The U.S. hyper-commercialized system of college sports, which does not exist anywhere else in the world, is in a period of overarching transition and deep financial crisis. A select share of Division I college athletes produce billions of dollars of revenue every year for their schools. Almost all of this revenue comes from football and men’s basketball.
And yet, expenditures by college athletics departments are such that, with the exception of a small number of schools, athletic expenses surpass revenues at the overwhelming majority of Division I programs. The median salary of head football coaches in the Division I Football Subdivision (FBS) is above $3.5 million, along with handsome perks and bonus provisions.
Due to longstanding rules of amateurism, the athletes themselves do not receive a salary even though some have an estimated market value of several million dollars. But change is coming. Even if it is in uneven fits and starts.
What this Means:
There appears to be an economic case to pay the student athletes, particularly in revenue producing sports. The questions that beg attention are: Where will the money come from? What institutions and principles will govern how students are paid and how the pay is distributed? If the athletes unionize, what will be the bargaining unit? Will embracing further marketization move the athletes on certain teams further away from receiving a robust education and a degree?
One thing is clear: change will come. Fundamentally, the choices are to move toward unfettered commercialization, allowing relatively free and open labor markets for the athletes, or to move toward a more controlled system that caps expenditures, re-emphasizes education and provides adequate short- and long-term medical coverage to the athletes. The latter path would include committing sufficient funds to enhance athlete education, for comprehensive injury and medical care, and to pay for loss of income insurance to promising athletes whose careers were aborted by injury in college. This path would attempt to resurrect the central purpose of college sports as an extracurricular activity in the university, where students are devoted to learning and live a relatively sedentary and cerebral life.
To be legally acceptable, the NCAA would need a limited antitrust exemption to control coaches’ and administrators’ compensation. The NCAA functions principally as a trade association for coaches, athletic directors and conference commissioners and is unlikely to generate fundamental reform on its own volition. More recent experience indicates that leaving the structure of college sports up to judges is time consuming, very expensive, confusing, and capricious. Nothing is easy in Washington, D.C. these days, but Congress is the most promising venue for defining a coherent and financially viable system for intercollegiate athletics in the 21st Century.
This story was originally published by Econofact on Jan. 22, 2023.
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