OT: College football and paying college athletes

[upstater1]

I couldn't find a forum for this as I looked down the list of forums, so I post this here.

This is a follow-up to the recent discussion some of us were having about the plight of student athletes. This professor from Texas breaks down the relationship between athletics and the academics side. The only part he leaves out is state subsidy for tuition of student athletes.

http://www.dailytexanonline.com/uni...-ut-s-academic-and-athletic-budgets-1.2140563

 

[letekro]

I couldn't find a forum for this as I looked down the list of forums, so I post this here.

This is a follow-up to the recent discussion some of us were having about the plight of student athletes. This professor from Texas breaks down the relationship between athletics and the academics side. The only part he leaves out is state subsidy for tuition of student athletes.

The Daily Texan - The real relationship between UT?s academic and athletic budgets

Our discussion was not about "student athletes" in general, it was about college football players. No one disputes that athletic departments as a whole do not generate large profits (or, in some cases run at a deficit). Obviously operating a swimming facility costs money and swimming brings in no revenue (multiply this for 50 or so non-revenue producing sports). The point is that the football program does not operate at a deficit. It is a cash cow, which you can confirm by checking the link I posted in the previous discussion. Also, I believe the numbers shown in that link exclude licensing revenue, which can run in the $millions per year. The fact is that many of the kids who are being compensated with "an education" are not even being educated, which is borne out by the low graduation rates at the football powerhouses. Furthermore, many are left dealing with the after-effects of multiple concussions, and major knee and back injuries, which were incurred for the benefit of the university and the multi-millionaire head coaches.

 

[TheGodInAGreyHoodie]

Personally I oppose sports scholarships at any institution that accepts state or federal funding (i.e. all of them). The purpose of college is education not as farm teams for professional sports. Scholarships should be granted on the basis of economic need or academic achievement.

 

[upstater1]

Our discussion was not about "student athletes" in general, it was about college football players. No one disputes that athletic departments as a whole do not generate large profits (or, in some cases run at a deficit). Obviously operating a swimming facility costs money and swimming brings in no revenue (multiply this for 50 or so non-revenue producing sports). The point is that the football program does not operate at a deficit. It is a cash cow, which you can confirm by checking the link I posted in the previous discussion. Also, I believe the numbers shown in that link exclude licensing revenue, which can run in the $millions per year. The fact is that many of the kids who are being compensated with "an education" are not even being educated, which is borne out by the low graduation rates at the football powerhouses. Furthermore, many are left dealing with the after-effects of multiple concussions, and major knee and back injuries, which were incurred for the benefit of the university and the multi-millionaire head coaches.

Our last discussion ended with a set of totally different numbers, but if you read this article, the professor does mention that the trademark monies from licensing go back to the AD, and NOT the school. They move from the academic side to the athletic side. People asked him how much of the licensing does he think is attributable to sports. One way to answer that is to look at the average licensing sales of schools that do not have big time programs, and go from there. You can assume that some of the licensing at least isn't from sports.

I think his arguments about football and cutting back are right on.

Again, you and I shouldn't rehash our last argument about the numbers because that argument already exists, but this professor is making the case that in a time when the school's core mission is being cutback, football should cut back too. His logic is that football only contributes a small amount to the school's revenues and that parts of the school that bring in much more revenue are cutting back. So why shouldn't the football program?

 

[letekro]

Our last discussion ended with a set of totally different numbers, but if you read this article, the professor does mention that the trademark monies from licensing go back to the AD, and NOT the school. They move from the academic side to the athletic side. People asked him how much of the licensing does he think is attributable to sports. One way to answer that is to look at the average licensing sales of schools that do not have big time programs, and go from there. You can assume that some of the licensing at least isn't from sports.

I think his arguments about football and cutting back are right on.

Again, you and I shouldn't rehash our last argument about the numbers because that argument already exists, but this professor is making the case that in a time when the school's core mission is being cutback, football should cut back too. His logic is that football only contributes a small amount to the school's revenues and that parts of the school that bring in much more revenue are cutting back. So why shouldn't the football program?

Again, this article is about the athletic department as a whole, not college football. The only football-related thing mentioned is coaches' salaries, which are market-driven, like player salaries should be. I don't think there is any argument about numbers. The link I previously posted was from the schools themselves. University of Florida showed a $43M profit from football in 2005. Big football programs make a lot of money. This article does not suggest that this is not the case, so I'm not sure of its relevance to our discussion. What I understand from you is that you don't think players should be paid because the schools don't make money from the football program. That's just a baseless line of reasoning. While there may be other reasons not to pay players, that ain't one of them.

 

[chicowalker]

Do most college football programs make money, or is it just a relatively small # of prominent programs?

 

[upstater1]

Again, this article is about the athletic department as a whole, not college football. The only football-related thing mentioned is coaches' salaries, which are market-driven, like player salaries should be. I don't think there is any argument about numbers. The link I previously posted was from the schools themselves. University of Florida showed a $43M profit from football in 2005. Big football programs make a lot of money. This article does not suggest that this is not the case, so I'm not sure of its relevance to our discussion. What I understand from you is that you don't think players should be paid because the schools don't make money from the football program. That's just a baseless line of reasoning. While there may be other reasons not to pay players, that ain't one of them.

How can you say the numbers weren't different when you posted to an article citing those numbers and I posted to the database with a line-by-line breakdown of both revenues and expenses? Our numbers from different sources were totally different, especially since the numbers in the article did not account at all for university support.

Should I link back to the original discussion?

so, ultimately, I stand by what I said. I didn't say ALL football programs don't make any money. I said the vast majority of programs don't make money. And the school in question was Florida St, not Florida, and I showed that Florida St's football program was not in the black. We were discussing FSU because the athlete in question was a FSU athlete.

Finally, I never said that football players shouldn't be paid because the programs don't money. I gave a host of reasons why they shouldn't be paid, the primary one being that their value in a free market was not anywhere near what schools were already reimbursing them with ($20,000 of food and shelter, $15,000 of training in their sport, and however you want to monetize the value of an education).

By the way, the article does suggest that the football program's revenues at Texas are overblown in a number of ways. One, support from the academic side is unaccounted. Two, trademark revenues go over to the AD, whereas the professor feels a certain % of that is generated by Texas' rep on the academic side. Three, donors who donate to the Longhorn Foundation are sometimes unaware that their donation does not go to the academic side but instead to the AD, and four, the AD is heavily in debt and the academic side is servicing those loans. In other words, the academic side pays interest on the athletic departments debts. The debt was something like $250 million.

 

[upstater1]

Do most college football programs make money, or is it just a relatively small # of prominent programs?

It's a really small number.

You can see in the financial reports here:

NCAA Financial Reports Database | IndyStar.com

Name a school and I can give you a breakdown.

 

[letekro]

How can you say the numbers weren't different when you posted to an article citing those numbers and I posted to the database with a line-by-line breakdown of both revenues and expenses? Our numbers from different sources were totally different, especially since the numbers in the article did not account at all for university support.

Should I link back to the original discussion?

so, ultimately, I stand by what I said. I didn't say ALL football programs don't make any money. I said the vast majority of programs don't make money. And the school in question was Florida St, not Florida, and I showed that Florida St's football program was not in the black. We were discussing FSU because the athlete in question was a FSU athlete.

Finally, I never said that football players shouldn't be paid because the programs don't money. I gave a host of reasons why they shouldn't be paid, the primary one being that their value in a free market was not anywhere near what schools were already reimbursing them with ($20,000 of food and shelter, $15,000 of training in their sport, and however you want to monetize the value of an education).

By the way, the article does suggest that the football program's revenues at Texas are overblown in a number of ways. One, support from the academic side is unaccounted. Two, trademark revenues go over to the AD, whereas the professor feels a certain % of that is generated by Texas' rep on the academic side. Three, donors who donate to the Longhorn Foundation are sometimes unaware that their donation does not go to the academic side but instead to the AD, and four, the AD is heavily in debt and the academic side is servicing those loans. In other words, the academic side pays interest on the athletic departments debts. The debt was something like $250 million.

1. FSU's program is definitely "in the black." The IndyStar Link shows a $ 7 million profit, but this number does not include alumni contributions - $17 MILLION worth - which are under "nonspecific revenues." For schools that break alumni contributions down by program, roughly 80% of contributions go to the football program. See UF, for example. I would venture that FSU is no different. If that is the case, you're talking about $20M in profit, without taking into account licensing revenue.

2. The line item expense for "student aid" I believe encompasses scholarships, housing, etc. So the cost to the school of educating the students is included in these figures, contrary to what you've said above.

3. Again, whether the athletic department operates at a profit is neither here nor there, so your point about debt service is irrelevant.

4. The most egregious error of all - you're misunderstanding the concept of a free market. You are making the point that, if the players went outside of the NCAA to play semi-pro ball, they would get paid X. That's not the point at all. The point is, if the NCAA were forced to drop the "student athlete" sham, the schools would be forced to pay the players (as under the law, they are clearly employees). The market rate would be set BY THE SCHOOLS. If you think a Reggie Bush-type high school player wouldn't command 7 figures for a four-year commitment, I think you're mistaken. By the way, I'm not suggesting the monetary compensation would be in lieu of the student aid, but rather, in addition to it.

 

[chicowalker]

Instead of paying players, maybe the NCAA should put rules in place limiting how much coaches can be paid, punishing programs for low graduation rates and low post-graduate job placement and limiting expenditures on any single sports program.

Of course, that presumes the NCAA cares about student athletes more than it cares about the revenue generated by being a de facto minor league system.

 

[upstater1]

1. FSU's program is definitely "in the black." The IndyStar Link shows a $ 7 million profit, but this number does not include alumni contributions - $17 MILLION worth - which are under "nonspecific revenues." For schools that break alumni contributions down by program, roughly 80% of contributions go to the football program. See UF, for example. I would venture that FSU is no different. If that is the case, you're talking about $20M in profit, without taking into account licensing revenue.

2. The line item expense for "student aid" I believe encompasses scholarships, housing, etc. So the cost to the school of educating the students is included in these figures, contrary to what you've said above.

3. Again, whether the athletic department operates at a profit is neither here nor there, so your point about debt service is irrelevant.

4. The most egregious error of all - you're misunderstanding the concept of a free market. You are making the point that, if the players went outside of the NCAA to play semi-pro ball, they would get paid X. That's not the point at all. The point is, if the NCAA were forced to drop the "student athlete" sham, the schools would be forced to pay the players (as under the law, they are clearly employees). The market rate would be set BY THE SCHOOLS. If you think a Reggie Bush-type high school player wouldn't command 7 figures for a four-year commitment, I think you're mistaken. By the way, I'm not suggesting the monetary compensation would be in lieu of the student aid, but rather, in addition to it.

I already broke this down the previous time. We're doing it again. Jeez.

1. You totally left off school support from your figure. You completely ignored it. And read what the Texas guy is saying about contributions to the Longhorn Foundation. He said contributors do not realize what they are contributing to. Now, my father contributes to a school foundation and gets season ticket queue to multiple sports. How can you tell what program you contributed to? Heck, you don't even know that you're not contributing at all to academics. I'm not saying those contributions shouldn't be in the ledge but the claim in this article is that donors are unaware.

2. Um, tuition and student housing, etc., comprise 24% of the acutal cost of educating a student at U. Texas. The rest is subsidized by the school. Surely you don't believe that the tuition you pay is enough for your education. That's hardly the case, and the Texas guy lays out the real costs. Each athlete is subsidized far beyond the tuition that the AD provides. The AD only pays for a quarter of the costs of the education of each student athlete. The school pays the rest. And that's not even accounting for things like student athletic fees or other contributions from the academic side.

3. Add up football revenues subtract football expenses: that's profit/loss. Then realize that IN ORDER to even have a football team, you are REQUIRED by federal law to fund a certain portion of your female student athletes on a roughly one-to-one ratio with each football player. Beyond that, your conference affiliation and div. 1 requirements insist that you fund Olympic sports as well. These are rules and laws that are beyond the control of any university. Federal law. You can't separate the football program from the AD, and I guarantee you that without football, that debt would be nowhere near as high. How in the world do you think 1-AA schools maintain athletic departments? Take Boston U. They don't even have football. And they surely lose money. The point is, they don't lose a lot. They could never run up $250 billion in debt if they tried, and yet they have an Olympic sports program, hockey, basketball, etc., all but football.

4. What law are you talking about? They are not employees. Non-profits are not subject to gov't laws of employment. When people take on things like scholarships and are required to complete service for the university in return, they are not at all subject to employment laws, like the minimum wage. Put it this way: universities--if their non-profit status were threatened--would say, see ya Reggie Bush. Go play for the Peoria Mites, see how you like it. Now that's the free market.

Universities exploit labor for the common good. That's the trade-off, and most of the labor exploited by universities has nothing to do with sports.

 

[upstater1]

Instead of paying players, maybe the NCAA should put rules in place limiting how much coaches can be paid, punishing programs for low graduation rates and low post-graduate job placement and limiting expenditures on any single sports program.

Of course, that presumes the NCAA cares about student athletes more than it cares about the revenue generated by being a de facto minor league system.

The one problem is that football is outside the NCAA. They are only an enforcement mechanism for football. They do control basketball however.

 

[chicowalker]

The one problem is that football is outside the NCAA. They are only an enforcement mechanism for football. They do control basketball however.

Really? Who does make the rules for college football?

 

[letekro]

Upstater, a successful college football program brings in big-time money. I've given you the numbers provided by the schools themselves. I'm assuming if college football were really the drain that you're suggesting, schools wouldn't sell their souls to field a successful football team.

In a free market system, if a university doesn't pay its players a market rate, the football team goes down, the alumni contributions dry up, administrators get fired and the school is worse off. Do you disagree? I'm not sure how much schools would pay, that really depends on how important a successful team is to the alumni. (My feeling is that it is EXTREMELY important and contributions would rise to meet player salary requirements).

Yes, in the common law sense they are employees. Early cases held that they had rights to workers comp. However, since the myth of the "student-athlete", a term coined by the NCAA, took hold, they are generally statutorily exempted from labor laws, workers comp laws, and such. That doesn't change the fact that, in substance rather than name, they are employees.

As for the "greater good," this concept has been used since the beginning of time to justify exploitation and denial of individual rights. The invocation of it in this context only confirms that paying the players is the right thing to do.

 

[chicowalker]

What makes them "employees"? Are other college athletes employees employees? Div. III athletes? Non-athlete students?

 

[upstater1]

Really? Who does make the rules for college football?

The conferences through the BCS committee.

 

[letekro]

What makes them "employees"? Are other college athletes employees employees? Div. III athletes? Non-athlete students?

You can find a discussion of the common law test (i.e., facts and circumstances focused on whether the person is subject to the control of the person he is working for) and the factors the IRS looks at here: I. - Determining A Worker's Employment Status

There is some law on graduate assistants (they are not employees because their "work" for the school is part of their graduation requirements). Applying that law to football players, arguably they are more likely to be found to be employees because playing football does not fulfill any graduation requirements, rather it is part of a profit-making business of the university.

Again, this is a substance over form issue. In form, they are students - they receive scholarships, they purport to go to class, etc., but in substance they are employees - they perform labor (in many cases long hours) for the benefit of the universities, they are subject to the control of the coaches, they can lose their scholarships and be kicked off the team and out of school if they don't comply with team rules/coaches' wishes, etc.

 

[upstater1]

Upstater, a successful college football program brings in big-time money. I've given you the numbers provided by the schools themselves. I'm assuming if college football were really the drain that you're suggesting, schools wouldn't sell their souls to field a successful football team.

In a free market system, if a university doesn't pay its players a market rate, the football team goes down, the alumni contributions dry up, administrators get fired and the school is worse off. Do you disagree? I'm not sure how much schools would pay, that really depends on how important a successful team is to the alumni. (My feeling is that it is EXTREMELY important and contributions would rise to meet player salary requirements).

Yes, in the common law sense they are employees. Early cases held that they had rights to workers comp. However, since the myth of the "student-athlete", a term coined by the NCAA, took hold, they are generally statutorily exempted from labor laws, workers comp laws, and such. That doesn't change the fact that, in substance rather than name, they are employees.

As for the "greater good," this concept has been used since the beginning of time to justify exploitation and denial of individual rights. The invocation of it in this context only confirms that paying the players is the right thing to do.

What can I tell you? We both went over the numbers and again we disagree. I show the numbers as a loss when you include the university's contributions and subsidies.

As for programs being a drain, I'm not against schools losing money for football. I think football is good for campus atmosphere. Football is good for the same reason that a host of other money-losing activities on campus are good. I'm against schools losing a hole bundle of money because of football. Look at Rutgers, they just bonded a $120 million stadium expansion of 12,000 seats. Do the math. 12,000 seats is not going to pay for $120 million expansion. And meanwhile the school is sliding in the rankings because they haev gotten rid of academic departments that are central to their mission. According to Andrew Zimbalist, who is a nationally known economist on college sports, Rutgers has bought some snake oil. He seems to think that 90% of the expansions will never see black even if you paint the rosiest picture about contributions.

In a free market system, if a university doesn't pay its players a market rate, the football team goes down, the alumni contributions dry up, administrators get fired and the school is worse off. Do you disagree?

I have no idea what you mean by this. no one pays. The market rate for these guys on average is peanuts. Maybe $500? I dont know what it is, but your statement is false because no one pays now, and so... what is your point here, I'm struggling to figure it out. Hypothetically, lets assume that schools do what the author in the link is advising: cut funding to football programs so that the football programs fund themselves. If that means the football program starts losing, you think that will impact the university as a whole? Then how do you explain the fact that the vast majority of our top 100 universities do not have div. 1 football teams? The schools with the biggest endowments and alumni contributions don't have winning football teams.

They aren't employees. Show me any law that says they are. I'll say it again: schools are non-profit institutions. Students receive scholarships. You're saying this term was made up by the NCAA when the fact is the term was in use long before the NCAA came into existence. There is no category in employment law for student athlete, by the way, and that's because being a student and engaging in student activities is not considered employment in any legal sense. In fact, it's quite the opposite: you can get out of paying back student loans, for instance, if you show that you're still a student. But as soon as you become employable, you must pay them back. So the law recognizes that students have all sorts of privileges that working people don't.

I'll say this again to you: the man in the link argues that the people who are bringing much more money and value to the university and the local community are experiencing cuts in support. So even if I agree with you on everything else, the argument goes that football programs are bringing a lot less in revenue than the core parts of the university, and yet football isn't cutting, while the core mission is cutting. That's the argument.

The numbers that the Texas guy lays out should convince you, since the whole of the athletic department taken together doesn't even produce 5% of university revenue.

 

[upstater1]

You can find a discussion of the common law test (i.e., facts and circumstances focused on whether the person is subject to the control of the person he is working for) and the factors the IRS looks at here: I. - Determining A Worker's Employment Status

There is some law on graduate assistants (they are not employees because their "work" for the school is part of their graduation requirements). Applying that law to football players, arguably they are more likely to be found to be employees because playing football does not fulfill any graduation requirements, rather it is part of a profit-making business of the university.

Again, this is a substance over form issue. In form, they are students - they receive scholarships, they purport to go to class, etc., but in substance they are employees - they perform labor (in many cases long hours) for the benefit of the universities, they are subject to the control of the coaches, they can lose their scholarships and be kicked off the team and out of school if they don't comply with team rules/coaches' wishes, etc.

Um, the work of graduate assistants has absolutely nothing to do with graduation requirements. Graduate assistants work, and that work doesn't give them any graduation credit, and they make less money than student athletes.

 

[letekro]

Um, the work of graduate assistants has absolutely nothing to do with graduation requirements. Graduate assistants work, and that work doesn't give them any graduation credit, and they make less money than student athletes.

1. You're right it is not a requirement, but my understanding is they get graduation credits, so it clearly has an academic component, while football has no such component.

2. How do you make less money than zero?