THE GOOD SHIP ... SCHOLARSHIP?

I’ve been giving some thought to the California case allowing college athletes to be paid for their name and likeness. I’m enthusiastically for it, of course. It’s only common sense.

What is unclear is whether this will lead toward a pay structure for college sports. I’m enthusiastically for that, as well, at least with the Power 5 conferences. But the more I think about it, the more I see a wisdom in the current system that, while not ideal in any way, allows for college sports to exist in places where it otherwise wouldn’t and therefore, if changed to a salary system, would almost certainly end college football and basketball as we know it.

It starts with the scholarship, which is a unique instrument of value. Here are some characteristics of a scholarship that makes it unique:

1.        It is only valuable to a high school senior. Much less frequently, it’s valuable to someone older like an ex-military person who is looking to attend college, but for the sake of argument, let’s ignore those miniscule numbers of people, especially where major college sports are concerned.
2.        It can’t be exchanged for something else of like value. You can’t get a university to give you the value of a scholarship in cash if you choose not to attend. It’s “take it or leave it.”
3.        It has an expiration date. If you don’t take the scholarship, they give it to someone else.
4.        It regenerates every year. Universities are allowed by the NCAA to award a given number of scholarships each school year.
5.        Every university that belongs to the NCAA scholarship system in every small town and big city can award scholarships. You don’t have to be in a growing population center with a huge, thriving economy to be a part of this system. You can be anywhere.

By using the college scholarship as the main form of compensation (stipends are an obvious thing that colleges should be doing anyway, but stipends don’t really amount to much in value terms compared to scholarships), it allows universities to attract athletes to an incredibly varied, diverse, and widespread number of cities, towns, and municipalities throughout the nation. Over time, this has led to stadiums, arenas, and practice facilities being built in almost every location you can imagine. Compare this to a sport that doesn’t have a college-sponsored system at all – cricket. Cricket is the #2 spectator sport in the world, yet without US colleges giving scholarships for cricket, there is almost zero demand for cricket facilities in the US and very few have been built. Of course, there are many reasons for cricket facilities not being built, but the fact remains that it is the most popular sport in the world that doesn’t have US college scholarships, and this is a huge reason for the lack of US facilities.

Now, imagine a world in which colleges were forced to pay a minimum wage to athletes. The scholarship would still exist and be a valuable commodity to non-elite players, but now cash would be king. If you must pay the federal minimum wage to your athlete “employees." that works out to $7.25/hr for about 40 hours a week for about 100 football players and 15 basketball players. Figure the season at 26 weeks each, and that’s a minimum outlay of $754,000/yr for football and $113,100/yr for basketball. Of course, that’s the federal minimum. Most larger schools will allocate far more than that because state minimum wages vary and inevitably, bidding wars will ensue for the best players. When all of that is said and done, the Power 5 will more than likely spend $5 to 10 million per year for player salaries for the two major revenue sports, and more for legally required medical benefits and other compensation as well as increased liability insurance and other costs that come with having employees rather than merely students. They might get around some of that by calling them "contractors" but that's another discussion.

At those numbers, even some of the Power 5 schools will balk. Will Mississippi State in sleepy Starkville, MS have that kind of cash lying around every year? Maybe. Alabama and Auburn will. A divide will start to appear even in the Power 5 and will widen until most smaller schools and many of the Power 5 schools decide to give up these sports. When the currency is cash, and not scholarships, you can spend cash on other things of value, and accountants start getting involved and start making recommendations. A scholarship is of no value to a research scientist or an English professor or a provost. Cash is another story, and when those stakeholders see mountains of cash flowing to the athletes, they will wonder why they aren’t getting it. Most of the Power 5 will decide the cost/benefit equation works in their favor, and that’s what we’ll be left with: a structure very similar to professional sports, where roughly 30-40 big name schools stay in the game and everyone else decides it’s too rich for their blood.

This of course will have lasting and profound effects on the fans of the schools that pull out. If you live in Ames, or Corvallis, or Starkville, you might have to suck it up just like you do for pro sports and drive a few hundred miles to the nearest remaining Power 5 school if you want to continue to watch top-level college sports in person. With far fewer schools, the ticket prices, concessions, parking, and merchandise will skyrocket at the ones still playing. The stadiums, arenas, and practice facilities of the schools that leave will either be torn down or re-purposed somehow for academia, and new ones will never be built.

Now, you can make the argument that this is how it SHOULD be. I would agree with you. A multi-billion-dollar conglomerate like college sports should pay the people who keep it operating in cash, and the market for their services should dictate the macro-economics of the business. But that means huge changes are almost certainly going to happen. To pay college athletes what they are worth, or even a fraction of that, means many schools will choose to spend that money elsewhere where they can get a better return, or at least appear to be getting a better return, in the eyes of their communities.

This is what the university presidents and the NCAA must think about all the time. I’ve never seen it quite articulated like this, but I’m sure an academic study is out there. Basically, this is a problem of the small-school many dictating to the large-school few that even though they don’t make billions on these sports, they make a good bit of money, enough to like having them around anyway, and they can only do so with the draw of the uniquely valuable scholarship (valuable to players, not valuable to anyone else, etc.) as the currency of choice. If you change the currency to cash, the pressure to spend that cash on other things will be too much for most of them, and these sports traditions they’ve built for over a century will collapse. None of them want this as their legacy.