For players, March Madness is no cash cow

Shabazz Napier admitted he went to bed hungry some nights.

The University of Connecticut basketball star was leading a run through the 2014 Division I men’s basketball championship. The NCAA, meanwhile, was making about $700 million in television rights for the event, known as March Madness.

“We do have hungry nights (when) we don’t have enough money to get food and sometimes … money is needed,” Napier, who now plays for the Orlando Magic, said at the time, garnering headlines that underscored a recurrent theme in college sports: Should athletes be compensated?

For proponents of that idea, progress has been slow.

Shabazz Napier of the Orlando Magic

Rocky Widner | Getty Images
Shabazz Napier of the Orlando Magic

Two years after Napier’s remarks, NCAA athletes can receive unlimited meals and snacks. Schools can also choose to cover players’ full “cost of attendance,” which goes beyond tuition and room and board to costs like transportation and academic supplies. The organization most recently announced a one-time distribution of $200 million to Division I schools, due in 2017, which must be used for athlete programs like financial literacy, mental health or academic support.

But as the NCAA prepares to kick off this year’s March Madness on Tuesday, some are urging the organization to give student-athletes more control over how much of that cash pile they receive. A looming legal case will help to determine not only the benefits that athletes get, but also the disparity between powerful men’s basketball and football programs and the rest of the NCAA sports.

Student-athletes, classified as amateurs, typically saw compensation capped at an academic scholarship and other smaller benefits. Rules govern outside benefits they can accept, and prominent athletes from Reggie Bush to Terrelle Pryor have faced punishment for breaking those guidelines.

Criticism of the traditional model has mounted in recent years, and an antitrust lawsuit challenging the NCAA’s use of player likenesses eventually led to the cost-of-attendance option. Former University of California, Los Angeles basketball player Ed O’Bannon led the suit.

The NCAA faces another legal battle that could disrupt the existing student-athlete model. The so-called Jenkins case seeks to remove the NCAA’s compensation cap, effectively establishing aspects of a free market for players.

“It’s about freedom of choice. It’s not about mandating anything,” said Jeffrey Kessler, a partner at Winston & Strawn and lawyer for the plaintiffs.

The class-action case is paired to another suit that seeks damages from the NCAA. It likely will not go to trial until next year, Kessler said.

The NCAA, which declined to comment on the suit, has previously said lifting the cap would send windfalls to some athletes at the expense of others. The proceedings could add to the already contentious debate over the influence athletes should have in how the NCAA’s cash pile is split.

The NCAA reported $905.4 million in revenue for the fiscal year ended Aug. 31, 2015. The organization’s revenue dipped from 2014, driven by a $20.6 million loss on its investments. It gained $81.8 million on investments in 2014.

About $720 million of the NCAA’s 2015 revenue came as part of a 14-year, $10.8 billion March Madness television rights deal with CBS andTurner Broadcasting. The payout climbs to $740 million this fiscal year.

The NCAA pointed CNBC to its growing spending on athletes, highlighting the cost-of-attendance payments and the $200 million distribution announced last week. The organization reported fiscal 2015 expenses of $921.6 million, including $567.4 million distributed to Division I schools.

Proponents of more compensation for athletes have called the cost-of-attendance option a step in the right direction. Still, the additional payment is only a “minor nuisance” to the so-called “Power Five” conferences, said John Vrooman, a Vanderbilt University sports economist.

The average school in those conferences — the Atlantic Coast Conference, Big Ten, Big 12, Pac-12 and Southeastern Conference — gives athletes roughly $1 million more per season, paying the full cost of attendance, according to Vrooman’s estimates. Top programs can rake in annual football and basketball revenue, combined, of more than $50 million.

The NCAA has a vested interest in keeping compensation as it stands currently, said Randy Grant, a Linfield College economics professor and co-author of “The Economics of Intercollegiate Sports.”

“As long as people keep paying for the product they’ll keep doing it because it’s been a great financial model for them,” Grant said.

Employees or students?

Luke Bonner remembers missing classes for road trips, making up exams with teammates when he returned. Bonner, who played basketball at the West Virginia University and University of Massachusetts Amherst in the mid-2000s, stuck around in the summer for voluntary workouts. He joked that the sessions were “volandatory.”

“You’re at the school to be a basketball player, first and foremost. I wouldn’t say I was a business management major at UMass,” Bonner said. “That’s your job, that’s why you’re there, is to play basketball or football. If you stop doing that, you no longer have a scholarship.”

Bonner, who now works at a sports and entertainment marketing firm in New Hampshire, never reached the National Basketball Association, and instead played professionally in Europe and in the NBA’s Development League. Bonner said he had an “entrepreneurial” mind at school, launching events like a charity concert series.

But he always had to tread carefully around NCAA rules and maintain his focus on basketball.

Bonner and many other NCAA athletes have struggled to find the balance between player and student. Some critics of the NCAA wonder why athletes do not receive more compensation for their time, especially as television rights revenues for NCAA events like March Madness explode.

The NCAA’s Division I Student-Athlete Advisory Committee conducted a survey last year, finding that most student-athletes support at least one day per week away from practice and competition.

More than 40 percent of men’s and women’s basketball players and football players said they would prefer two days off per week. About 30 percent of men’s and women’s basketball players said they would want to eliminate mid-week games, which leave many players traveling and missing class during the season.

The NCAA is now considering changes to give players a better balance between academics and athletics. Bonner supports more compensation for student-athletes but contends that representation is more important.

“It’s not about compensation, it’s about having legitimate player representation,” Bonner said.

Some Northwestern University football players, led by former quarterback Kain Colter, attempted to unionize in recent years, arguing they are employees of the school. The National Labor Relations Board dealt a blow to the effort last year, dismissing the players’ petition but declining to rule on whether they were employees.

“The attempt to unionize thus far has been a struggle,” said Marc Edelman, an associate law professor at Baruch College who consults on sports antitrust law.

Bonner and Colter now work with the College Athletes Players Association, which was founded by former UCLA football player Ramogi Huma. The organization is pushing for various initiatives, including guaranteed medical coverage of sports-related expenses for current and former players, minimizing the risk of brain injuries from sports and improving graduation rates.

If the compensation cap for athletes is lifted, though, new issues could arise. For one, it could exacerbate the gap between large and small schools, making the Power Five conferences effectively “semi-pro leagues,” said Vrooman.

Larger schools have received more of the recent boom in TV rights, and would have more money to offer top athletes, he said. For example, the SEC received a $65.6 million payout for the College Football Playoff in 2015, versus $23.5 million for the Mountain West Conference.

It also creates a gender-equity problem, as universities operate under Title IX rules that ensure equal benefits for women.

“I don’t think anyone’s really worked through the mechanics of how it would be possible to pay the football and basketball players without making comparable payments to women,” Linfield’s Grant said.

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