Pay For Play
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College Athletes: Pay for Play?
Ever since the National Collegiate Athletic Association was formed in 1905, their role in regulating intercollegiate athletics has involved many different tasks. These tasks include making athletics safe in order to prevent injury, marketing athletic events, regulating and changing rules in order to make college sports more fun for the fans, and enforcing the key principle of college sports: amateurism. Amateurism in college athletics means that athletes are unpaid. As a result, the NCAA has had to deal with deciding how to handle issuing and assigning monetary value of scholarships and grants. However, the NCAA has not had to manage the debate over college athletes getting paid to play. In a day where more and more college athletes are leaving college early to enter the professional leagues it is time to ask a question: Should division-I college athletes get paid? The question is based on the assumption that there is a place for college athletics within a university. The NCAA should be looked at economically because the universities within it generate profits through their athletic departments and operate as businesses by assessing costs, revenues, etc. With that assumption established, because of the market inefficiency and exploitative characteristics of the NCAA, division-I college athletes should get paid in a free-market environment. Division-I college athletes recognize that they are exploited and receiving a scholarship worth less than their market value, so they have no incentive to not cheat and accept illegal payments.
First of all, the NCAA market structure is inefficient, and it results in exploiting its athletes. The NCAA exploits its athletes because it works as a buying cartel. A buying cartel takes advantage of its suppliers by getting rid of competition from other buyers through eliminating the negotiating or bidding process. The result of having no bidding process is fixed wages. The NCAA works in this exact way. In the world of college sports, the fixed wages are represented by the athletic scholarship. According to John Stieber, a professor in the Department of Finance at the Edwin L. Cox School of Business located on the campus of Southern Methodist University and also teaches Economics, Finance said in this system, “the price paid by colleges and universities for the athletic resources they buy (student athletes) will be lower than these kids would receive in a free market” (446). Evidence of how the effect of competition among buyers affects wages can be found by looking at the market for professional football players. When the NFL and AFL merged together, the salaries and bonuses of the players declined because of the buying cartel that was formed. Then when the United States Football League was created, player salaries and bonuses in the NFL increased (446).
The money which universities save from the suppressed wages contributes to lower costs and therefore higher profits collected. Richard McKenzie a professor of Economics and Thomas Sullivan a professor of Law, come from Clemson and Washington University respectively both provide a legal and economic account of the inefficiency that results from a buying cartel:
The number of athletes actually hired is less than the competitive level and the marginal value of additional athletes will exceed their opportunity costs. The gap between the marginal value and opportunity cost of athletes necessarily means that some athletes are forced to employ their talents where they are less valuable than in college athletics. (379)
What the quotation really means is that because college athletes’ scholarships are below market-value wages, the athlete’s opportunity cost (what is given up that could be earned from doing something else) is much higher than the monetary value of what they are receiving. Therefore, athletes would be better off spending there time on something else. However If they are forced to do something else rather than participate in college athletics, they will not receive an education which could help them in the future. Paying them would get rid of the gap between the opportunity cost and the received payment, making them better off participating in athletics. Although it is clear through the economic interpretation of the NCAA that current restrictions about the payment of athletes are inefficient, some people incorrectly think that fixed wages (scholarships) are necessary to maintain equal athletic competition among schools.
A false counter-argument to the idea of paying athletes in a free-market environment is that only the big schools with rich and numerous alumni would attract the best athletes. The high caliber athletes would tend to go to the universities who offer the most money. Many people wrongly think that this would cause a problem with fair competition, saying, if only the big schools could attract the best athletes, there would be a larger separation in talent level between big schools and small schools. This counter-argument is based on the assumption that only big schools would be able to raise the money to attract high caliber athletes. In the counter-argument, opponents to paying athletes base their opinion on the economic principle that large business firms have a competitive advantage over smaller ones. In this situation universities would be acting as firms. Because these people see an economic principle causing the problem, opponents admit that the way the NCAA operates is an economic issue. With that being said, the people who argue against paying athletes in a free-market have no right to do so because if looked at economically, the only efficient way to run the NCAA is to pay its athletes. To not pay the athletes exhibits economically dishonest behavior because these people understand economic efficiency. Therefore are not being sincere. Stieber rightly says that the assumption is “a widely accepted premise that has never been tested” (447). He then goes on to say, “In a free market, we might be surprised what schools would field the best teams” (447). Stieber’s statement contains much validity because as he says the assumption is untested. Many factors go into determining the success of a business; this would also be true in the NCAA. It could be possible for the small schools to generate enough money to compete with the big ones. A system of paying athletes beyond a scholarship has never been implemented so it is not reasonable to accurately predict a negative outcome.
Along with arguing wrongly about the consequences of a free-market system for college athletes, others incorrectly argue that college athletes aren’t underpaid or exploited. They believe that current scholarships