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Friday, March 25, 2016

A (Partial) Reply to Jay Bilas: Are Student-Athletes Employees/Should They Be Compensated Beyond a Scholarship?

Jay Bilas's thesis is that the prohibitions on student-athletes are wrong and unfair because no other scholarship student has restrictions on his/her interactions or movements.  For example, the brilliant computer science major can work part-time for a high-tech company and make big bucks or he can do an internship and in many places get college credit (which has a monetary value).  As a matter of Federal law, that college student has to get one or the other, as the days of the "volunteer" internship are over -- those internships do not comply with Federal law.  Therefore, per Bilas, what student-athletes receive -- a scholarship -- is not compensation, it's an expense.  The combination of the demands on the student-athlete's time, the precarious nature of his one-year renewable scholarship and the monies the schools make off the labors of the student-athletes demand compensation.  Bilas is big, he's forceful and he's smart, and those traits combine to make his arguments difficult to refute.

There are a bunch of schools of thought that counter Bilas's thinking, some of which are more compelling than others.  Here are three:

1.  The scholarship is compensation.  Monetized, a Duke scholarship is worth at least $250,000 over four years, or $65,000 or so per year if not more.  But let's call it a quarter million dollars.  And let's suppose that elite programs are an alternative to the NBA's Developmental League, which they might be (although one could argue that from top to bottom the talent on a D-League team is better than that on an elite college team).  By this standard, the elite collegians are making out well, because they are getting room and board for this value as well as the opportunity to get a very good education (not everyone is Ben Simmons, who eschewed that opportunity at LSU).  D-League players in comparison, make $25,000 per year.  And they don't get room and board (and the board, in some cases, can be a separate athletic dormitory that is far nicer than the average dorm on campus).  Sounds like Bilas's argument just fails, especially when you add to it that the purpose of the institution is to promote higher education and not run a minor-league basketball team.  Game, set, match?

While that argument is hard to refute, there are counter-arguments to it.  First, college basketball at the elite level differs from the D-League in one very critical area -- the revenue it brings in.  The D-League doesn't have a significant TV deal or draw fans or get news coverage or sell merchandise.  In contrast, the elite college leagues and programs do just that, and the money can be quite big.  Second, on the one hand, you can argue that the $65,000 per year monetized value for a collegian far exceeds the D-League max of $25,000, you cannot end the argument there.  It does look good on paper, until you ask the question, well, what is the overall revenue that the 300+ division schools make on revenue sports (and there aren't many of them).  It could well be that at the elite schools the revenues and profit margins on major spectator sports are so big that the scholarship value alone does not compensate the player.  The numbers should be crunched, at least for purposes of argument.  Second, I don't agree with Bilas's far-sweeping statement that the scholarship is an expense with respect to all scholarship athletes.  He might have a case for basketball (men's and women's) at some schools and football at some schools (although a recent stat showed that 80% or more of DI football programs actually were losing money) and ice hockey at others.  But for most student athletes on scholarship, the revenues are paltry (in fact, the gross revenues from sports like football and basketball might support the rest of the athletic program).  As a result, to argue that a scholarship golfer at Vanderbilt or a scholarship rower at Wisconsin or a scholarship women's cross-country runner at Tennessee should be compensated fails.  Even if any of those teams in a given year were to win a championship, because only friends and family really notice. 

2.  What is the purpose of the institution?  Is it to spread knowledge for the public good, to train leaders and professionals of tomorrow, to elevate the public debate on issues of critical importance?  Or is it to win the ACC title and get to the Final Four?  Or win the Rose Bowl?  This is a critical discussion, especially because the revenues do not tell the whole story.  Generating revenue and generating profit are two different things.  Show me a business that runs for a loss for a while and either it's a biotech company on the verge of an amazing discovery or it's a company that will get acquired or go broke.  But it also would be a company where raises are slim and bonuses are non-existent.  Most college football programs run at a loss.  I'm not certain about basketball programs, but the operating costs are high, especially when you look at the compensation paid to the coaching and administrative staffs.  This is really a very high-class problem, because nations in the rest of the world must think that the Americans are crazy.  Costs of college have sky-rocketed, yet many alums worry about the beating the arch-rival more than they do figuring out how to pay their student loans. 

To get to the point, perhaps the answer is to de-emphasize college athletics almost altogether, to take them down to a DIII level or to eliminate them entirely.  Think of how that money can be used -- to make the education more accessible, to give out more aid, and to emphasize, instead, intramural contests in which a much broader section of the student body can participate and enhance their health and overall well-being.  Imagine having "house" versus "house" competitions at schools, and that those would be the biggest things on campus.  As opposed to having student-athletes who really don't have time to mingle with the rest of the unanointed in ordinary campus events.  Why would that be so bad?  And think of the benefits to the overall fitness of the country and the burdens on the healthcare system.  About 33% of the nation is either overweight or obese.  Think about how we could change that, lower the cost of healthcare and improve people's lives everywhere.

So, we're back where we started.  Should scholarship athletes get paid?  The answer is a qualified no.  Almost all of them receive more than ample compensation via the scholarships they get versus the arguable benefits their being on teams or successes could benefit their university.  The argument might differ for the revenue-generating sports, but then the question is one of numbers-crunching -- how much profit is actually generated?  But to say categorically that all should be paid is not what I think Bilas is contending, just the ones who play for revenue-generating teams.

And there, his argument is one that is hard to refute.  Just look at the kids on campus who start businesses and make a lot of money.  There are no limits on them.  But. . .

Then there is the issue of the overall tax-exempt status of institutes of higher education.  Sure, they do run some for-profit ventures.  Most major research universities license technologies that their professors invent for millions of dollars.  That does not get taxed.  Nor does the revenue from the major spectator sports or the television revenue.  Perhaps it should be, but there are complex tax rules about how much income they can generate without violating their tax-exempt status.  I don't think that paying revenue-generating athletes something atop their scholarships would violate that rule.  But it could. . .

violate Title IX.  Because the sense here is that the compensation would go mostly to men who play football, basketball and in certain cases, ice hockey.  Sure, the UConn and Tennessee women's teams might fall under this rubric too, but would it be legal for a school to pay only men on scholarship and not women.

Complicated?  You bet.

It's hard to argue with Jay Bilas (he usually wins his arguments on the radio), but I would contend that before paying student-athletes I would consider de-emphasizing athletics at all schools and returning to their primary missions.  Energy and money expended on recruiting, getting kids in and keeping them eligible would be better spent on developing a huge multiple of the kids playing on the revenue-generating teams better.  That's hard to argue with too -- spread the money out more for the greater good.  And end the paternalism and free feeder systems for the professional leagues, while they're at it.  As with Europe, compel the major sports leagues to develop their academies and pay their under-21's, under 18's, etc. and leave college for the college students.  In this fashion, the NFL could have a feeder league, the NBA could have a better feeder league and the conversation is over.  And that's much simpler than having the NCAA adopt another cumbersome set of rules as to what an acceptable stipend would be.

Sorry, Greenie, Golic, Jay and Seth Greenberg, but this is the simplest solution.  De-emphasize, and ensure that the president of the university is the highest paid person on the campus, and not a coach, and reinforce the emphasis on higher education.

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