College Football: Made in America by Union Workers

Professional Student AthletesThe college football season is right around the corner and fans across the country are getting ready to cheer for their favorite teams. But plenty of action is taking place already—not on the football fields, but in courtrooms and by legislative bodies—about players and what constitutes fair treatment.

The big splash came when Northwestern University football players filed an appeal with the National Labor Relations Board requesting to form a union. The players believe the term, “student-athlete,” has instrumental and political value: it enables the National Collegiate Athletic Association (NCAA) to skirt labor laws. The claim: “student-athlete” was coined by the NCAA decades ago, in part, to inhibit injured players from filing workers’ compensation claims. The players say they’re university employees and the NCAA says they aren’t. Who’s right? The courts will decide.

But consider the work done by law professors Robert and Amy McCormick of Michigan State University. The McCormick’s published an article in the Washington Law Review entitled, “The Myth of the Student-Athlete: The College Athlete as Employee.” Based on interviews with current and former athletes the professors concluded that players meet the standard of “employee” as defined by the National Labor Relations Act. They write: “These interviews demonstrate that their daily burdens and obligations not only meet the legal standard of employee, but far exceed the burdens and obligations of most university employees.” They continue: “We demonstrate that the relationship between these athletes and their universities is not primarily academic, but is, instead, undeniably commercial.”

No matter how this turns out, push has already come to shove. Last season players from Northwestern, the University of Georgia, and Georgia Tech wore A.P.U. emblems—All Players United—during a game-day Saturday. Then, on New Year’s Day, a plane flew over The Rose Bowl carrying this banner: “Wake Up, NCAA!” And this year Electronic Arts (EA) Sports agreed to pay former college players $40 million dollars. It was a court settlement associated with the previously unauthorized use of players’ likenesses in EA’s electronic college football game. And there have been other settlements with the NCAA, most recently about head injuries associated with athletic competition.

What do the players want? Major items include a voice in athletic policy; stipends that cover the full cost of college; and lifetime coverage for athletic-related injuries. They aren’t asking “to be paid.

How odd it is to have a debate at universities about student welfare—institutions that take pride in optimizing the student experience. But universities are many things. They’re corporations, too: presidents are CEOs and athletic directors oversee large and multifaceted sports programs.

And from the business angle, let’s make no mistake about it: the NCAA and its member schools want to keep the system generally as is. Here’s why.

Major college football today is anything but an extra-curricular activity: it’s a billion-dollar enterprise that mimics professional football in many ways.

Major college football today is anything but an extra-curricular activity: it’s a billion-dollar enterprise that mimics professional football in many ways—in attendance, coaching salaries, staff support size, and TV coverage—except that college players don’t “pay for play” and college football financially supports more than just football. The second distinction is especially important because non-revenue college sports (e.g., swimming) rely—in large part—on revenues generated by college football and, to a lesser extent, other revenue-producing sports (basketball at many schools).

And the need for money is considerable: a significant amount of money is being spent by major schools on college athletics. That matter was analyzed recently by The Delta Cost Project at American Institutes for Research. The Project found that the top-spending athletic conference nationally was the Southeastern Conference (SEC), a league that includes some of America’s top sports programs and most recognizable school names—Florida, Alabama, Kentucky, and Louisiana State—to name a few.

At the SEC’s public schools (data were not available for Vanderbilt, the conference’s private member) the median amount being spent institutionally per athlete across all sports was $164,000 for the 2010 year. How was the money spent? On average, nationally, about 40% of per athlete spending goes for coaches’ compensation and to pay athletic support staff salaries (e.g., sports information). Another 20% goes for facilities. 14% goes to student aid. The rest goes for things like recruiting, and travel.

That means (roughly and in round figures) about $23,000 of the money the SEC spent per athlete in 2010 went to aid student-athletes directly. The rest of the money supported the “athletic establishment”—across sports programs—that enables play. In comparison, the median amount that public SEC schools spent on non-athlete students in 2010 was about $13,500.

To single out the SEC athletically isn’t fair, though. The Big 12 schools (e.g., Texas, Oklahoma) spent about $130,000 per capita. And public schools in other major conferences—the Big 10 (e.g., Wisconsin, Illinois), the Atlantic Coast Conference (e.g., Virginia, Florida State), and the Pac-12 (e.g., UCLA, Oregon)—all had median institutional spending on athletics above $100,000 in 2010.

But that’s not the full financial story, not by any means. The possibility of offering additional financial benefits to athletes—beyond scholarships, room, and board—is no small matter, even if those benefits are offered only to players in revenue-producing sports. That’s because balancing revenues with expenses is a tight squeeze at most schools. So it makes dollars and sense for the NCAA to protect the system the way it is.

Professional Student AthletesBut many Americans don’t realize how the system works. To balance athletic budgets most public American universities rely on subsidies. That’s right: the cost of big-time college athletics at many public universities is subsidized. Gate receipts, TV revenues, t-shirt sales, and other income sources don’t cover full costs at most schools. Subsidies come in the form of higher tuition costs, added student fees, and state allocations (from university general funds) that are channeled to athletics.

It’s infeasible and unfair to expect athletic revenues to cover 100% of athletic costs, but take a look at the scale of what’s happening in American college sports today: in 2013 athletic subsidies totaled $2.4 billion dollars nationally. That’s according to USA Today, which tracks and reports athletic revenues, expenses, and subsidies at public sports-playing universities. The 2013 report—covering 230 schools—was published recently.

Data reveal a two-tier reality in American public university athletics. And it’s all about athletic revenues: the Top 50 revenue producers are in one tier and the rest of the schools are in the other tier.

All but a few schools in the Top 50 are from the “Power 5 conferences”—the Southeastern, Atlantic Coast, Big 12, Big Ten, and Pacific-12 conferences—schools with high name recognition: Cal, North Carolina, Tennessee, and the like. Schools like those generate a lot of money, manage expenses generally well, and receive modest, if any, subsidies. In fact, no subsidies were taken last year at seven schools: Texas, Ohio State, Oklahoma, LSU, Penn State, Nebraska, and Purdue. And subsidies taken by the other Top 50 schools (a total of about $315 million dollars) represent a fraction of collective gross athletic revenues, which were about $4.6 billion dollars in 2013. The bottom line is this: Top 50 schools generated about 60% of total revenues in 2013 and took about 13% of the subsidies.

Scenario 2 is a different story entirely—and it applies to about 80% of America’s sports-playing public universities. For these schools (as a group) athletic revenues totaled about $3.4 billion dollars in 2013, but over $2 billion dollars came by way of subsidies. Over 80 schools had subsidy rates of 70% or higher; a majority of schools needed a 50% subsidy to make budget; subsidies ran as high as 95% of revenue (Chicago State); and big subsidies can be found at nationally prominent schools (e.g., 81% at UMass).

An uneven subsidy landscape is apparent all over the country; and schools located just miles apart can have radically different balance sheets. For example, sports subsidies are low at the University of Michigan and Michigan State—both Top 50 schools. The two schools generated $240 million in revenues in 2013 and they received about $2 million dollars in subsidies—.18% of revenues at the University of Michigan and 1.8% at Michigan State. But the picture is radically different at the state’s three Mid-American Conference (MAC) schools. Subsidies at Western Michigan University totaled $21 million dollars in 2013 (74% of revenues). Subsidies at Central Michigan University and Eastern Michigan University were 67% and 80% of revenues last year, respectively. Aggregate subsidies at the Michigan-based MAC schools totaled $62 million dollars… at three schools, for one year, and in one state. I’ll bet most Michigan taxpayers don’t know that.

The USA Today report confirms what some analysts have suspected: at many schools intercollegiate sports aren’t run like a true business. Most programs can’t function (as they are organized currently) without subsidies. That conclusion doesn’t get much public air play, does it?

So, given the financial landscape of college athletics, you can see why the NCAA and member schools don’t support establishing athletic unions. Many universities have difficulty balancing the books as it is; and “meeting union demands” will just make things more difficult financially. That’s one reason why the NCAA has proposed creating a two-tier system administratively—giving more power and authority to schools in the Power 5 conferences—schools that are better able to manage finances without relying on subsidies.

But no matter what the NCAA does the larger question is whether major-college athletics has become a public policy matter. Public universities are spending billions each year on college athletics—a good share of it subsidized—and the public has no say in what’s happening.

The Power 5 proposal is more than just an internal adjustment based on economic realities in the collegiate athletic industry. It’s also a strategy for placating athletes’ and their unionizing urges. Because the top tier schools have the resources to “do more for athletes” (primarily offering stipends that cover “the full cost of college”) it may be a way for big-time football to avoid or slow down the union movement.

But no matter what the NCAA does the larger question is whether major-college athletics has become a public policy matter. Public universities are spending billions each year on college athletics—a good share of it subsidized—and the public has no say in what’s happening. The spending comes at a time when many Americans grapple with the high cost of college and many students graduate with considerable debt.

The public policy frame is critical because the current option—letting the NCAA and its member institutions decide—will likely yield more of the same: more and more spending. While it would make sense to downscale athletics at many schools so that costs can be covered more substantially by non-subsidized revenues, there’s no movement underway to recalibrate college athletics so that schools can operate within financial means.

The tenuous financial profile of major college sports puts athletes at risk. That’s because schools are self-absorbed in institutional matters. So it’s no wonder the players have turned to organizing, choosing activism as a pathway to voice, standing, and self-protection.

frank-fearAnd that’s a good move. Activism keeps the system honest. It also shines a spotlight on democracy’s most fundamental questions: What’s Fair? What’s Just? Answers to those questions are main ingredients in a dish called “the American experience,” a recipe topped with conviction, persistence, and emotion. Voilà! What emerges is that makes America great: freedom from control and oppression.

Unionizing is about as American as it gets. And it may be coming soon to a collegiate stadium near you.

Frank Fear

ENDNOTE: The content of this article was drawn from my articles at The Sports Column http://www.thesportscol.com/category/frank-fear/ dated February 5, April 23, and June 27 2014; and from my Letter to the Editor published in The Fort Myers (FL) News-Press, August 3 2014.

 

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