What happens when (at least some) college athletes are paid by their schools?

Good morning, and thanks for spending part of your day with Extra Points.

I’m going to tweak my publishing schedule a bit, since I’m traveling. By the time you read this, I will have just gotten back from the University of New Haven after giving a presentation on the implications of college athletes being directly paid by their schools. I’ve been playing planes, trains, and automobiles for a bit, and I need a minute to catch my breath and read the gazillion emails I’ve been neglecting as I tried to eat my way through every pizza place in town.

I don’t have an exact video recording of my presentation, but since this topic fits squarely in the Extra Points Readership wheelhouse, I figured I could at least share my Google Slides deck and some notes that I shared with the group.

If you’re interested, here’s the deck that I used. I didn’t write out my entire talk on the slides, because don’t you hate it when a presenter just goes up to a podium and reads a slideshow? But perhaps these notes may be useful for some of my readers who also teach college classes.

For those who don’t want to read that whole thing, here are a few major takeaways that I tried to impress on the group:

There is no such thing as “the NIL market”

There are, in my view, two different NIL marketplaces. There is the NIL world of brand-centered, marketplace outcome-driven deals, where athletes run camps, start businesses, or engage in social media promotional activity. There is also a world, mostly (but not exclusively) concentrated around P6 football and basketball players, where NIL activity is funneled through collectives as a talent acquisition or retention fee.

Call it “brand value”. Call it “bagman NIL.” Call it “pay for play.” Call it whatever you want, but don’t call it NIL if you’re calling the other stuff NIL as well.

These are two completely different marketplaces that have different actors, respond to different market forces, and have different definitions of success. Conflating the two marketplaces confuses brands, athletes, parents, athletic departments, academics, and anybody else trying to participate in the marketplace.

The advice I usually give when talking to students or athlete groups is that everybody, from NAIA to the P5, can participate in market-driven NIL…but their individual market value, without a lot of work, is probably very low. Not everybody can participate in Bagman NIL.

Both markets, in my opinion, are poor and inefficient stand-ins for actual athlete compensation for their labor and value.

We are almost certainly moving towards a system where at least some athletes will be directly compensated by schools. But which athletes, and who represents them, is still an open question

There are powerful external forces pushing towards major reforms to the college sports status quo. The NCAA is facing legal challenges from the National Labor Relations Board, Johnson, House, and others. Losses in any single case would either bankrupt the organization, force some athletes to become classified as employees, or both. The model is also facing pressure from lawmakers, activists, collectives, a slew of lawyers and businessmen, and even some athletes.

But exactly what that new model looks like is not certain, or at least, I don’t think it is certain. We could have a world where courts rule that virtually all college athletes fall under the employee designation, even if they don’t drive television or ticket revenue. We could have a world where only a few sports at a few schools fall under that designation, a system that may perhaps break P5 football and P6 basketball out of the NCAA (or even colleges) altogether. There could be any number of hybrid models between those two.

I believe there are too many unknowns to prognosticate with any certainty…but that’s a very good reason why coaches, university leaders, athletes and everybody else need to be prepared for multiple outcomes. Everybody, from Ohio State to Oberlin, needs to have a plan for what happens if their athletes suddenly become employees.

I believe the most moral, and best organizational choice, is to directly compensate at least some college athletes. But I don’t want to pretend that this choice doesn’t have potential consequences.

There are two truths that I think those who advocate for paying athletes need to recognize.

For one, the idea that not every college can afford to do this is not just a scare tactic floated by overpaid administrators…it’s a real thing. If Texas A&M can pay a grown man named Jimbo over 70 million dollars to not coach football, of course they can afford to pay every single athlete in every single sport. Ohio State, Alabama, Michigan, Texas…can absolutely afford to pay highly competitive and fair wages to all of their athletes, not just the football players. It may require some staffing cuts elsewhere in the department, it will require right-sizing coach and staffer compensation, and it may require ending some athlete-support services…but it absolutely can be done.

But not everybody is Ohio State. If you strip away the student fee money and the institutional subsidies, and just look at earned revenues…your typical MAC or Sun Belt program is pulling in under ten million bucks a year, and that includes the money they make from paycheck games. If you’re a Big West, Horizon, or America East type program…you’re earning two, three, five million a year. At the D-II level, it may be under a million.

That isn’t enough to cover expenses now, let alone pay athletes anything. You could shave a few hundred thousand from slashing the pay of your AD and a few head coaches, but it’s not like whoever is coaching softball at New Hampshire is making $250,000 to begin with.

If everybody has to share revenue with athletes (either via employment or some other model), and schools don’t decide to increase their institutional commitments to cover those costs, some schools are going to drop some sports. Some schools are going to drop scholarships. Some schools are going to convert their athletic departments to club models. I don’t think it’s possible to say how many, since it will depend on what revenue-sharing obligations look like (and institutional goals)…but the number will be greater than zero.

I think advocates also have to grapple with the limited (at least at first) bargaining power of college athletes.

The dirty little secret, one mentioned by many economists and even a few ADs (once you promise not to quote them on the record), is that college sports management would likely benefit from employee status and unionization of college athletics.

A union collective bargaining agreement, after all, frees everybody from those pesky antitrust lawsuits that the NCAA keeps losing. And there’s very good reason to think that if unionization happened, the NCAA would probably kick the athlete’s ass at the negotiating table.

I’m not an expert on labor law, but I have helped organize a union before, and I do know a little bit about this world…enough to know that organizing a union is HARD. It will be especially difficult for athletes who are a) young, b) transient, c) unlikely to come from union homes, and d) depending on the size and scope of the bargaining unit, may not share economic incentives with each other.

At the negotiating table, whether you’re an athlete, adjunct, or actuary, you get what you can negotiate with your leverage. Athletes may be able to win massive concessions in the courtroom, but without organization from current, active athletes, they won’t be able to keep those concessions once they’re sitting across the table from Jones Day suits. Management will eat them alive, just like they did during COVID.

This is part of the reason some athlete advocates have floated non-union methods for organizing or grappling with schools…such as having NIL collectives facilitate revenue sharing, or having non-union organizing groups, like SAAC or Athletes United. I plan to write about this in more detail in a few weeks, as I think those models have a few unique potential advantages and disadvantages.

I don’t write this because I don’t think some athletes should be paid. I do think some athletes should be paid. But I don’t think we, as writers, academics, activists, or anything else, do anybody any favors if we do not acknowledge the full picture. If this was a completely easy decision or process, it would have already happened. It isn’t.

The time to build a different system is now

If the NCAA (and by NCAA, I also mean individual schools and conferences) decide to leave this flight completely in the hands of the court system, they will (likely) eventually lose. And when they do, the responsibility to build a new system will be in the hands of judges, lawyers, and lawmakers, parties that may not understand (or care) about college sports. That means the risks of damaging unintentional consequences are high.

The law, after all, doesn’t say that it’s okay to break antitrust and labor if that means you create educational opportunities or social utility. It says you have to follow the law!

I believe that now is the time for all leaders in college sports, from athletes to administrators, conference commissioners to coaches, FARs to former executives, to start trying to build a new system that will stand up to legal challenges and acknowledge that we cannot govern Ohio State football and Ohio Northern football the same way. This should be the time of a gazillion white papers flooding the NCAA Convention. This is not just a Big Ten and SEC problem, but a Mountain West problem, a GIAC problem and an NCAC problem. This needs to be the conversation in private, and in the op-eds of SBJ and Sportico (and Extra Points).

There’s still time to be a part of the solution. If college sports decide to abdicate that responsibility and leave it to Tommy Tuberville and Brett Kavanaugh, I can guarantee they’re not going to like the result.

I’ll try to address more of these points in their own newsletters before the end of 2023. Thanks for reaching, and I’ll see you again in your inbox soon with some actual #reporting.

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