to make money, but to provide college athletics and a route to education for college athletes. That often involves running at a deficit and using other revenues to make up the difference. (This is where the folks on the other side of the equation, like the Knight Commission, are also incorrect. Athletics is part of educating the entire person, so there's nothing inherently wrong with a department running a deficit.)

The scapegoating of Title IX

That financial gap is often explained away by scapegoating Title IX. Most of those arguments tell us more about the opposition of those making the arguments to Title IX than about the economics of college athletics.

If only we could get rid of Title IX, you see, the athletics departments wouldn't be losing money. Which is nonsense. The problem -- which isn't really a problem -- is that colleges also offer nonrevenue sports to both genders. Only at a few schools is baseball a revenue sport, if it's a revenue sport anywhere. That's even more the case for soccer or lacrosse or track and field, either for men or for women.

Now, if you want to oppose Title IX because you don't like the ideas behind it or are one of the devotees of the market as its own end, that's your right in a country of free and independent-minded individuals. But don't say it has anything to do with college athletes not getting paid, because it's simply not true as long as long as athletics departments fund nonrevenue sports for men.

The perception that it's women's sports that cause the problem also feeds the other part of the scapegoating: If we could just get rid of Title IX's requirement to treat all sports equally, we could finally get the money freed up to pay college football players, because they wouldn't have to be matched with payments to female athletes or offset with an increased investment in women's sports. But again, at the overwhelming majority of schools with football programs, there's no money to be freed up. It's not that the athletics department can't afford the money to pay college athletes and spend the same amount on women's sports, or that they can't find a way to offset the payments under Title IX; they don't have the money to pay athletes even if they could do so without balancing the effects.

The door to paying revenue athletes would not just be through modifying Title IX or channeling money away from nonrevenue sports -- it would be through destroying those sports wholesale. I know, that's a doom-and-gloom scenario that would never actually happen in the really world. Except that it already has. Cal decided last year to do away with baseball and three other sports programs, largely because it could no longer afford to field those teams. For the devotees of some Darwinian version of society where everything should be subject to the whims of the marketplace, that's how the system should work. But for those who have some greater view of humanity, where the market must only be a means to an end and not an end itself, that's a bit unsatisfying. The idea of a major member of one of the best college baseball conferences in the country no longer having a baseball program would be laughable if it weren't so tragic.

The problem with the market mindset is essentially the flip side of the diagnosis of the Knight Commission and its ilk, in which the fact that universities are losing money on athletics is seen as some great danger to higher education. It's not. College athletics has no more responsibility to be profitable than do student media departments (and a good deal of them aren't), Student Governments or any other other extracurricular activity. I would argue that it also has no more responsibility to be profitable than the physics department. The vast majority of athletes -- even on college football teams -- are "going professional in something else," in the words of the annoying television commercials, and there's nothing wrong with universities helping to fund their sports and their scholarships, and little else.

--

NEXT: The Value of Amateurism