Changing the NCAA: A case for the Olympic Model

The question of whether college athletes should be paid is a fascinating one without an easy answer that touches many aspects of our sports MBA curriculum.

We first discussed the Ed O’Bannon case — in which the former UCLA basketball star is leading a class action lawsuit against the NCAA, Electronic Arts and CLC “claiming their likenesses had been misappropriated without compensation,” as Forbes puts it — in our licensing course with this case potentially altering the landscape of NCAA licensing.

If O’Bannon’s side wins, the NCAA could be liable to pay former college athletes for using their names and likenesses in a wide-variety of products and to pay both current and former college athletes a portion of the monstrous broadcast television rights, as Patrick Hruby explains.

Prof. Dan Bruton drove home the point that this lawsuit may fundamentally change the way NCAA licensing is done, not to mention the structure of the entire enterprise.

In our Human Resources Management course, the cohort split into eight teams to negotiate four issues, and of course paying college athletes showed up on the agenda. The side defending the players argued for a stipend for all college athletes while the NCAA representatives held their ground as both sides brought forth the chief arguments surrounding this issue.

As part of our Economics course, teams of students gave a final presentation on an economic concept that interested them, so one group presented economic rationale for and against paying college athletes.

Danny Roach summarized many of the arguments brought forth in these class discussions in his post last week before proposing a solution that I endorse wholeheartedly:

The most practical solution to the pay-for-play issue is to continue to prohibit student-athlete pay but to relax the terms surrounding “amateurism” and to allow student-athletes to profit off of their image and likeness, just like virtually any other adult in America is free to do.

Roach is describing the Olympic Model whereby student-athletes would not be subjected to the hypocrisy of the NCAA’s rules. It’s a solution that seems to make sense for all sides because student-athletes with earning power would be able to cash in while the NCAA would be able to keep its broadcasting and licensing money without worrying about how to split up stipends to an athletic department full of athletes.

Perhaps aspects of Christian Jensen’s plan could be included as well, such as a joint licensing plan that allows both the school and the athlete to profit off star players’ names.

As a side benefit, enforcement costs would go down since the NCAA would not need to investigate every minute violation that isn’t such a big deal in the grand scheme of things so more effort could be put into the truly serious college sports scandals. With such a rule, it would be perfectly acceptable for Ohio State football players to receive free tattoos, and stars everywhere would be free to receive many of the same fringe benefits they are currently getting under the table anyway without risking their eligibility.

The NCAA often focuses so much attention on violations that seem petty in the grand scheme of the college sports enterprise. Much of the hypocrisy would go away if players could use their likenesses to make their own money, while the NCAA would not need to fundamentally change its business model in a way that would result in the end of college sports as we know it.

Yahoo! Sports’ Dan Wetzel, a long-time critic of the NCAA, endorses this model:

Even the ethically challenged International Olympic Committee bailed on the questionable policy back in the 1980s and allowed athletes to be paid for endorsements, memorabilia deals and other business opportunities.

 Although hardliners had predicted the practice would adversely affect the athletes or the popularity of the Olympics, allowing Usain Bolt and Michael Phelps to sell shoes and sandwiches benefited everyone. Athletes, especially in developing nations, stopped being forced to live in poverty. And the Games might now be as popular as ever.

It’s the so-called “Olympic Model” and it’s the soundest one for the NCAA to embrace as the drumbeat for better compensation for student-athletes increases.

So does Ben Cohen of The Wall Street Journal:

Unlike a system that offers stipends or pays athletes directly, this wouldn’t cost the NCAA or any of its member institutions a nickel. The financial burden would land with the shoe companies, multinational corporations and local car dealerships who want to enlist the athletes to help them push products.

The plan certainly isn’t perfect, although no NCAA solution really is. It’s unknown how such a model would comply with the spirit of Title IX since it would likely create more opportunities for men than women, and players would not actually be paid the dollars they are earning on the field in the form of broadcasting contracts. It’s also thought that such rules could allow a company to sponsor specific players rather than an athletic department, such as Phil Knight paying Oregon players for their patronage of Nike rather than sponsoring the entire athletic department, as Cohen notes.

Furthermore, star players would still not be compensated for their full economic value but when considering the fact that they would be receiving general training rather than specific training, as we learned in Econ, this is understandable. General training refers to skills that can be easily transferable whereas specific training (like learning a team’s particular playbook) is only useful for that team. Dr. Ely taught us that inexperienced players often pay for general training through lower salaries.

In our HRM course, we learned that the best negotiation tactic is to first aim to increase the pie before dividing it up. The Olympic Model would expand the pie by allowing players to profit off their names while preserving the bulk of the NCAA’s share of the pie, making this a reasonable solution to a problem without a perfect answer.

Fisher on paying college athletes

Count SDSU men’s basketball head coach Steve Fisher among the crowd that feels college athletes will eventually get paid, as our class found out after he was inevitably asked this question during his classroom visit a few weeks ago.

“I think they should be paid, I do,” Fisher said. “Every athlete on campus, that won’t happen, but this probably will happen, maybe not in my tenure as coach. It might be just the Big Five (conferences) with all the millions of dollars that they have. They’ll start out by paying football and basketball. That’s going to happen. When I was in college, they called it laundry money. I got it, $30 a month. I don’t know what $30 a month in 1963 is now. I do think that they should have some kind of a stipend.

“It’s not amateur sports in its most purest form anyway, it really isn’t. The higher you go, you go to Alabama football, I mean they probably would make the NFL playoffs, that team. When it happens I don’t know, that probably will be the cause of the split, and I’m hoping when that happens we’re going to be in the mix in one of the super conferences. I think it will happen, and I can see justification for it happening. The guys we’ve got, it’s just impossible for them to work during the season. You can’t do it.”