The NCAA and its conferences are the legal, economic cartels entrusted with negotiating and distributing revenue from media and sponsorship partnerships to their members. A patchwork system of multiple jurisdictions depending on state, public or private institutions will create an unprecedented level of complexity and chaos. Such a system will be not only be rife with recruiting chicanery, it will create an employee/employer relationship at the collegiate level, which essentially eliminates the amateur athlete designation in any of the revenue-generating sports. A federal solution is required if the NCAA wants to continue to maintain control.
In response to these recent state laws and the changing public perception of the function of the student/athlete, some interesting ideas have been floated, including one from the Knight Commission on Intercollegiate Athletics, proposing to create a separate division of large revenue schools to compete independently of the mid-tier and lower-tier programs. All of the suggestions we’ve seen so far have focused either on redistributing existing revenue sources or on giving athletes the right to seek compensation from corporate sources and/ or from the sale of licensed apparel bearing their likeness. One of us works at one of the biggest college basketball schools in the nation and the other one works in a state dominated by college football. We’ve both worked extensively within the framework of the business of collegiate sports. The notion of allowing college players to seek compensation directly from “sponsors” and alumni bases is the same system upon which slimy college boosters and AAU coaches have long been preying and thriving.
We propose a different solution. One that doesn’t require redistributing existing revenues, breaking up conferences, eliminating non-revenue sports, or inviting unprecedented levels of recruiting violations and booster tomfoolery. There are ways to use technology and the unmatched market for college athletics to solve this problem. Working with Congress to draft federal legislation, the NCAA could ensure fair athlete compensation while protecting its status as an amateur sports organization. The answer lies in the data.
When the Supreme Court’s decision in 2018 ended the federal moratorium on the states determining how to regulate sports gambling, a new revenue source was opened to all leagues – professional or amateur. According to estimates from Bloomberg News and Forbes, the NBA will generate over $300 million for the next six years and the NFL twice that. The four, major sports leagues are each reportedly generating over $200 million per year for their data and rights. The NCAA has two of the biggest gambling subject sports in college football and March Madness. Reuters estimates that over $8.5 Billion is wagered on NCAA basketball alone and the upcoming National Championship of college football between LSU and Clemson, both undefeated, should generate unprecedented interest. With such assets, the NCAA could easily generate over $500 million a year for its data and rights.
There are 15,000 D-I men’s football and basketball scholarship players. Would an extra $30,000 a year make players more likely to enjoy their college experience? Or, if the NCAA passed out $200 million to the 347 Division I basketball schools, then each school could recruit and pay the players of their choice, allowing for all schools to have a good shot at acquiring talent and remaining competitive. Otherwise, if the NCAA waits too long, it will no longer have the ability to determine its own future. If the NCAA leadership is not careful, state legislatures will create an environment where the alumni at schools like Duke will sell out of the $25,000 Zion Williams commemorative jerseys and Ole Miss business owners will pay $100,000 to feature the Rebels’ starting offensive line in a promotional video…all in the name of allowing student athletes to be equitably compensated for their names and likenesses.
By acknowledging that sports gambling is a legitimate and legal pastime enjoyed by millions of its fans, the NCAA could leverage substantial incremental revenue into a solution that compensates athletes while maintaining the amateur status upon which the NCAA business model and its core value system rests. Ironically, the NCAA, which has been so vocally opposed to gambling for years, might now need to embrace this legal pastime to save its identity, mission, and business model.
This appeared in Sports Business Journal on March 2, 2020.