Tuesday, June 22, 2010

Economic & legal obstacles make it impossible to pay college athletes

(This post was published in the Detroit Free Press on February 8, 2011)

One of the recurring hot topics in sports is whether college athletes should be paid. Many people believe that college athletes should be compensated based upon the perception that colleges and universities are making millions of dollars off of them. Others argue that it is philosophically wrong to pay student athletes given their amateur status and the in kind compensation that they already receive.

While compensating student athletes may be a fun topic to debate, it is simply not a viable option due to the current economic circumstances within college athletics and the mandates of Title IX.

Athletic departments at NCAA schools are not nearly as profitable as one might think. According to Dr. Dan Fulks, a Professor of Accounting at Transylvania University in Lexington, Kentucky who has also analyzed financial data for the NCAA for the past 15 years, only 14 of 119 of athletic departments for Football Bowl Subdivision schools made profits in 2009.

When asked about the feasibility of paying college athletes Dr. Fulks explained, “Over the last five year period, we are seeing the median institutional cost for athletics to be approximately $8 million, and this is true in all subdivisions of Division I. The average number of athletes per school in all three subdivisions is approximately 600, and the average cost per athlete in the FBS is over $70,000. Thus, it is not financially feasible to pay the student athletes.”

Very few sports programs within NCAA athletic departments generate positive revenue. The only teams that even stand a chance of operating at a profit at most schools are men’s football and basketball. In fact, the only programs other than men’s football and basketball that were profitable at any Football Bowl Subdivision college or university in 2006 were men’s baseball at Louisiana State University and the University of Texas, and women’s basketball at the University of Tennessee and Duke University.

To make matters more difficult, athletic departments would not be able to selectively compensate athletes from sports that are profitable at the expense of athletes from non revenue producing programs

Dr. Fulks explained, “While it is true that over half of football and men's basketball programs are profitable, we cannot select the programs whose student athletes would be subsidized. Such pay would have to be across the board for all programs.”

Even if financially constrained athletic departments wanted to drop non revenue producing sports in order to make it easier to compensate athletes in profitable programs such as men’s football and basketball, they would still be handcuffed by the requirements of Title IX.

Title IX is the Federal law that states: “No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance.” Among the factors that are looked at in order to determine compliance with Title IX are “travel and per diem allowance.”

Thus, in order to pay college athletes and comply with the requirements of Title IX, athletic departments would need to compensate female athletes at roughly equal numbers and rates as they do male athletes. While the few athletic powers that have economically self sufficient athletic departments might be able to afford to compensate their student athletes with a few program cuts in non revenue producing sports, even some of the most prominent colleges and universities in the nation would be unable to pay their student athletes.

Not only did 105 out of 119 FBS athletic departments operate at a net loss in 2009, barely half of those 119 FBS schools were even profitable in men’s football and basketball, the two programs that typically generate positive revenue in college athletics. If so many prominent schools don’t even generate enough revenue to compensate athletes in the only sports that are typically profitable for most athletic departments, how could they ever manage to compensate student athletes in non revenue producing sports without major program cuts or subsidies?

Compensating college athletes would have ramifications far beyond paying elite players who participate in high profile sports at the biggest colleges and universities. Any NCAA policy that would allow athletes to be paid would have to be applied evenly to all athletes at all colleges and universities, which would likely lead to the death of the traditional student athlete and most athletic departments as we currently know them.

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