There's advantages to being a contractor also. For instance, a workplace injury could leave the contractor/employer liable, but if they are an employee then workers compensation insurance covers and usually make liability claims not possible. They could end up with less for an on the job injury as employees.
At least that's what I was taught in a business class. It sounds like the cheerleaders fit the IRS definition of an employee (which is not well defined). Whether they should have fought to be employees, or whether there should be external rules outside of what the two parties agree with is a different discussion though.