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Tuesday, April 7, 2009

Are College Athletes Exploited?

I was watching the NCAA professional basketball tournament. I saw a commercial saying "College athletes aren't exploited, because most of them have careers other than in sports." Seeing such flagrant propaganda made me think "That's a good blog topic!"

First, I'll give the arguments for "college athletes are not exploited".

A professional college athlete works spends approximately 20 hours/week in practice and playing. They also are expected to spend time working out, lifting weights, etc. College tuition is worth $20k-$50k per year, depending on the school. Student athletes are also reimbursed for living expenses (room and board). A job for 20 hours/week, part of the year, that pays $20k/year is a pretty good deal.

Many of these students would not otherwise be able to afford college. A college degree is a prerequisite for most wage slave jobs. Therefore, student athletes are getting a good deal.

Now, I'll give the arguments for "college athletes are exploited".

The universities make millions of dollars per year off sports. There are TV contracts. There are ticket sales. A successful sports team is also worth a ton of money, in the form of alumni donations and more students applying to the school. Schools report a surge in student applications the year after winning a national championship in a major sport.

Consider men's college basketball. Let's use the generous assumption of "student athletes get tuition, room and board worth $50k/year". With 15 scholarships per year, the university's expenses are $750k/year. Most schools make millions of dollars or more on TV contracts, ticket sales, and the other perks of a sports team. For example, suppose the University charges $10/game on an arena that seats 10,000. That's $100k per game, and there are 10+ home games. Of course, not every game will be a sellout. I still haven't included the value of the TV contract, clothing sales, etc.

The rules regarding student athlete compensation are set by the NCAA. This is a price fixing cartel. For example, universities are barred from offering students a direct cash payment in addition to their scholarship.

College football and college basketball act as minor leagues for the NFL and NBA. The NFL has a rule that athletes must play at least 3 years in college first (or be 21 years old). The NBA has a rule that athletes must play at least 1 year in college (or be 19 years old). These leagues are colluding with the college minor leagues. For basketball, playing in Europe for a year is a possibility. The NFL has a pretty much an absolute monopoly for professional football.

Only a small percentage of college players turn pro. Survey every scholarship freshman in football or basketball, "Do you expect to be a starter on a professional sports team?" I bet that a large number will answer "yes". There certainly will be many more "yes" responses than the number of pro league spots available.

There is occasionally a scandal about university "boosters" offering perks to students under the table. The university is barred from directly paying students. However, some alumni attempt to conduct arbitrage over this restriction. They make off-the-books (agorist-style!) payments to the student athletes. Most of the time, this occurs undetected. The coaches may know what is happening, but they're clear as long as they can claim plausible deniability.

There are weird rules about who exactly is a University "booster". If you're an official booster, then the school is responsible if you break the rules. If you're an unofficial booster, who will ever know?

Pro sports agents tend to hang around the players. They give the players gifts, in the hopes that the player will sign with them when they turn pro.

For example, it isn't a violation of NCAA rules for me to give money to a basketball player attending Purdue. I have no affiliation with Purdue, and therefore the NCAA rules don't apply to me. (It might be a Federal crime for me to give money to a college athlete. I haven't checked.) If I'm an agent for professional basketball players, it's in my interests to give money to college players so they'll sign with me after graduation.

Popular college players are barred from signing endorsement deals until after they turn pro. That's an unreasonable restriction on players. Universities are allowed to sign deals with professional clothing manufacturers, so their logo appears on the team uniforms. Coaches are allowed to perform endorsement deals.

Players are barred from taking jobs other than their scholarship. Otherwise, this loophole could arbitrage the "no payments to players" option. For example, a University booster could hire a player for a $50/hr summer job, just because he's on the team.

Consider baseball, which has a minor league system separate from college. The top 18 year old baseball players sign minor league contracts, instead of going to college. College baseball isn't a big money sport like football or basketball, where college is the development league. The NBA has a development league now, but it isn't popular like college basketball; only players too old for college or ineligible for college play in the NBA development league. For hockey, there are professional minor leagues; fewer top hockey prospects play in college.

The value of the education earned by college athletes is less than that of typical students. Almost no college athletes study "hard" subjects like Mathematics or Computer Science. Many of them take less-difficult courses, making their education worth less. Further, they spend so many hours practicing and on the road, that they don't have much time for studying.

The university charges the athletic department the cost of tuition. However, the university does not spend that much on actual education. The cost of an athletic scholarship is merely money moved from one part of the University's budget to another part.

Summarizing, the arguments for "college athletes are exploited" are:

  1. Via the NCAA, universities collude on the rules regarding student athlete compensation.
  2. Professional sports leagues collude, requiring athletes to play in college first.
  3. Student athletes are barred from getting paid more than value of their scholarship. Top student athletes receive huge raises when they turn pro.
  4. Student athletes are frequently paid extra money under-the-table. (agorism!)
  5. The universities make huge profits from basketball and football.
  6. Consider sports where there are professional minor leagues, such as baseball and hockey. In these sports, the college game attracts much less interest.
  7. The actual value of a college education is less than the official cost, especially for student athletes. Student athletes tend to take less difficult courses. Student athletes are required to spend many hours practicing.
You may say "College athletes aren't exploited. Nobody's forcing them to play." The rules of the economic system given universities a State-licensed monopoly. The rules of the economic system make a college degree a prerequisite for many jobs. For many poor students, an athletic scholarship is their best option. That doesn't mean the system is fair.


David Z said...

FSK, here's a bit of FYI in response to "For example, it isn't a violation of NCAA rules for me to give money to a basketball player attending Purdue. I have no affiliation with Purdue, and therefore the NCAA rules don't apply to me."

Nope, but the rules apply to the players. Most NCAA athletes, especially scholarship athletes, are barred from even having a part-time job. They are also not allowed to capitalize on their status as an athlete. The latter is pretty much grey area, but is generally interpreted to mean, "If you're a college athlete, and someone gives you money, it's probably because you're a college athlete, and therefore a violation of NCAA rules.

Anonymous said...

this subject could be very interesting. unfortunately your post doesn't seem to have any facts. just general impressions. like mine. look into it. graduation rates, majors of kids, actual enrollment changes, value of tv deals, value of ticket sales, was cam newton exploited?, all sorts of stuff. but it seems like you just kind of gloss over it all. meh, we can't all be successful at everything we do.

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