NCAA- Supreme Court ruling

[BMWallace]

But there is competition. In the case of FB and MBB, it just so happens that the primary "competition" to the NCAA in determining market labor rate for athletes, namely the NFL and NBA, has minimum age restrictions, and those leagues have few jobs to offer relative to the number could compete in college sports. So, in essence, the NCAA is being punished for offering opportunities to athletes that are otherwise precluded from working for the NCAA's competition.

I think you are viewing that backwards. The NCAA was a large proponent of the minimum age for the NBA draft, because some of the top basketball players were bypassing college, and that meant schools were missing out on potential revenue.

While it was rare that high schoolers went directly to the NBA (39 players from 1995 to 2005), players like Kobe, KG, Dwight Howard, and Lebron represent massive audience draws, and the potential for the schools to bring in more money, even if they are just one-and-done. Look at the way Anthony Davis and Zion Williamson were pushed and marketed. That wasn't for the players benefit, they appeared physically capable of playing in the league. But they weren't allowed to go so they did their one year of college.

For the NFL, they have shown that they are not interested in a developmental league. Instead they are happy to let the colleges shoulder the risk and cost of developing the young players, and then picking the top talent once they become eligible. Meanwhile the NCAA and the colleges want the talented players because that means there is a better and more marketable product on the field for them to sell.

 

[jbhtexas]

Agree, the NCAA is being wrongly punished because no one will fund alternative professional leagues for HS grads, especially for football. The NCAA should have told the Supreme Court: "NCAA participation is purely voluntary and there are no restrictions on someone forming alternative professional leagues."

Or not taking a scholarship and taking out loans to pay for college like most everybody else does...

 

[jbhtexas]

I think you are viewing that backwards. The NCAA was a large proponent of the minimum age for the NBA draft, because some of the top basketball players were bypassing college, and that meant schools were missing out on potential revenue.

When has the NCAA supported the NBA minimum age requirement? In the article below, from 2019, the NCAA tweeted support for the NBA lowering the minimum age to 18.

Report: NBA formally proposes age limit of 18

Reducing the NBA's draft-eligible age requirement from 19 to 18 is one step closer after the league formally proposed the rule change to the players' union, USA Today reported.

www.espn.com

In a free market, if there are only a limited number of jobs in a certain field, then the job provider gets the upper hand in determining compensation. The potential employee is not forced to take the job.

 

[theshadow]

Would it? Schools have plenty of employees already and it doesn't affect their tax status. They rake in giant amounts of cash for sports and it hasn't caused them to lose their status. I'm not necessarily opposed to them having to pay taxes, but tax exempt entities are allowed to pay their employees.

The current argument for tax-exempt status in college athletics is the "college" (education) part. The schools can still get away with it because the payment to athletes is indirect and comes in the form of scholarships -- a fair amount of which is already considered taxable income for the athlete.

However, if it gets down the road far enough that the athletes are getting compensated directly (beyond NIL), then that status will get another long look -- because then you're tiptoeing the line of professional (paid) sports league vs. extracurriculars at an educational institution.

 

[CYEATHAWK]

Is there a way to do the collective bargaining with athletes who are going to be there for a little over 4 years?

A college players union.....at a public school? Who would be the adversary in cases of dispute?

 

[agrabes]

That money will come from the increase in the CFB playoffs from 4 to 12, right now ISU has 541 student athletes, so if each one receives $25,000 that would be a total of $13,525,000 per year in paying the players. That would eat up most of what ISU will receive with the playoff expansion and increased TV deals. But if you only pay the revenue making sports of football and basketball that cuts it down to less than 4 million for 135 players at 25 K per year.
The link below shows here the money is being made and spent at ISU, and most of that money is coming from football and a little from MBB, every other program is running in the red. So the question becomes does the university and the courts allow non revenue sports athletes to also be paid a stipend or only the revenue producing ones?

Iowa State University Athletics Programs - College Factual

I think that's a fair point. If money does come in to ISU and/or the B12 and other P5 leagues from a potential expanded playoff it could be a good way to pay for player salaries. But do you think a $25K/year flat rate for scholarship football players is truly the end goal/result of this?

The language we are hearing is that these players are the backbone of a billion dollar industry and their compensation is not in line with their value. If we're talking about things in that framework, we're talking about paying star players hundreds of thousands or millions per year. $25k across the board, or even $25k average is not going to cut it for someone with that mentality. And in some ways, it is hard to argue against their logic. I think to really know how fair or unfair a deal college athletes get we'd need to see side by side comparisons between NFL/CFB and NBA/CBB and their finances. Are the high salaries of NFL players mostly due to the fact that the NFL brings in more money vs. CFB? Is it due to billionaire owners putting in their own personal money to their teams to keep them competitive? Do TV networks take higher margins on NCAA sports vs. NFL/NBA? Is it due to differences in funding sources for facilities? You won't see an NFL player take the field for $25k/year. So where does that money come from?

 

[CascadeClone]

How is your plan going to pass Title IX standards?

Great question. No idea really.

The only thing that seems reasonable to me is to split the revenue from each sport to the athletes in each sport. Auburn's women's rowing team doesn't have a $50M locker room, so there must be some exception/process that makes that possible.

If they don't allow that, and all the football revenue has to go to everyone, you might see a lot more kids getting pushed into equestrian, fencing, and track lol.

Take ISU as a rough example. Let's say $10M of the CFB TV money gets thrown into a pool for the athletes. If it goes equally to the football players only, then that's roughly $150k each. If it gets equally to all the other athletes, then it's maybe $25k each? These are rough numbers, I am just wagging it.

 

[JM4CY]

Schools cant start paying or they will bump up against Title IX issues. The only solution is to allow NIL rights to athletes. It's going to be the Wild Wild West of boosters and local companies paying athletes out there. I can see why the smaller revenue schools are leery of this.

Should be crazy.

You guys will have a leg up with all your experience already in that arena.

 

[cycloneG]

This system “effectively transfers resources away from students who are more likely to be Black and more likely to come from poor neighborhoods towards students who are more likely to be white and come from higher-income neighborhoods,” the researchers write. Coaches and administrators also are more likely than their players to be white.

Who Benefits from Not Paying College Athletes? Their Coaches, for Starters

The income transfers created by college-sports compensation rules exacerbate long-standing inequities.

review.chicagobooth.edu

 

[SEIOWA CLONE]

I think that's a fair point. If money does come in to ISU and/or the B12 and other P5 leagues from a potential expanded playoff it could be a good way to pay for player salaries. But do you think a $25K/year flat rate for scholarship football players is truly the end goal/result of this?

The language we are hearing is that these players are the backbone of a billion dollar industry and their compensation is not in line with their value. If we're talking about things in that framework, we're talking about paying star players hundreds of thousands or millions per year. $25k across the board, or even $25k average is not going to cut it for someone with that mentality. And in some ways, it is hard to argue against their logic. I think to really know how fair or unfair a deal college athletes get we'd need to see side by side comparisons between NFL/CFB and NBA/CBB and their finances. Are the high salaries of NFL players mostly due to the fact that the NFL brings in more money vs. CFB? Is it due to billionaire owners putting in their own personal money to their teams to keep them competitive? Do TV networks take higher margins on NCAA sports vs. NFL/NBA? Is it due to differences in funding sources for facilities? You won't see an NFL player take the field for $25k/year. So where does that money come from?

The money that the NFL brings in each year dwarfs what CFB brings in and they split that pie only to the 32 teams in the league. No owner is putting his own money into the team, they are printing it between tickets sells, stadium deals and TV. And each team gets an equal share of that revenue, does not matter if they are located in NY city or Green Bay. The only TV rights each team sells is its preseason games, the rest of the games are owned by the league itself.

College football is totally different, each league gets to determine how much money they give out to each member school, the Big 10 and SEC give each school upwards of 50 to 60 million, while the Big 12 comes in 3rd at around 37 million. The ACC and Pac 12 give out less per school. Its all based on their TV contract, the Big 12 allows teams to sell their own 3rd Tier rights, allowing UT to set up the Longhorn Network and get an extra 15 million a year from ESPN. ISU's is a fraction of that around 2 to 3 million.

How they give out the money to the players will have to be decided in the future, maybe a tiered system, first year players get 10K, then receiving more as you go from year to year. No one knows, just like we do not know whether the non revenue sports are going to get any of it or not.

According to an article in the Atheletic yesterday, the best way is to allow the players to form a union, and then go from there, but the article did tell the NCAA in a 9 - 0 vote that it would be in your best interest to get something worked out, because if it comes before the court again, the NCAA will not like the results.

 

[Mr Janny]

The current argument for tax-exempt status in college athletics is the "college" (education) part. The schools can still get away with it because the payment to athletes is indirect and comes in the form of scholarships -- a fair amount of which is already considered taxable income for the athlete.

However, if it gets down the road far enough that the athletes are getting compensated directly (beyond NIL), then that status will get another long look -- because then you're tiptoeing the line of professional (paid) sports league vs. extracurriculars at an educational institution.

Again, nowhere in the IRS statute on tax exempt status for Universities will you find anything related to sports. It's simply not in there. It would take a change to the law to revoke their status as tax free.
But even if that did happen, I wouldn't mind seeing athletic departments get taxed. That's not a doom and gloom scenario in my opinion

 

[cykadelic2]

Again, nowhere in the IRS statute on tax exempt status for Universities will you find anything related to sports. It's simply not in there. It would take a change to the law to revoke their status as tax free.
But even if that did happen, I wouldn't mind seeing athletic departments get taxed. That's not a doom and gloom scenario in my opinion

The IRS statue never contemplated the idea that Universities would be paying student-athletes as W-2 employees for their athletic services. If Universities are somehow (and wrongly) forced into doing so, the non-profit status of the entire University will come into question, not just their ADs.

 

[scottwv]

I don't think most Universities will directly pay players beyond scholarships and "cost of attendance" stipend. Title IX issues is one reason. Plus- Athletics budgets are miniscule to the University as a whole. Would Iowa State that has a $1.4 billion annual budget want to add hundreds of collective bargaining eligible employees in a department that has a $80 million budget?

 

[Mr Janny]

The IRS statue never contemplated the idea that Universities would be paying student-athletes as W-2 employees for their athletic services. If Universities are somehow (and wrongly) forced into doing so, the non-profit status of the entire University will come into question, not just their ADs.

Again, tax exempt organizations are allowed to have employees. Paying employees for work doesn't invalidate an entity's tax exempt status.

Certainly the law could be changed. But laws can be changed at any time. As it stands, there's nothing in the statute that ties tax exempt status for Universities to athletics.
If you want to play the "what if" game and wonder what could happen, that's fine, but it's just speculation.

 

[theshadow]

If you want to play the "what if" game and wonder what could happen, that's fine, but it's just speculation.

That's pretty much all this entire thread has been.

 

[ruxCYtable]

I hope my fears are unfounded, but I'm VERY worried about the future of college athletics.

 

[Mr Janny]

That's pretty much all this entire thread has been.

Lol. Touche.

 

[BMWallace]

When has the NCAA supported the NBA minimum age requirement? In the article below, from 2019, the NCAA tweeted support for the NBA lowering the minimum age to 18.

Report: NBA formally proposes age limit of 18

Reducing the NBA's draft-eligible age requirement from 19 to 18 is one step closer after the league formally proposed the rule change to the players' union, USA Today reported.

www.espn.com

In a free market, if there are only a limited number of jobs in a certain field, then the job provider gets the upper hand in determining compensation. The potential employee is not forced to take the job.

In a free market, if there are only a limited number of jobs in a certain field, then the job provider gets the upper hand in determining compensation. The potential employee is not forced to take the job.

But that principal doesn't hold water if the employees are also the product that the job provider is selling. The job providers (colleges) are reliant on the quality of employees that the can acquire in order to put the best possible product in front of consumers, and more importantly, advertisers.

It doesn't help that college athletics is not an open market, especially for football. It has become a protected monopoly that has been able to suppress employee compensation with the excuse of "amateurism". There is no other viable path for a player to reach the NFL than by participating in the college, but those players are also not allowed to seek fair compensation for their labor and the product that they put out.

And we have seen over the last few years more and more players opting out of the college post season because the benefits do not outweigh the risk. The highest profile example being Nick Bosa, who, after an injury withdrew from Ohio State 3 games into his junior. He had already established the value he could bring at the NFL level, and it became more prudent to skip the remainder of the season thank risk more serious injury.

 

[cykadelic2]

Again, tax exempt organizations are allowed to have employees. Paying employees for work doesn't invalidate an entity's tax exempt status.

Certainly the law could be changed. But laws can be changed at any time. As it stands, there's nothing in the statute that ties tax exempt status for Universities to athletics.
If you want to play the "what if" game and wonder what could happen, that's fine, but it's just speculation.

Of course, they are allowed to have employees and those employees provide services that facilitate the University's non-profit academic mission. But when you pay students beyond FCOA schollies as W-2 employees solely for their athletic talents, that tax exempt status will surely come into question.

 

[agrabes]

The money that the NFL brings in each year dwarfs what CFB brings in and they split that pie only to the 32 teams in the league. No owner is putting his own money into the team, they are printing it between tickets sells, stadium deals and TV. And each team gets an equal share of that revenue, does not matter if they are located in NY city or Green Bay. The only TV rights each team sells is its preseason games, the rest of the games are owned by the league itself.

College football is totally different, each league gets to determine how much money they give out to each member school, the Big 10 and SEC give each school upwards of 50 to 60 million, while the Big 12 comes in 3rd at around 37 million. The ACC and Pac 12 give out less per school. Its all based on their TV contract, the Big 12 allows teams to sell their own 3rd Tier rights, allowing UT to set up the Longhorn Network and get an extra 15 million a year from ESPN. ISU's is a fraction of that around 2 to 3 million.

How they give out the money to the players will have to be decided in the future, maybe a tiered system, first year players get 10K, then receiving more as you go from year to year. No one knows, just like we do not know whether the non revenue sports are going to get any of it or not.

According to an article in the Atheletic yesterday, the best way is to allow the players to form a union, and then go from there, but the article did tell the NCAA in a 9 - 0 vote that it would be in your best interest to get something worked out, because if it comes before the court again, the NCAA will not like the results.

Thanks to your note I went in and looked up NCAAF vs. NFL annual revenue for 2019 and it does give some good context.

P5 Estimated Combined Revenue 2019: $4B for 65 Teams = $61.5M/P5 Team per average
NFL 2019 Revenue: $16B for 32 Teams = $500M/NFL team average

The financial fallout of a canceled college football season

The largest college sports conferences are bracing for a cancellation of the upcoming college football season—a move that would have wide-reaching economic consequences.

fortune.com

.

Report: NFL revenue dropped by $4 billion in 2020

The NFL lost $4 billion in revenues in 2020 compared to the prior year, the Sports Business Journal reported Thursday.

www.reuters.com

.

So if we were to say that on average a P5 team has 12% the money the average NFL team has, we'd be looking at the median P5 player making $106,000 (12% of $860,000 median NFL player salary). That's still a big gap. If we're looking to say the median total compensation of a P5 football player should be proportionate to his NFL counterpart that is a lot of money to find in NCAA budgets.

Another way to look at it would be gap in pay between head coach and median player. The median NFL coach is paid $5.5M/year, 6.4 times more than the median player. With Matt Campbell's salary of $4M, we would be looking at a median ISU player salary of $625,000.

Any way you look at it, there are valid arguments to be made that things are out of whack with NCAA pay/compensation structures.

I think it's wishful thinking to say that this could go any other way than direct payments to the athletes, based on the Supreme Court ruling. Someone will sue, and a court will rule that it's unfair based on this precedent and decree that the athletes must be paid in line with others in similar work. The only way it could go otherwise is if players organize and the NCAA bargains with them and comes up with a deal they accept prior to a lawsuit happening.

How Much Money Does an NFL Player Make a Year?

Playing in the National Football League is a dream for many high school and college athletes. The incredibly high multimillion contracts of star players gives the appearance that all NFL team members receive big contracts, but the truth is far different. Most players earn substantially less.

work.chron.com