A growing number of critics are calling for the National Collegiate Athletic Association (NCAA) to pay student athletes. Just this month, a coalition of professors banded together in support of labor rights for men’s football and basketball players.
But ask the NCAA and its member institutions whether they can afford to pay student-athletes, and their response is clear: No.
Meghan Durham, an NCAA spokeswoman, said only 20 of the roughly 1,100 schools that constitute the NCAA make more from sports than they spend, according to the association’s most recent estimates.
ESPN reported over two-fifths of the teams in the March Madness tournament either broke even or lost money last year.
Why ask such questions when schools couldn’t afford to pay players if they wanted to?
When sports economists were asked whether the NCAA and its member institutions could afford to pay student-athletes, the response was quite different: a resounding yes.
“It’s pretty clear they would be able to,” said David Berri, a professor of economics at Southern Utah University. “I don’t see any reason they wouldn’t be able to, in fact.”
As Rodney Fort, a sports economist and professor of sports management at the University of Michigan, said, “The money is already there.” The NCAA alone brought in nearly a billion dollars in revenue in its most recent financial year, and top-tier athletic programs regularly bring in tens of millions of dollars as well.
There’s a lot of money coming in, but if the schools are still losing money or only breaking even on their sports programs, won’t additional costs hurt those programs and the schools?
“They’re nonprofits, and their incentive is to spend every cent that comes in,” Berri said. “That doesn’t mean they aren’t making money—that just means they spent all of it.”
Duke’s athletic program, for example, pulled in revenue of nearly $80 million during a recent fiscal year. But it ended up with just $146,000 in excess revenue. That’s also why the NCAA had a surplus of only $80 million on $989 million in revenue for its last fiscal year.
“Schools quite often move around or spend money to basically get rid of excess revenue,” said Michael Leeds, a professor of economics at Temple University. “(That’s why) you have several coaches (in the NCAA) getting paid NFL money, despite working for an enterprise that really does not match what the New England Patriots take in.”
That would explain why some universities end up with state-of-the-art sports facilities. Or why Duke basketball coach Mike Krzyzewski makes nearly $10 million per year, much more than the typical NBA coach. Or why in so many states, the best-paid public employee is a basketball or football coach.
To pay the players would simply require a reallocation of resources, the economists said.
Most of the economists agreed it would likely be the highly paid coaches and athletic directors who would take the hardest hit if players were paid. Andrew Zimbalist, the Robert A. Woods professor of economics at Smith College, said it might take a few years for head coaches’ salaries to adjust to the new economic reality, but in time there would probably be less pay for people like Coach Krzyzewski.
That would explain in part why some coaches so vehemently oppose the idea.
But Stefan Szymanski, a sports economist at the University of Michigan, argued that head coaches should not fear a world in which student-athletes get paid.
“I don’t see the process by which coaches suddenly become less valuable,” he said. “I think they’ll (just) demand a bigger allocation from the university.”
The coaching change that Szymanski expects if players start making money is not one of pay levels, but one of skills valued. In a world in which student-athletes are paid, he said, coaches would likely be compensated less for their recruiting abilities – the money will talk, after all – and more for their coaching abilities.
David Carter, executive director of the USC Marshall Sports Business Institute, agrees with the economists’ conclusion, but worried that such a change would lead to “further polarization” between the haves and have-nots of college sports.
Economists note that bidding wars are already being waged. Duke basketball is already a powerhouse; Kentucky basketball is already a recruiting machine. Allowing colleges to pay players may give top-tier programs with greater revenue streams an additional recruiting advantage, and they already offer famous coaches, first-class facilities, greater visibility and a better shot at the big time, on top of scholarships.
HuffPost asked the five schools in the March Madness tournament that lost money on their athletic programs last year and the five schools that earned the most profit about paying their student-athletes. None of them directly addressed the issue.
