Time to Allow College Athletes to Earn Money
As the debate over paying college athletes rages on in federal courtrooms, on campuses, and in the media, I recommend that both sides of the issue focus on changing the rules in constructive ways that would allow student-athletes to earn endorsement and other non-playing income based on their athletics reputation. Let Speedo sponsor Katie Ledecky while she studies and swims at Stanford. Let memorabilia dealers pay players to autograph photos for resale. Let local businesses pay players to appear in advertisements. Opening up this one area of student-athlete compensation would help make college sports more equitable for all involved without requiring schools to invest in salaries for student-athletes, which would threaten the intercollegiate athletics model.
Let me be clear about the fact that I am strongly opposed to the idea of schools paying salaries to their athletes. Schools already provide tax-free compensation to their student-athletes in the form of tuition, room, board, books and cost-of-attendance stipends. For example, the University of Iowa athletics department spent approximately $12.6 million on student-athlete scholarships in 2016 (2016 presentation by Iowa's Asst. AD for Business and Finance). The Hawkeyes have the equivalent of approximately 300 full scholarships available for student-athletes, which means the department “paid” the equivalent of 300 “salaries” of $42,000 last year. Since those are tax-free benefits, the true value of those annual “salaries” was closer to $56,000. At private schools where tuition is much higher, athletes receive even more compensation. For example, the general counsel of the National Labor Relations Board recently noted that scholarship football student-athletes at Northwestern University receive up to $76,000 per year in benefits.
Clearly, student-athletes are well compensated by their schools. The financial aid compensation model allows NCAA schools to sponsor dozens of sports and provide financial benefits, higher education, and high-level competition to thousands of student-athletes nationally each year. If schools paid actual salaries to student-athletes, limited resources at many schools would be directed even more than they already are to football and men’s basketball student-athletes and enough female athletes to satisfy the non-discrimination requirements of Title IX, and many other sport teams would be eliminated. Not only would this be a tragic result at the college level, but such a system could also devastate many United States Olympic teams that rely on talent developed during NCAA competition. Given that there is already a reasonable compensation system in place, I am not willing to sacrifice thousands of student-athletes in non-revenue sports so a few high-profile football and men’s basketball student-athletes can negotiate their fair market value in salary rather than receive tax-free tuition and other benefits.
Returning to my recommendation, which poses less of a threat to college athletics, I have identified six compelling reasons to allow student-athletes to earn endorsement and other off-the-field income based on athletics reputation:
1. Teach entrepreneurship, branding, and negotiation skills for life
If student-athletes could market themselves for business opportunities, they would have real incentives to learn life skills that could transition to their post-playing careers. For example, under my proposed rule changes, a student-athlete could develop her own summer sport camp and use her name, image and athletics reputation to promote her camp. She could learn event management skills, risk management, how to develop a business plan, marketing principles, and other basics of running one’s own business. Student-athletes would have a heightened level of interest in marketing and branding classes on campus since they would have the ability to develop their own brand image for profit. This would further support achievement of part of the NCAA’s stated purpose to, “Maintain intercollegiate athletics as an integral part of the educational program.” (NCAA Constitution, Article 1.3.1)
Universities today strongly support and promote experiential learning in academic programs – what could be a better learning experience than applying business principles acquired during academic coursework to actual negotiations and business development that impact a student-athlete’s own bottom line?
2. Encourage student-athletes to stay in school longer
NCAA rules encourage schools to support student-athletes staying on campus and remaining academically eligible. Allowing student-athletes to pursue off-the-field revenue in their sports could help encourage many elite athletes to remain in school rather than leaving early for the pros.
There has been a trend in recent years of college underclassmen declaring themselves eligible for the NFL draft - 107 did so in 2016. Of those players, 28% went undrafted, which means they lost their remaining NCAA eligibility and did not receive the life-altering NFL payday that they bet on.
How many of those 107 players would have more seriously considered staying in school if they could have earned money by signing autographs and making personal appearances? Instead, they faced an all-or-nothing decision of either going for the money now in pro sports or staying in school and giving up another year of earning potential in a short athletic career that could end at any time from injury or ineffectiveness.
3. Enhance competitive balance
With endorsement opportunities opened up under my proposal, programs like Kentucky men’s basketball and Alabama football may lose some of the recruiting dominance they currently enjoy, as talented recruits decide to spread themselves across the country and join a variety of programs. High-profile recruits would run the risk of becoming lost on the rosters of powerhouses like Alabama and Kentucky, where they would be surrounded by other blue-chippers. The opportunity for an elite recruit to develop a more lucrative brand image at a school where he has a better chance of standing out might help tip the recruiting scales in the favor of the less prestigious programs more often.
Some might be concerned that if student-athletes could earn endorsement income, it would give boosters unprecedented influence on campuses. For example, an Alabama booster who owns a Tuscaloosa car dealership could sign the star running back to a $1 million endorsement deal in return for little or nothing from the player. The NCAA has managed to legislate against this threat in other areas of employment and could do the same for endorsement income. For example, NCAA rules allow student-athletes to work at a job, even a job with a booster, as long as the athlete is paid only for work actually performed at the going rate for such work in that region (NCAA Bylaws 12.4.1 and 15.2.7). This requires compliance officers to monitor where student-athletes are working and how much they are earning. Endorsement deals could be monitored in the same way. Autograph sessions, personal appearances, sponsorships from apparel companies – a going rate can be established and enforced for all of these forms of part-time work.
4. Capitalize on their 15 minutes of fame
Most student-athletes reach the height of their popularity during their college careers when they are unable to capitalize on it for financial gain. A tiny percentage of athletes will go on to earn any money in their sport after school, and of those that do, many will never achieve the local, regional, or national fame that they experienced as a college athlete. Opening up endorsement and other off-the-field earning opportunities will help improve the student-athlete experience by giving those that have the ability to earn money from their athletics reputations the chance to do so. This will benefit far more student-athletes than just the top football and basketball stars. Anyone who has lived in a small campus community understands that student-athletes in a variety of sports become temporary local celebrities and could have some earning potential while they are on campus.
5. No investment by schools
The best part of allowing student-athletes to earn money based on their athletics reputations is that it does not require schools to spend any additional money. Most athletics departments spend more than they earn, so other forms of compensation to student-athletes, such as salaries, raise the concerns I addressed previously about cutting non-revenue sports. Let student-athletes go out and earn what they can from outside sources.
6. Fairness
Student-athletes can make public appearances and sign memorabilia for money, but only if funds raised from such activities go to their school, conference or a charitable, educational or nonprofit agency (NCAA Bylaw 12.5.1.1). So student-athletes can appear at a luncheon for donors who pay $100 per person to support the athletics department, but the same athletes cannot currently be paid $100 by a local restaurant owner to make a promotional appearance at her restaurant and be mentioned in advertising.
An athletics department can collect a $180 charitable donation for a basketball autographed by student-athletes, but those same student-athletes cannot currently be paid for signing autographs at a local business for two hours on a Saturday as a promotional activity for that business owner.
The bottom line is that NCAA student-athletes already engage in a variety of promotional activities, so allowing them to seek out their own opportunities and earn money doing it is a reasonable step to take.
If the NCAA is concerned about the time demands on student-athletes or the types of products or businesses student-athletes might choose to promote, a review process could be established. To avoid triggering any NCAA violations, most schools have a formal review process for any request from charitable organizations seeking autographs or player appearances. The NCAA rules forbid students from missing class for permissible promotional activities that benefit the school or charitable organizations, and similar rules and compliance reviews could be applied to commercial promotions by student-athletes.
The NCAA rules have adapted during the past 20 years to first allow student-athletes to hold part-time jobs during the school year with limits on earnings and eventually to eliminate the earnings cap. It is now time to eliminate the NCAA rules that prohibit a student-athlete from receiving any employment compensation that includes remuneration for value or utility that they may have for the employer based on the publicity, reputation, fame or personal following that they have obtained because of athletics ability (NCAA Bylaws 12.4.1.1 and 15.2.7). In doing so, the NCAA should also modify rules preventing student-athletes from entering into agreements with agents so that student-athletes could be properly represented in their business endeavors. It would take a slight philosophical shift by the NCAA, schools, and conferences as they modify the meaning of amateurism and an acceptance that the intercollegiate athletics model will not crumble if student-athletes are paid by for-profit organizations for things that they currently are allowed to do for no compensation with non-profit organizations.
Just as it was determined 20 years ago to be unfair and overly restrictive to prevent student-athletes from having a job at all, it should now be considered unfair and overly restrictive to prevent student-athletes from working at a job that capitalizes on their athletics reputation.