The NCAA Cartel

Lonzo Ball and De’Aron Fox have taken centre stage as up and coming basketball stars, and yet these athletes are not paid a dime. Are they being exploited, and is there a solution?”

By Andres Rodriguez

If you ask a college sports fan why they love it so much, they will tell you that these players compete for the sake of competing– the love of the game. In a way, it is more pure than professional sports, where players are merely mercenaries competing for money, rather than passion. With this in mind, it could be argued that paying college athletes would destroy this notional integrity of college sports, and shift their motivation from the love of the game to a paycheck.

 

While the argument might seem to have some merit at surface value, it is clear that the romantic ideal merit after we consider the specific context After all, it is not as if there is no money involved in the market. College sports is a billion dollar industry, generating revenue through advertising, television fees and stadium charges.  Yet these players get very little value in return for their production. While a some flawed analysis, such as that of USA Today, suggests their compensation is valued at around $125k, their valuation includes athletic training and coaching. On the other hand, Andrew Zimbalist, a Sports Economist from Smith College, argues that this is merely equivalent to in job training and that the actual compensation is better measured by their graduation rate times the tuition rate, equivalent to under $20k for most schools. Even then, this is assuming that college athletes get the same level of education as every other student. Sadly, because of the vast extent of network effects, players have little to no choice but to play in the NCAA in order to achieve their dream of playing for the big leagues.

 

It is extremely easy to demonstrate this, since college players are paid far below their market value. After all, their non-payment status-quo is only maintained through rules and stringent penalties for those who break them. Players are deemed ineligible and can be suspended or banned if they are found to break these rules. Schools can be prohibited from participating in the playoffs. This rule serves as a de-facto price control, limiting compensation to a full scholarship.

 

Even the educational compensation that is given is a joke in respect to its actual value. Education is an investment and circumstantial evidence suggests that the gains in human capital for these students are far less than those full time students receive. The graduation rates are extremely low and so is educational achievement. Male college basketball players graduate at a rate 20.6% points lower than the average male college student. Though the NCAA forces students to meet academic eligibility, these requirements often mean more lenient grading for these students, making the previous statistic even worse.. Thus, even if their actual returns on human capital aren’t affected, the signaling effects are likely going to be negative, ás the negative stories raise suspicion about the legitimacy of college athlete’s achievements.. Furthermore, the students face very low graduation rates. For example, University of North Carolina, which just won the NCAA’s College Basketball March Madness Tournament, has been at the center of an academic discipline scandal, due to fake classes and grades. This is the alleged educational compensation these students receive. But no worries, at least they get to keep their memories, injuries and health issues for the rest of their lives.

 

The NFL requires players to be at least 3 years removed from high school in order to be drafted into the NFL in order to allow physical maturity before entering the league. The NBA requires players to be 1 year removed from high school, due to the legal restrictions of scouting underage, high school players. The MLB allows you either enter immediately after high school or after three years in college, which means that unless you believe yourself to be ready to enter the league you will have to stay in college for three years before you give it a shot. In a competitive market, players could simply choose to participate in another league. However, sports are characterized by network effects, which means that players have very little alternatives if they hope to play professional sports in the future.

Simply put, other leagues do not have the same combination of talent and commitment to young players as the NCAA does. Therefore, choosing an alternative path will likely jeopardize one’s chances to play for the big league. There aren’t any good alternatives for young football players to prove their worth. In the case of the NBA and MLB, foreign professional leagues don’t have a strong incentive to develop young talent when they know they will simply leave as soon as they are able to be productive for them. It is not the best way to spend the resources for them. Therefore, if players wish to develop their skills and prove their value to professional leagues, these players will sadly be stuck playing for the exploitative cartel that is the NCAA.

Sources:

 

Trahan, K. (2014, July 09). Athletes get degrees, but what does that mean? Retrieved April 14, 2017, from http://www.sbnation.com/college-football/2014/7/9/5885433/ncaa-trial-student-athletes-education

Cronin, C. (2017, March 23). As March Madness earns NCAA millions, student-athletes continue to share none of the profit. Retrieved April 14, 2017, from http://www.mercurynews.com/2017/03/22/as-march-madness-earns-ncaa-millions-student-athletes-continue-to-share-none-of-the-profit/

 

Trahan, K. (2014, December 05). How Much Is a Degree Worth to College Athletes? Not Much. Retrieved April 14, 2017, from https://sports.vice.com/en_us/article/how-much-is-a-degree-worth-to-college-athletes-not-much

 

Tar Heels still dogged by academic scandal. (n.d.). Retrieved April 14, 2017, from http://chicago.suntimes.com/sports/tar-heels-still-dogged-by-academic-scandal/

 

Belkin, D. (2016, February 17). Student Athletes Report Success After College, but Sports Take Toll on Some Men. Retrieved April 14, 2017, from https://www.wsj.com/articles/student-athletes-report-success-after-college-but-sports-take-toll-on-some-men-1455685687

 

Weiner, J., & Berkowitz, S. (2011, March 30). USA TODAY analysis finds $120K value in men’s basketball scholarship. Retrieved April 14, 2017, from https://usatoday30.usatoday.com/sports/college/mensbasketball/2011-03-29-scholarship-worth-final-four_N.htm

 

The ‘Illegal Procedure’ Of Paying College Athletes. (2012, March 28). Retrieved April 14, 2017, from http://www.npr.org/2012/03/28/148610494/the-illegal-procedure-of-paying-college-athletes 
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