With more and more money pouring its way into college sports, college athletes and their representatives have been pushing for a bigger slice of the growing pie. Earlier this month, the Supreme Court decided not to take on a case brought by former UCLA basketball player Ed O'Bannon over the rights to athletes' names, images and likenesses. O'Bannon, who played in the 1990s, first brought his case after seeing himself in a video game and realized he wasn't being compensated.
The Supreme Court could have used the O'Bannon case to make a landmark decision on college sports, but chose not to. So that means debate will continue, especially about big-time athletic programs with annual revenues over 100 million dollars. The debate isn't about whether or not athletes should be compensated — they already are — but how and how much.
I see a framework already emerging for answering these questions. It has three parts: stipends, prizes and intellectual property. Let's briefly look at each.
In 2015, the NCAA allowed top level programs to pay students a stipend to cover expenses that were not included in scholarship packages. These payments were put in place to close the gap between what the government defines as the total cost of attending a university and an athletic scholarship, and includes things like the costs of transportation and school supplies.
Scholarship athletes now receive "cost of attendance" stipends. At CU Boulder, according to CBS Sports,the stipend last year was about $4,000 for out-of-state scholarship athletes and $3,30 for in-state. Costs vary across programs. For instance, UCLA, a public school, pays as much as $6,000 per student, while private USC pays less than $2,000, even though both schools are in Los Angeles.
These payments were a response by the NCAA to the O'Bannon litigation but also to bad publicity that the NCAA received when Shabazz Napier, a basketball player at the University of Connecticut, complained on national TV after winning the 2014 NCAA Tournament of "hungry nights" caused by a lack of food and money.
Future court decisions may force university athletic programs to augment the cost of attendance stipends or even pay salaries to athletes. How might this be done?
One sensible approach would be to treat college athletes like another group of students who work on campus in support of the university mission — graduate students. Graduate student stipends typically are provided in exchange for 20 hours of work per week and rarely exceed $30,000 per year. The NCAA could set the maximum undergraduate sports stipend equal to each university's minimum graduate stipend amount, in order to discourage a "stipend war" among universities.
The budgetary consequences are not outrageous. For instance, at Ohio State University the minimum graduate student stipend is $13,500, while at Stanford it is about $27,000. If OSU carried the maximum number of NCAA-allowed athletic scholarships, then the additional cost of stipends would be about $6 million, or about a four percent increase to its nearly $150 million athletics budget. The increase to Stanford's budget would be larger, due to its higher stipends, adding about $12 million to its reported $100 million athletics budget. Most schools however do not carry the maximum set of scholarships, and schools could award partial stipends just like graduate programs do, so the financial impact could be managed across schools with different resources and priorities.
There is a case to be made that athletes in the so-called "revenue sports" — football, men's and women's basketball — should have an opportunity to receive greater compensation. This can happen in two ways, both of which have existing foundations, prizes and intellectual property.
Last summer at the Rio Olympics several NCAA athletes took home substantial earnings in the form of cash prizes for medals from the U.S. Olympic Committee. Katie Ledecky, who will swim at Stanford, took home $355,000 in prize money. Texas swimmer Joseph Schooling, from Singapore, received almost $750,000 from the Singaporean government for his Gold Medal. Such prizes are allowed under NCAA rules.
In fact, it is not widely known and the NCAA doesn't tout it, but the NCAA Division I rule book currently allows athletes to receive awards for participating in and winning championships. An athlete who wins conference and national championships in a season could receive cash awards totaling $1,480. In addition, the parents of athletes in the Final Four get as much as $4,000, and $3,000 is provided for participation in the college football playoff. Participants in bowls games and the NCAA Tournament now have access to "gift suites" where athletes can collect merchandise prizes, which according to Sports Business Daily include "recliners, jewelry, TVs, headphones and speakers" and could add up to $4,000 in total gifts.
All told, the most successful athletes might take home close to $10,000 in prizes — under existing rules. In fact, under current rules the NCAA has "no limit" on awards to participants in NCAA postseason tournaments or championships.
The money is there for larger prize awards. Consider that awarding $10,000 to each of the 884 men's scholarship basketball players who make it to the NCAA Tournament would represent just more than one percent of the current NCAA's annual March Madness TV contract — a contact that will increase from $770 million per year to $1.1 billion per year, starting in 2024.
The NCAA could treat college athletes how universities already treat faculty and students when intellectual property is involved (I discussed this in more depth in the Camera in 2011). For example, at UCLA team of researchers recently sold a drug developed on campus for more than $1 billion making both the researchers and the university incredibly rich, because such revenues are shared. A similar set-up could benefit the college athlete with large commercial potential, while also benefiting the athletic department and wider campus. Such revenues captured by universities could be used help to defray the cost of stipends.
There is little doubt that the economic value of the name, image and likeness of the vast majority of college athletes will be close to zero. It is the same way with professors and their intellectual property. But every once in a while an athlete will have outsized commercial value that is presently uncaptured. Texas A&M estimated that Johnny Manziel's 2012 Heisman Trophy season was worth $37 million to the university. Capturing some part of this value would benefit the university, its athletics program and the athlete.
In 2015, the Pac-12 conference put forward a proposal to the NCAA to allow college athletes to profit off of their name, image and likeness. That proposal was eventually withdrawn due to a lack of support across the conferences, however it signaled openness to the idea among some at the highest levels of college sports.
Despite what the NCAA says, the debate over amateurism in college sports is over. Big time college sports are a fully professionalized enterprise. The only question left to be settled is what form of professionalization college sports will ultimately take. Fortunately, a pragmatic approach centered on stipends, prizes and intellectual property is already emerging. A common-sense approach can best keep what is so valued by many about the American college sports model, while sharing more fairly the wealth that it creates with those who actually play the sports.