Anthony W. Miller
In recent days, there has been increased dialogue concerning the topic of compensating college athletes above athletic scholarships. The purpose of this paper was to discuss the NCAA and its member institutions’ exploitation of student-athletes. Amateurism and exploitation were defined and discussed in relation to NCAA Division I athletics. The evolution of intercollegiate athletics and the student-athlete was reviewed in order to better understand the motives for today’s exploitive practices. Using Wertheimer’s two arguments for the exploitation of student-athletes, it was demonstrated some student-athletes are victims of exploitation. However, after examining mutually advantageous exploitation and consensual exploitation, it was determined not all student-athletes are exploited. The NCAA and those responsible for setting student-athlete policy should discuss the implications of these conclusions.
**Key words:** college athletics, NCAA, amateurism, exploitation, student-athletes, athletic scholarships
Last winter, National Collegiate Athletic Association (NCAA) president Mark Emmert was asked by a group of sports media members about the possibility of paying college athletes. Emmert responded, “We can never move to a place where we are paying players to play sports for us” (Garcia, 2010, para. 9). “No, it will not happen – not while I’m president of the NCAA,” he later stated (“NCAA president,” 2011, para. 17). These comments sparked the reoccurring ethical discussion concerning the topic of amateurism and exploitation in college athletics. While many believe as amateurs, college athletes are receiving more than their fair share through athletic scholarships, others argue universities are exploiting their own student-athletes. The questions remain unanswered. Should college athletes be compensated beyond their athletic scholarships, and specifically, are the NCAA and its institutions exploiting student-athletes?
The questions involved in this discussion are unable to be answered with a simple “yes” or “no.” In order to knowledgeably discuss the subject, there first needs to be a foundational understanding of the basic terms of amateurism and exploitation. In addition, the relationship between the two terms and intercollegiate athletics should be clearly defined. A history of the evolution of college sports and the role of student-athletes over the last two centuries must be examined also. The author will attempt to use all of this information to answer several key questions related to the topic of paying college athletes in order to determine if student-athletes are being exploited and, if exploited should they be compensated above their athletic scholarships?
Surprisingly, studies have not demonstrated an overwhelming support for paying student-athletes above their athletic scholarships. Schneider (2001) investigated college students’ perceptions of giving compensation to intercollegiate athletes in addition to the standard grant-in-aids. Of the 458 students (275 males and 183 females from 1 Division 1 athletic conference) surveyed, only a slight majority (54%) of the students believed athletes should receive additional compensation. Nevertheless, it is a subject that has again (even recently) become a hot topic in college athletics.
#### Amateurism and Exploitation in Collegiate Athletics
When it comes to debating whether or not college athletes should be paid, the two most often used terms are amateurism and exploitation. Neither term is new to intercollegiate athletics. Actually, both subjects have been topics of discussion for the NCAA since its inception in the early 1900s (“History,” 2010). Today, these two words drive both sides’ arguments concerning paying and exploiting student-athletes.
##### Amateurism Defined
Simply put, collegiate amateurism refers to the fact the athletes do not receive remuneration for their athletic services. College athletes today are referred to as student-athletes. The governing body of college athletics, the NCAA, views these individuals as students, not as professionals or employees of their member schools. Thus, student-athletes are not currently monetarily compensated (Murphy & Pace, 1994). According to the NCAA, student-athletes’ participation in athletics is just another part of their entire education, not the primary purpose for attending college (Meggyesy, 2000).
Late in the 19th century, college authorities conceived this idea of amateurism in an effort to maintain schools’ educational integrity and middle- and upper- class standing by not technically paying athletes (Flowers, 2009). “A Gentleman never competes for money,” once wrote author Walter Camp (Flowers, 2009, p. 354). As sports’ popularity and revenues increased over the next several years, athletes were given incentives such as free room, board, and tuition. In the middle of the 1900s, the NCAA instituted its key piece of legislation, the Sanity Code, in an attempt to preserve amateur sports while still allowing schools to compensate athletes (Kahn, 2007). By including room, board, and tuition in grant-in-aids (i.e. athletic scholarships), schools were able to reward student-athletes without paying them directly. After the Sanity Code’s establishment of athletic scholarships, the term “amateurism,” not “professionalism,” would be united officially with college athletics (Byers, 1997; Flowers, 2009).
In addition to assigning a fixed amount to athletic scholarships, there are additional ways the NCAA continues to preserve the “amateur” label in collegiate sports. Although the NCAA and the schools reserve the right to use a player’s images and names for commercial purposes, no athlete may be endorsed by or receive any payment from businesses or corporations (Suggs, 2009; Murphy & Pace, 1994). Student-athletes also may not receive financial assistant in addition to their grant-in-aids or be paid for any work with private sports camps related to their sport (Byers, 1997).
##### Exploitation Defined
The biggest issue in the subject of paying college athletes is the idea the NCAA and its member institutions are exploiting student-athletes. Throughout the years, exploitation has been defined countless ways by individuals discussing various topics such as economic, politics, and sports (Wertheimer, 2008). For the discussion involving college athletics, exploitation should be defined as an individual gaining something by taking an unfair advantage of another individual (Wertheimer, 2007).
There are generally two arguments used to demonstrate the exploitation of student-athletes. The first is student-athletes, many of whom are making large amounts of money for their schools, often are not receiving any kind of legitimate, quality education. The second is compensation student-athletes receive in the form of athletic scholarships is not comparable to the marginal revenue products they individually generate for colleges (Wertheimer, 2007; Brown & Jewell, 2004).
Before examining further these two claims, some distinctions must be made. Wertheimer (2008) maintains there are several specific types of exploitation that apply to this discussion. The first, called mutually advantageous exploitation, refers to a situation where both parties, both the one doing the exploiting and the one being exploited, gain from the agreement. The second is referred to as consensual exploitation and involves an instance where individuals who are exploited have given voluntarily consent to the situation prior to the transaction. In situations involving these types of exploitation, it can be argued nothing morally wrong has occurred.
In most circumstances involving exploitation, the issue is not whether exploited individuals are making any gains but rather they are not receiving what they ought to receive. In other words, those being exploited are not getting what is considered fair (Wertheimer, 2008). In the example of the exploitation of student-athletes, the specific issue is “they do not receive an appropriate return on the financial surplus” they create for their universities (Wertheimer, 2007, p. 366).
#### The Evolution of Intercollegiate Sports and the Student-Athlete
The face of intercollegiate athletics has changed drastically in the last two centuries. What started as nothing more than student-organized competitions has turned into what has been described as a “sports entertainment enterprise” (Flowers, 2009; Meggyesy, 2000, p. 25). Students who once went to school only for an education and participated in these kinds of competitions in their free time now often attend these same universities solely for the purpose of participating in sports. In most situations, they end up devoting hundreds of hours to sports-related activities and end up becoming athletes first and students second. The end result is a system that uses students to generate millions of dollars for both the NCAA and its universities.
##### The Origins of Intercollegiate Athletics and the Student-Athlete
Modern intercollegiate athletics have their foundations in intra-collegiate competitions. Sports were largely an unknown on most college campuses until the early 1800s when college students began organizing their own class (e.g. freshman, sophomore, etc.) teams to compete against other classes. The popularity of these different competitions grew over the next 50 years to the point that by the 1850s, universities were forming their own intercollegiate teams. At first, school authorities frowned upon these seemingly frivolous and sometimes violent competitions. But by the late 19th century, American colleges recognized the prestige that came from winning intercollegiate contests and the visibility sports teams provided for the school were too valuable to ignore. As the popularity of intercollegiate sports grew, schools realized they could manufacture additional income by charging spectators admission to events. Prestige, visibility, and money – intercollegiate athletics would now be a permanent fixture on college campuses (Flowers, 2009).
The next conclusion drawn by colleges was obvious, and it shaped intercollegiate athletics into what they are today. How can a school garner more prestige, visibility, and money? Win more games. How can a team win more games? Get the best players. So in an effort to field the best teams, schools began accepting students who never would have been admitted previously to these institutions. In order to lure athletes, colleges started in the 1870s to offer both graduates and undergraduates financial assistance in the form of room and board, jobs, and even small cash considerations in exchange for their athletic services (Flowers, 2009). In response to the “dangerous and exploitive athletics practices of the time,” college authorities joined together in 1906 to form the Intercollegiate Athletic Association of the United States, which would later change its name to the NCAA (“History,” 2010, para. 1). In actuality, this new organization was intended to officially legitimize athletics in higher education and control athlete admission to and distribution amongst colleges (thus hopefully eliminating some of the questionable practices of several schools) (Flowers, 2009; Kahn, 2007).
With sports’ popularity growing and athletic revenues increasing, by the 1940s several schools were unashamedly paying their athletes (Kahn, 2007). Realizing amateur intercollegiate athletics were turning into professional athletics, the NCAA modified its constitution in 1956 to allow schools to offer grant-in-aid to any undergraduate athlete. In addition, the NCAA coined the term “student-athlete” (instead of “employee”) to describe those receiving athletic scholarships (Byers, 1997). The amateur code was officially established, and the student-athlete was born.
##### Modern Intercollegiate Sports and Student-Athletes
The current NCAA Division I intercollegiate sports program has evolved into a multi-billion dollar industry where many of the schools’ annual revenues reach above $260 million (Meggyesy, 2000). In addition to fielding teams in the money-making sports of men’s basketball, football, and ice hockey, schools also run programs for sports such as baseball, lacrosse, softball, soccer, swimming, volleyball, and wrestling (Kahn, 2007). Because these programs are not self-supported, they rely on revenues from the men’s basketball and football programs and often some additional state funding (Suggs, 2009). It is not uncommon for the coaches of Division I teams to earn several hundred thousand to several million dollars every year (Wieberg, 2011).
Researchers and economists who have studied intercollegiate athletics have described today’s NCAA as a cartel (Deschriver & Stotlar, 1996; Zimbalist, 2001). A cartel is defined as a joint group of members who create policies in order to promote the mutual interests of the members (Kahn, 2007). Koch (1983) argued the NCAA’s cartel behavior is manifested when it regulates the means of acquiring athletes, puts a fixed value on the amount given to student-athletes, controls the rights to televising athletic events, periodically distributes its profits to members, and enforces policy on its members. According to the NCAA, all of this is done in an effort to create equal opportunity for monetary profit, athlete distribution, and athletic success (Kahn, 2007; Koch, 1983).
The NCAA itself, a non-profit educational organization with 270 employees, has an annual budget of $32 million (Meggyesy, 2000). Each year, it distributes over $500 million to its member schools (Suggs, 2009). Nearly all of the money is collected from revenue generated by men’s basketball and football, specifically the television rights to men’s college basketball’s March Madness and football’s Bowl Championship Series. Just this past year, the NCAA signed a 14-year, $10.8 billion contract with CBS and Turner Sports to have the exclusive rights to show the men’s college basketball tournament (Wieberg, 2011).
History has demonstrated today’s universities recruit student-athletes for the purpose of helping sports teams achieve success on the playing field and thereby increase the school’s prestige and overall revenue. Using financial records from NCAA Division I-A universities as well as NFL and NBA draft data from 1995-1998, Brown and Jewell (2004) estimated a draft-quality college football player earns $406,000 in revenue annually for his school, while a college basketball player earns $1.194 million. Schools today treat student-athletes as more than just typical students (Suggs, 2009). They are given academic assistance, game tickets, clothing and equipment, medical treatment, weight and conditioning training, and money towards room, board, and tuition. A recent analysis by USA TODAY determined the average NCAA Division I men’s basketball player receives at least $120,000 in goods and services each year (Weiner & Berkowitz, 2011). But while these athletes are not living in poverty, the question still remains. Are student-athletes being exploited?
#### Are Today’s Student-Athletes Truly Exploited?
The 2011-2012 NCAA Manual states the mission of the NCAA is to protect student-athletes “from exploitation by professionalism and commercial enterprises” (2011, p. 4). Many would contend the NCAA itself is responsible for exploiting student-athletes. Their proof would hinge on the two previously mentioned arguments that many of these students are receiving neither a legitimate education nor fair compensation for their athletic services (Wertheimer, 2007). In addition to considering Wertheimer’s two arguments, the terms mutually advantageous exploitation and consensual exploitation also factor into this discussion.
##### Wertheimer’s First Argument
Universities’ educational practices are quickly called into question when college players make comments similar to the one made by University of Connecticut men’s basketball’s Kemba Walker. While being questioned this past March about his schooling, the junior basketball star said, “[Forty Million Dollar Slaves: The Rise, Fall, and Redemption of the Black Athlete] is the first book I’ve ever read” (Layden, 2011, para. 26). Often, there are times when athletes are put into either easier courses or courses whose professors are known to like student-athletes so athletes are able to achieve and receive higher grades (Zimbalist, 2001). In these situations, the argument is student-athletes (B) are being exploited by schools (A) because A is profiting thousands, sometimes millions, from B’s efforts while B is receiving nothing of lasting significance (i.e. a quality education) (Wertheimer, 2007).
In response to this argument, the question is whether student-athletes are forced into these positions. It should be determined if student-athletes are required to attend educational institutions with weak or questionable academics. The best schools are not available to everyone. Some athletes are only recruited by schools with poor academic records. Although players are not forced to attend one of those schools, some are financially unable to attend college without the help of an athletic scholarship. A student-athlete under such circumstances would be considered a victim of exploitation. As for an athlete who has his choice of the best schools and still selects a poor academic institution, it has been argued that although he was not coerced into attending a particular school, a teenager should not be expected to choose a school based on whether or not that school will provide him with quality educational opportunities. In this situation, a case for exploitation could also be made (Wertheimer, 2007).
It also must be determined if student-athletes are forced into classes or majors which result in them not receiving a quality education. Of course there are always the “low-ability” level students who struggle academically and really have little chance of ever receiving a college education (Wertheimer, 2007, p.369). However, there are situations where some students do not achieve academic success or graduate simply because they fail to give enough effort in their academics. In these specific examples, an argument for the exploitation of the low-ability student-athletes could be made, but it would be harder for this same argument to apply to student-athletes who do not make an effort academically.
##### Wertheimer’s Second Argument
The second exploitation argument is universities (A) are exploiting student-athletes (B) due to the fact B is not receiving fair compensation in relation to B’s generated surplus. This argument is harder to make because of the difficulty in determining the surpluses of NCAA Division I schools. According to NCAA president Mark Emmert, only 14 out of over 1,150 schools finished the 2009-2010 school year with a financial surplus (Garcia, 2010). But any surplus generated by colleges’ football and basketball programs are used to pay for coaching salaries, academic counselor salaries, and athletic facility renovations. In most circumstances, a portion of the money subsidizes schools’ other intercollegiate sports programs (Wertheimer, 2007; Suggs, 2009). Subsequently, very few schools show a surplus in the end.
In addition to the difficulty in determining universities’ financial surpluses, it is equally difficult determining nonfinancial surpluses. Dating back to the beginnings of intercollegiate athletics, the primary purpose for having these types of sports programs was the prestige and visibility they provided for colleges. Today’s winning sports teams are given hundreds of hours of media attention and television coverage. It is impossible to put a monetary value on the advertisement which each intercollegiate team or each student-athlete is creating for colleges (Wertheimer, 2007).
The answer to this question lies in determining what fair compensation is. At first glance, a $10-40,000 a year education in return for generating $400,000-$1.2 million seems anything but fair (Zimbalist, 2001; Brown & Jewell, 2004). But a teenager with no prior professional experience who receives the equivalent of $120,000 a year is uncommon in other professions. When asked about fair compensation for college athletes, Butler University men’s basketball player Matt Howard replied, “Forty thousand dollars-plus a year to play, that’s a pretty good salary for an 18-year-old who has no college education” (Weiner & Berkowitz, 2011, para. 6).
Determining what is fair becomes even more difficult when considering other situations. First, if athletes are exploited only when they do not receive fair compensation for the surplus they themselves create, then this means only a portion of a school’s student-athletes (in most cases, only football and basketball players) are being exploited and should receive compensation. Is it fair for the volleyball, baseball, and soccer players not to be paid while their fellow schoolmates, the male football and basketball players, are paid? After all, athletes in nonsurplus sports put in the same amount of time and effort into competing for their schools as do athletes in surplus sports. It is no fault of the athletes whose programs are not as popular in American culture as other programs (Wertheimer, 2007). Murphy and Pace (1994) replied to this particular argument with an example from the professional world. In business, do all members of a company’s team receive the same compensation? Is a secretary who works the same number of hours and works just as hard as the boss paid a similar wage? Of course, the answer is no.
Second, if colleges were to pay athletes, any surplus created by those programs would be used to compensate the athletes. Consequentially, many of the non-revenue generating programs would not have adequate funding to continue. Is it fair to those athletes to deprive them of an opportunity to compete collegiately and, for those who would be unable to financially afford school, an opportunity for a college education? On the other hand, requiring universities to use revenues to pay athletes may force schools to cut down some of the exorbitant salaries paid to some Division I coaches and other athletic department employees.
##### A Case for Mutually Advantageous and Consensual Exploitation
In this discussion concerning the exploitation of student-athletes, a case can be made for both mutually advantageous exploitation and consensual exploitation. Mutually advantageous exploitation occurs when A gains from B and B gains from A, leaving both parties in a better position than before the transaction (Wertheimer, 2008). Take, for example, a star high school basketball player from a low-income family who is recruited and signed by a renowned academic institution. He competes four years for that school. Along the way, he helps his team win over 100 games, reach 2 Final Fours, and win a national championship. After 4 years of education (worth a total of approximately $160,000) and instruction from one of the best coaches in the nation, he graduates with a college degree, is named as a NCAA All-American, and one month later is selected in the NBA Draft. Over the next 7 years, the former student-athlete signs 3 NBA contracts worth over $28 million, thanks in large part to the coaching he received while in college. In this example, both parties made gains which left them better off. It could be argued, therefore, no wrongful exploitation took place.
In other examples, athletes have been known to become student-athletes for the sole purpose of receiving expert instruction, media exposure, and training. As a result of those benefits, their future earning power increased (Kahn, 2007). Many of these elite athletes stay in college for only the required amount of time and then leave to become professionals. Again in such situations, both the athletes and the schools have entered into agreements which benefit both groups. Nothing morally wrong has occurred.
When an individual volunteers or gives informed consent to a transaction, it is referred to as consensual exploitation (Wertheimer, 2008). Prior to the start of a student-athlete’s collegiate career, the individual must agree to sign several eligibility forms. One of those forms is the NCAA Student-Athlete Form 10-3a (2010) that reads, “You affirm that you meet the NCAA regulations for student-athletes regarding eligibility, recruitment, financial aid, amateur status and involvement in gambling activities” (p. 2). A separate read and sign section of the same document states:
> You authorize the NCAA [or a third party acting on behalf of the NCAA (e.g., host institution, conference, local organizing committee)] to use your name or picture in accordance with Bylaw 12.5 including to promote NCAA championships or other NCAA events, activities or programs. (p. 4)
The NCAA is not attempting to deceive individuals by having student-athletes sign confusing forms so then the schools can make money off the athletes. Instead, they are presenting a clear, understandable agreement that essentially says, “In order to participate in intercollegiate athletics, you must abide by these terms.” Players must sign the agreement to become student-athletes, but no athlete is forced to sign the NCAA Student-Athlete Form.
There is a common perception athletes are required to attend college in order to become eligible for the professional ranks. This is not the case. The current NBA Draft eligibility rules state a player must be 19 years of age, and 1 year must have elapsed since the player’s graduation from high school (“Article X,” 2009). In the NFL, a player must be out of school for three years before he is eligible for the draft (“NFL Collective Bargaining Agreement,” 2006). In baseball, Major League Baseball teams can draft any player who has graduated from high school, while anyone in hockey who is 19 or older is eligible for the NHL Draft (“First-year Player,” n.d.; “Hockey Operations,” n.d.). Neither athletes of surplus sports nor those participating in nonsurplus sports are required to attend college in order to be drafted into professional sports. In most circumstances, the visibility which comes from playing for prominent sports programs causes most athletes to choose to attend college.
Even after knowing all the facts, the questions related to paying college athletes and the exploitation of student-athletes are difficult to answer. However, there is no doubt the current model for compensating college athletes is ethically questionable at best. If this were not the case, then President Emmert would not continue to make statements suggesting the necessity of exploring ways to increase the financial assistance given to student-athletes (Wieberg, 2011). Just last week, several NCAA conference commissioners began discussing ways to compensate their athletes above athletic scholarships. Conference USA commissioner Britton Banowsky said, “Unless the student-athletes in the revenue-producing sports get more of the pie, the model will eventually break down… [I]t is only a matter of time” (Schad, 2011, para. 3). When the current model does break down, the NCAA’s members will be forced to consider the topic of student-athletes’ exploitation prior to establishing a new model.
Going forward, the NCAA and its member institutions must address several ethical situations in order to avoid the continued exploitation of student-athletes. The first step is re-defining amateurism in college athletics. Currently, intercollegiate sports are amateur in name only (a practice continued today by colleges in an effort to avoid providing workers’ compensation and to continue eligibility for tax exemption status) (Haden, 2001; Murphy & Pace, 1994). The second step is deciding whom to pay. If it is determined only scholarship athletes in revenue-producing programs (i.e. basketball, football, and ice hockey) should be compensated, then the NCAA will have to be prepared to justify excluding some athletes, including the non-scholarship basketball, football, and hockey players (Murphy & Pace, 1994). Due to Title IX, which mandates equitable opportunities and benefits for women competitors, there is a possibility schools would be required eventually to extend remuneration to other student-athletes (Francis, 1993). The third step is determining what fair compensation is for student-athletes, a difficult task based on the information mentioned previously. The final step is choosing where to get the money to pay athletes.
Deciding where to get additional money opens the door to a vast array of ethical questions. Should the money made by men’s basketball and football be used to fund other athletic programs? Instead, should the money be used to pay the basketball and football players only? Will Title IX allow for only a portion of a school’s athletes to be paid? Are college coaches overpaid, or are their large paychecks justified by the prestige, visibility, and money they are helping to generate for their schools? If smaller schools are lacking the funds required to pay student-athletes, is it fair to raise regular students’ tuition prices to help cover costs (Schneider, 2001)? These are just a few of the questions which will have to be addressed.
Determining which student-athletes are being exploited is a difficult task. What is clear is both the NCAA’s current amateur rules and the questionable educational practices of some schools make it more likely for students-athletes to be exploited (Murphy & Pace, 1994). Deciding how to compensate student-athletes more fairly could potentially result in completely restructuring intercollegiate athletics. If the NCAA and its member schools truly desires to protect their student-athletes “from exploitation by professional and commercial enterprises,” then they will be forced to reexamine their own practices (2010-2011 NCAA Manual, 2010, p. 4).
### Applications In Sport
The topic of paying college athletes is one of, if not the most debated issues in collegiate athletics. Understanding the terms of amateurism and exploitation, a history of intercollegiate athletics, and how student-athletes are possibly being exploited may assist in helping to decide if NCAA student-athletes should be compensated above athletic scholarships.
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22. Schneider, R. G. (2001). College students’ perceptions on the payment of intercollegiate student-athletes. College Student Journal, 35(2), 232-241.
23. Suggs, W. (2009). Old challenges and new opportunities for studying the financial aspects of intercollegiate athletics. New Directions for Higher Education, (148), 11-22. doi:10.1002/he.364
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### Corresponding Author
Anthony W. Miller, MEd
4 Amity Lane
Greenville, SC 29609
Anthony W. Miller is a doctoral candidate at the United States Sports Academy. He is also a faculty member of Bob Jones University.
This past week it was announced that Mike McAdoo — a former football player at the University of North Carolina — is suing the university over the practice of “paper classes.” Such classes involved little or no academic effort and seemed to be designed to ensure that athletes maintained eligibility to play sports at North Carolina. Although this practice might have kept athletes on the field, it also — as McAdoo’s lawsuit alleges — may have dramatically diminished the value of the athlete’s education.
One can easily see that an athlete is not getting a good deal if he/she competes for the school but doesn’t receive the promised education. But let’s consider a different scenario. Let’s imagine the North Carolina scandal never happened and every athletes received all the education promised when they were recruited to the school. Did the athletes get a good deal if that happened?
In economics, a worker receives a “good deal” if they are paid a wage equal to the revenue the worker generates for the firm. When a worker gets a “bad deal,” economists say the worker has been “exploited.” Such a word can be quite inflammatory in public debates. But it is also a term used frequently in labor economics and it has a simple definition.
This past February I was asked about “exploitation” when I provided expert testimony at a hearing of the National Labor Relations Board. The hearing was called to decide whether or not the football players at Northwestern University could form a union (I was testifying on behalf of the players). During my testimony I was asked if football players were “exploited.” I responded that I thought they were, and my argument began with the standard definition of “exploitation”: A worker is exploited if the wage the worker received is less than their economic contribution to the firm. In terms of college sports, an athlete is “exploited” if the athlete generates more revenue than he/she is paid in terms of his/her scholarship and housing at the school.
Let’s illustrate this point by looking at the men’s basketball players at the University of North Carolina in 2012-13 (another group that was supposedly impacted by the UNC scandal). According to numbers reported by North Carolina University to the Department of Education, the men’s basketball program generated $20.9 million in revenue in 2012-13 (this is the last year the Department of Education reports). Currently the NCAA restricts the payment of athletes to essentially the cost of attending the institution. But in a typical labor market, the payment to workers is unrestricted. If the North Carolina Tar Heels had to hire workers in such a market, how much of this $20.9 million would the players receive?
For an answer, let’s look at professional sports leagues in North America. Major League Baseball and the National Football League tend to pay about 50% of their revenue to their players. A similar story is told in the NBA and the NHL. One should note, though, that each of these leagues has labor markets restrictions (i.e. reverse order drafts, reserve clauses, luxury taxes, salary caps, etc…) that do not exist outside of sports. As we see in European sports, without these restrictions players are paid more than 75% of league revenues. So the 50% figure we see in North America sports is likely not what we would see in a completely free market.
Nevertheless, let’s imagine that in a free market the Tar Heel basketball players received 50% of the revenue the program generates. If this was the case, the players would have received $10.45 million in 2012-13. And with 16 players on the roster, and equal split of this money would give about $650,000 to each player. North Carolina says the out-of-state cost of attendance in 2014-15 is about $50,000. If this represents the value of the education North Carolina is providing its players — and given what we have heard about this program, this might be an exaggeration — this means that even if the players are receiving all the education they were promised, the players are still very clearly exploited.
Of course, professional teams do not pay every player the same amount. Players are generally paid in professional sports to win games. And if we 1) measure how many wins each player produces (in a fashion similar to what has been done for the NBA), and 2) divide the aforementioned $10.4 million among the players in terms of the wins each player produced; then the three most valuable players on the 2012-13 Tar Heels would be as follows:
- Reggie Bullock: 6.9 Wins Produced, $2.99 million in revenue
- P.J. Hairston: 4.5 Wins Produced, $1.96 million in revenue
- Dexter Strickland: 3.5 Wins Produced, $1.52 million in revenue
Again, the cost of attendance at this school is about $50,000. So if these three players received all the education promised they were only paid about 2.4% of the revenue they generated with their on-court production for the school.
So the top players at a top basketball program are clearly very much exploited. Is this true elsewhere?
Let’s travel a few miles from Chapel Hill and visit Durham, North Carolina. Many college basketball fans might know that this is the home of Duke University. According to the numbers provided by the school to the Department of Education, the men’s basketball program at Duke generated $27 million in revenue in 2012-13. So Duke is even more successful than North Carolina when we consider revenue. And with only 11 players appearing on the court in 2012-13, the average player was worth more than $1 million. Duke University says it will cost about $63,000 to attend in 2014-15. So again, like we saw at the University of North Carolina, the men’s basketball players at Duke are very much exploited.
That is not probably not surprising. If North Carolina players are exploited then it follows that Duke players will be as well. But let’s look a little bit south of the Duke campus in Durham. There we will find the campus of North Carolina Central University. The Eagles have only played four seasons of Division-I college basketball. So this is not a big time college program. And people probably suspect that at such a small program, players cannot be exploited. But the data tell a different story.
If we look back at the 2012-13 season we see that the Eagles won 22 games while playing its conference games in the Mid-Eastern Athletic Conference. And according to the data provided by the school to the Department of Education, NCC generated $1.22 million in revenue during the 2012-13 season. If we again argue that the players should be paid 50% of team revenue, this means the players should be splitting about $610,000. With 14 players on the roster, this works out to about $43,000 per player.
North Carolina Central is not quite as expensive as UNC or Duke. According to the NCC website, it cost a little bit less than $15,000 to attend the school in 2014-15. So if the players employed at NCC received all the education promised, it is still the case that these players were exploited.
And just like we saw at UNC, the level of exploitation for the top players is even larger at NCC. The three most productive players — and their economic value — is as follows:
- Stanton Kidd: 4.5 Wins Produced, $116,618 in revenue
- Jeremy Ingram: 4.4 Wins Produced, $114,146 in revenue
- Emanuel Chapman: 3.7 Wins Produced, $97,169 in revenue
So the most productive players at NCC are producing at least six times more revenue for the school then the value of their education. And that suggests exploitation is likely everywhere in Division I-A college basketball. We don’t have to investigate the quality of education the players receive to see that at both big and small schools there are players generating more revenue than they are being “paid.”
So when we think about the scandal at North Carolina we should remember: Yes, not getting your education is a bad deal for a student-athlete. But even if these athletes get all that they are promised, it is still a bad deal.