story from Talk Business & Politics, a content partner with The City Wire
Paying college athletes a small stipend in addition to their scholarships is inevitable, the sports agent for former Arkansas Razorbacks quarterback Ryan Mallett said during a speech before the Clinton School of Public Service on Monday (Dec. 1).
J.R. Carroll, a partner at the Fayetteville office of the Kutak Rock law firm and one of two Arkansas-based agents representing NFL players, said the NCAA will no longer be able to rely on the justifications it has used in the past to avoid paying players. It calls players “student-athletes” when they really are college employees, and it uses their likenesses and names without compensating them. Meanwhile, the economics of college sports demands that the athletes be paid.
“The money has gotten to be so big and the pie has gotten to be so big that at some point, you’re going to have to give a piece of that pie to the individuals who are actually generating that income,” he said.
Carroll predicted that it will be commonplace for athletes to be paid small stipends to help them pay for college. Scholarships do not cover the full cost of college including incidentals, but practice demands preclude players from working paying jobs. However, he said stipends will remain relatively low because the universities will collude to prevent an “arms race.”
Carroll said schools will have to pay stipends to both male and female athletes to comply with Title IX, a federal law requiring gender equity in educational programs receiving federal funds.
Carroll traced the current situation back to the 1950s, when Walter Byers, the first NCAA president, coined the term “student-athlete” so the NCAA and its member schools could avoid paying for worker’s compensation. In a case involving a football player who died in a game, a judge ruled that players were not under contract, that universities are not in the football business, and that no university could profit from a football team – arguments that don’t apply now, he said.
Two legal decisions this year have weakened the NCAA’s case, Carroll said. When Northwestern University’s players asked to be allowed to unionize, a National Labor Relations Board regional director ruled that scholarships are a contract and athletes are employees.
Peter Sung Ohr, a regional director with the National Labor Relations Board based in Chicago, agreed with Kain Colter, the Northwestern quarterback who pushed the issue.
“In sum, based on the entire record in this case, I find that the Employer’s football players who receive scholarships fall squarely within the Act’s broad definition of ‘employee’ when one considers the common law definition of ‘employee,’” Ohr noted in a March ruling.
The ruling is being appealed. The NCAA has joined the appeal, has have several members of Congress.
Then a judge ruled in a lawsuit brought by former basketball player Ed O’Bannon and others that the NCAA could not prohibit member schools from offering players a limited share of sports revenues.
The ruling in the Ed O’Bannon case will not apply until 2016, but Carroll said some schools have already begun to discuss the kinds of financial rewards they will offer.
Carroll pointed to the University of Alabama to show how athletics is tied to the overall operation of the university. Since Nick Saban became head football coach of the Crimson Tide in 2006 and began leading the team to three national championships, athletic department revenue has increased by 112 percent, the school has received more than $600 million in private donations, and the student population has increased by 51 percent. Sixty-two percent of the school’s students are from out of state, bringing in an extra $300 million just in out-of-state tuition. Meanwhile, the University of Florida, whose football team has been mediocre in recent years, has seen a one percent drop in its student population.
“Seven million dollars a year seems like a pretty good bargain for Nick Saban,” he said, referring to the coach’s salary.
Indeed, big dollars are at stake. A recent Forbes series on college football estimated that the top 20 most valuable college teams have a value of $85 million a year and generated a combined $1.3 billion of revenue in the most recent year. A September 2013 BusinessWeek article noted that 10 top college football programs saw their combined annual revenue rise from around $300 million in 2000-2001 to more than $759 million by 2010-2011.