The Tournament's Over -- Now Pay the Players

A specter is haunting the NCAA tournament. Three weeks of games came to an end Monday night, with Louisville beating Michigan 82-76 (and, after the nets were cut down, the traditional song One Shining Moment was played). But it's still there, the specter of exploitation.

Although the announcers, analysts, and courtside reporters employed by CBS and the Turner family of networks tend to studiously avoid discussing whether players should share some of the immense monetary bounty that flows from advertising, tickets, and merchandise, two events that transpired during the tournament brought up the question with more force than Greg Gumbel could muster if he wanted to.

A bloody shirt
The first was Kevin Ware's horrific leg injury, witnessed on live television by millions (and then twice on replay) that brought the Louisville-Duke game to a halt and Louisville coach Rick Pitino to tears. Louisville won the game, Ware had a successful surgery, and Adidas tried to sell a shirt. The shirt, which said "Ri5e To The Occasion," was released following Ware's injury and Louisville's Elite 8 win over Duke. Kevin Ware wears No. 5 and "Rise to the Occasion" is on all Adidas t-shirts for many teams in the tournament.

It was immediately greeted as, at best distasteful and possibly against the NCAA's own rules. Even though Louisville said it would forgo any royalties from the shirt and direct them to the school's scholarship fund, Adidas still pulled it. Why?

Because the "5" was an all too obvious reference to Ware himself, and the NCAA doesn't allow schools to profit from merchandise and memorabilia that references specific players. The loophole is that they sell jerseys with specific numbers but keep up the legal fiction that the jersey could reference any player who's ever had that number.

But when it came to Ware, a backup who no one but Louisville diehards could recognize before he and his snapped leg became national celebrities, it was all too clear. And the intention was made obvious by Louisville's associate athletic director, who told a local television station that Louisville asked that the shirt be made "as a respectful tribute to honor Kevin within NCAA trademark apparel parameters, and allow fans to rally around the team."

What Adidas did wasn't just a bit too on-the-nose -- shoe, apparel, and drink companies are supposed to milk inspirational moments that happened in the more distant past, not a few days ago -- it tipped dangerously close to a line that the sponsors and advertisers of college basketball must not cross.

This legalistic distinction is, at best, vague. Watching the NCAA tournament -- especially when Duke plays -- seems like it's equal parts commercials for financial services companies interlaced with shots of cheerleaders, the band, some actual live basketball, and highlight after highlight of classic moments from tournaments past.

Nike may not be able to sell jerseys with Christian Laettner's or Grant Hill's name on them (or current stars like Mason Plumlee or Seth Curry), but CBS can show the end of the 1992 East regional final -- where Grant Hill passes to Christian Laettner three-quarters of the court and Laettner sinks a game-winning shot as time expires -- every time Duke gets within a whiff of the championship game or plays Kentucky. They can get millions of views for the highlight on YouTube. Laettner and Hill have never seen a dollar from that play and Ware won't get anything from the shirts (and not just because Adidas stopped selling them).

It's precisely this practice -- the NCAA and schools profiting from the likenesses of players -- that's the subject of a massive potential class action lawsuit working its way through federal court. The antitrust suit, spearheaded by former UCLA star Ed O'Bannon, claims that former and current players have a right to the revenue generated from use of their likenesses in television and video games.

Basketball legends like Oscar Robertson and Bill Russell have signed on to the suit and it may be certified as a class action in June. If everything goes right for the plaintiffs, a jury could rule that they have a right of up to half of the revenue from television and video games.

CBS and Turner's contract for the NCAA basketball tournament alone is worth some $11 billion over 14 years. Their 1999 contract was "only" $6 billion over 11 years.

Pushing and shoving
The second incident that reminded everyone about the ironies and cruelties behind the exciting façade of tournament basketball was the firing of Rutgers basketball coach Mike Rice. When a disgruntled assistant coach, whose contract had not been renewed, released video footage of Rice yelling homophobic slurs at players, shoving them, and hurling basketballs at their knees and necks, the reaction was universal condemnation. Especially from professional basketball players.

Ray Allen of the Miami Heat told ESPN, "It was despicable," and "throwing the ball at them ... It made me want to fight him," while LeBron James tweeted "If my son played for Rutgers or a coach like that he would have some real explaining to do and I'm still gone whoop on him afterwards! C'mon."

Highly skilled athletes who are treated and paid like professionals are much less likely to accept abuse from power-hungry, enraged authority figures.

One member of the basketball world a bit less perturbed when he first saw the footage was Rutgers athletic director Tim Pernetti. He originally gave Rice a three-game suspension.

Perhaps Pernetti had something else on his mind: turning Rutgers into a big-time college sports program in a major conference, the Big 10. In fact, Rutgers president Robert Barchi first heard of Rice's antics and abuse just a few days before Rutgers officially joined the Big 10 last November. Barchi only fired Rice when the video became public and he actually saw it for the first time.

It's hard to imagine that, say, a Rutgers drama professor would ever get away with abusing students. And the more money and prestige that a sports program brings to the university, the more leeway its coach gets to play by his own rules.

What happened at Rutgers was just a small-scale example of what so horribly transpired at Penn State under head football coach/local deity Joe Paterno: (public) institutions of higher education warping themselves to serve the sports teams, not the sports team conforming to the values and purposes of the university.

So, what to do? The first would be to stop collusion between the leagues and the colleges. For professional football and basketball, college sports serves as a free minor league for young players. Football and basketball teams don't have to scout the entire world of high school sports or establish a network of minor league teams (the NBA Development League only has 16 teams). And, when those college standouts get drafted into the NBA and NFL, they can enter the leagues as stars in their own right.

In no other labor market would such a tight and multifaceted hiring cartel be considered totally acceptable, and in no other labor market is it so profitable for so many.

But it's worth stepping back and realizing how strange it is. Not only are players forced to sign with the team that drafts them, there is an arbitrary age limit. It's not that high school seniors haven't made effective NBA players -- superstars Kobe Bryant, LeBron James, Dwight Howard, and Kevin Garnett all came straight out of high school -- it's just better for all the established players that they wait for a year.

The average NBA veteran gets less competition (rookies are also paid on a tight salary scale), the college teams get the best talent at least for a year, and the NBA teams don't have to spend so much on scouting. No one considers the interests of the players themselves, at least the ones that aren't already getting paid.

The solution: Open the floodgates
But what about the college game itself? While there have been some truly modest proposals floating around, like giving players higher stipends for spending money, or keeping the revenue gained from players' likenesses in a trust until after they graduate, I have an idea more keeping in the original tradition of proposing things modestly: Get rid of all the rules about outsiders paying players.

Even if the colleges themselves don't want to pay their players and keep the gravy train of television revenue steaming along (notwithstanding the outcome of the O'Bannon case), let boosters, agents, advertisers, teams, and everyone else who wants to give players money do so.

This would solve one problem that bedevils player-pay proposals: how to do it across sports. If we let players do advertising and endorsements, athletic directors wouldn't have to figure out how to pay the star shooting guard versus the backup outfielder on the softball team, or even the star shooting guard as opposed to his or her backup.

As we see every year, there is a whole world of people desperate to give college players money, favors, discount memorabilia, free tattoos, and expect little to nothing in return. Some of them -- the boosters -- have no potential financial stake in the players' success, just an intense personal desire to see their alma mater succeed.

Exactly why the schools and the NCAA should get in the way of that arrangement is unclear. Instead of maintaining this fiction of the Ohio State football team being a crucial part of the Ohio State educational experience, we could envision college athletes and their relationships to their benefactors as something more like renaissance artists' relationships to their patrons.

Would boosters use their newfound ability to cut checks for players to effectively pay them to attend one college over the other? Almost certainly yes. Then again, why exactly should the college capture all the revenue that, say, a Reggie Bush or Anthony Davis brings to them? Would agents start paying players far before they become eligible or even declare their intention to enter the NBA or NFL? Even more than they (illegally) do now. But agents are willing to make these payments already even when there is literally no way they can be guaranteed to get something back for their cash. Just imagine if they could do so out in the open.

If this scheme sounds fanciful, impractical, ridiculous, amoral, unrealistic, or a poor attempt at satire, that's because it's some or all of those things.

But isn't $11 billion going to everyone besides the players the biggest joke of all?

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Read/Post Comments (26) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 09, 2013, at 11:29 AM, TMFTomGardner wrote:

    I was very pleased to see the proposed solution in this excellent article. I believe that big-time college football and basketball players should announce that they are open to receiving money. . .beginning on September 1. If enough players are willing to accept money -- even as little as $50, to make a point -- then the system will begin to break. I believe that the most honorable thing that players could do at this point would be to break the rules in a very moderate way, simply to make the point. In the meantime, I'm rooting on the lawsuit into class-action status toward success.

    I hope this article gets very broad distribution. Excellent points.

    Tom Gardner

  • Report this Comment On April 09, 2013, at 11:48 AM, CluckChicken wrote:

    I am sorry how many of these players are going to walk away with a college education and will have paid just as much as somebody who is not part of the sports team?

  • Report this Comment On April 09, 2013, at 1:29 PM, smikey055 wrote:

    Good article with valid points, but I don't really understand how this topic relates to the Motley Fool's mission or Investing Commentary. Sure, it's related, but the relation isn't detailed in the article. Does reading this article make me a better investor or a civil rights activist? This article seems like a perfect fit for The Hughington Post, Fox, or NBC, and that’s where I might go if I wanted to catch up on civil rights and political activism. I read similar commentary and I’m reminded of “activists” who practice from the comfort and safety of the coach or office desk whenever is most convenient (relative to the end of the tournament, in this case). A convenient time to stir the debate, much like politicians and exploiters of all types never let a disaster go to waste. Go ahead a pay the players. Many of them will need it considering their lack of prospective opportunity as professional athletes and/or as business, communications, social science, or sports majors. One question that has to be asked is how would payments to athletes provide them with a more meaningful academic experience? They already receive academic scholarships, tutors, mentors, and tailored schedules. Payments to players might detract from the original purpose for attending college. Another solution might be for the NCAA to forgo the "one year rule." One year of college sure doesn’t offer much of an academic experience. If it's more about the money and not an education, let them skip college all together. Also, I'd be most impressed by a student body or a nation of spectators who boycott the NCAA by avoiding sports arenas and television broadcasts. Spectators (with their egotistical thirst for social acceptance) are the only reason why the NCAA and student athletes are at the center of this debate. Of course, a boycott is not as convenient as complaining on social media networks, blogs and discussion boards from the convenience of our homes and offices.

  • Report this Comment On April 09, 2013, at 2:04 PM, rathbateman wrote:

    Universities are businesses. Football and men's basketball are (typically) the high margin products they sell. A full scholarship is a generous compensation, period, just like a salary.

    When I am awarded a patent, it's not mine to capitalize on, it is the property of my company. I knew that going in, and accept it. Bottom line: it is what is expected of me as part of my compensation, just as student athletes' performances on the field, or court, is expected of them.

    I know there are walk-ons, yes, but they are outside the scope of this discussion.

  • Report this Comment On April 09, 2013, at 2:20 PM, YankeeDoodleDoo wrote:

    Pay the players? They are already getting paid with official college degrees. And I'll guess most of them didn't put in half the work need a paying student had to. Do you really think these Michigan and Kentucky players have been to class for the past 3 weeks? Think any other students got the same pass? When I was in college, one absence was usually excused, the 2nd was a guaranteed F. Didn't matter if your dog, mother, or spouse died.

  • Report this Comment On April 09, 2013, at 2:45 PM, daveandrae wrote:

    ^

    AMEN!

    Stop glorifying what is suppose to be a STUDENT athlete!

    They're already being "compensated." with an education that would cost the rest of us a freaking fortune! And even this assumes the rest of us are able to pay our way through without having to borrow money from the Mafia, errrrrrrr, I mean the Government.

    If STUDENT athletes want to get "paid" for playing basketball, football, or baseball, get in line with everyone else and try out for a professional sports team.

  • Report this Comment On April 09, 2013, at 3:27 PM, TMFBane wrote:

    Great article! And I'm really enjoying the comments.

    The current system resembles a sort of semi-socialism (for better or worse) once you stop and think about it. Every scholarship athlete receives the exact same "wage", regardless of how much revenue they generate for their institution. And each school, of course, varies widely in the amount of basketball revenue they receive.

    Under this system, a Michael Carter Williams from Syracuse -- a school with over $10 million of pure men's basketball profit per year -- receives the same "wage" as a reserve on some other team that may not even turn a profit or compete at a high level.

    That may be perfectly fine, of course, though I doubt many people would be in favor of such a system for the business world. Should a trainee make the same as the CFO at a bank, for example? And talking only about scholarships ignores all of the other revenue streams that a Michael Carter Williams-level player can generate (sneakers, jerseys, etc).

    My own view is kind of a cranky one. Despite loving college sports -- I'm a huge SU basketball fan and am devoted to ND football -- I don't think universities should be in the business of big-time basketball and football. There are just too many conflicts of interest. I feel our universities should just focus on educating our kids without overseeing their growing sports empires. The current system is absurd.

    Anyway, just some random thoughts.

    Best,

    John Reeves

  • Report this Comment On April 09, 2013, at 4:07 PM, liverpoolSteve wrote:

    Big Corporations are all about exploitation and in this context it is magnified. And just like big corporations this well written and thought provoking article is only thinking short-term. Where does this stop? Next level high school, ESPN is already exploiting that with HS games on the national level. I know the fool community is all about making money hence the reason I am here, but [big corporate] money ruins virtually everything in the long run. At my age, it saddens me to watch one of my favorite sports get consumed by money. As a big fan of Big East Basketball, look what big TV revenues did to it, RIP Big East. BTW, my solution is draconian, don’t pay the schools TV revenues, chew on that…

  • Report this Comment On April 09, 2013, at 6:11 PM, ftbramwell wrote:

    For those who think that the NCAA football and men's basketball players are compensated with a free education, I respectfully suggest that you are buying into a fiction.

    Football and men's basketball players (generally) go to elite Division I programs to play sports first -- they do not go to earn degrees in finance, science, statistics, or other serious subjects. Want some evidence? How often do you see competitive players stay for all four years of college?

    Even worse, is the fundamental unfairness of athletes (the majority of whom are minorities) being unable to make money while in college. By way of example, a cellist on scholarship could easily make a CD and keep the royalties on the sale without jeopardizing his scholarship. The basketball player cannot do anything similar without jeopardizing his.

    At the end of the day -- for good or for ill -- college sports are big business. The question is who gets to keep the money. Right now, coaches get paid, athletic directors get paid, universities get paid, and the NCAA gets paid. The student does not get paid (other than tuition for an education he's probably not able to take full advantage of). And that's all kinds of wrong.

  • Report this Comment On April 09, 2013, at 6:46 PM, TheRealRacc wrote:

    An article on paying basketball players, which mentions the word "scholarship" one time.

    Something is amiss...

  • Report this Comment On April 09, 2013, at 6:47 PM, TheRealRacc wrote:

    I work for a private company, you get paid the same money regardless of how well you perform. Your bonus is based on your team's overall profit margin.

    Socialism? I think not. Fair? Nor that.

    But it is real life. And I will deal with it.

  • Report this Comment On April 09, 2013, at 7:04 PM, rathbateman wrote:

    "The student does not get paid (other than tuition for an education he's probably not able to take full advantage of)"

    How is he "not able to take full advantage of"?

    It is his choice to do so, or not to.

  • Report this Comment On April 09, 2013, at 7:04 PM, TheRealRacc wrote:

    I played a lot of pick-up basketball during my off-class hours when I was in college. Am I entitled to a free Slurpee?

  • Report this Comment On April 09, 2013, at 7:05 PM, TheRealRacc wrote:

    Pay college athlete's, also known as the Age of Entitlement in America.

    Thanks Obama.

  • Report this Comment On April 09, 2013, at 7:25 PM, nickp91 wrote:

    ncaa makes $800 Million over the course of March Madness.

  • Report this Comment On April 09, 2013, at 7:42 PM, SuntanIronMan wrote:

    Instead of pay student athletes in scholarships, room and board, give them that exact cost of that (or some other agreed upon amount) as an actual salary. That way they and their families are able to allocate the money exactly as they deem necessary.

    If they wish to spend that money on college education, run-down student housing and so-so cafeteria food (my experience with student housing and cafeteria food, haha), that's great. If they wish to spend that money on a cheaper college nearby, new car to drive to practice, nicer accommodations near campus, helping their families back home, investing it in the stock market, or whatever, that's great also. Their earnings should be theirs to do what they please.

    Here is a question:

    What about the tax situation of all of this? Since these are students athletes being paid in scholarships, are the schools avoiding the payment various employment-related taxes and whatnot by classifying their non-employees as student athletes?

    That was an actual question, not rhetorical one. Does anybody know what kinds of taxes are associated with student athletics (on the school-side and the student athlete-side)?

  • Report this Comment On April 09, 2013, at 9:43 PM, CluckChicken wrote:

    "Under this system, a Michael Carter Williams from Syracuse -- a school with over $10 million of pure men's basketball profit per year -- receives the same "wage" as a reserve on some other team that may not even turn a profit or compete at a high level."

    Wow I am not sure if this comment is just a really bad jab at trying to make a political statement or just absolute cluelessness about the cost of colleges.

    Syracuse played Montana, California, Indiana, Marquette and Michigan, do you believe that they all run the same cost? And I guess you also feel that a degree is a degree and where you get one doesn't matter as well.

    I am sure this little piece is being well received by those that have student loans that are now worried that the government may change the interest rate from 3.2% to 6.4%. I guess it is more important for those that have to receive more then to actually be smart about things.

  • Report this Comment On April 09, 2013, at 10:26 PM, daveandrae wrote:

    ftbramwell wrote-

    "Football and men's basketball players (generally) go to elite Division I programs to play sports first -- they do not go to earn degrees in finance, science, statistics, or other serious subjects."

    Well DUH!!

    This is why so many so called "collegiate student athletes" cannot READ or SPELL and why a whopping 78% of the ones that do end up going pro, also wind up becoming BANKRUPT before they turn 40 years old.

    For what good is wealth without wisdom?

    Thus, more money doesn't "solve" anything. It only serves to exacerbate the underlying problem.

    Look at Terrell Owens. Alan Iverson. Scottie Pippen. Warren Sapp, Curt Schilling, Mark Brunell, Lenny Dykstra and countless other former "student athletes" and just imagine how many more single mothers, broken families, illegal drugs, and DUI arrest this country would be dealing with if you had started putting money in these players pockets when they were in college.

  • Report this Comment On April 09, 2013, at 10:35 PM, ftbramwell wrote:

    daveandrae wrote --

    "Look at Terrell Owens. Alan Iverson. Scottie Pippen. Warren Sapp, Curt Schilling, Mark Brunell, Lenny Dykstra and countless other former 'student athletes'"

    What about Michael Jordan, Bo Jackson, Magic Johnson, Larry Bird, and Isiah Thomas who didn't toss their money away? I don't know that 78% of pros wind up in bankruptcy court. Want to cite a statistic for that allegation?

    I find it interesting that no one has commented on the inherent unfairness of a cello player (who is probably white) being able to make money off of his talent while a athlete (who is probably a minority) cannot.

  • Report this Comment On April 10, 2013, at 7:35 AM, CluckChicken wrote:

    "I find it interesting that no one has commented on the inherent unfairness of a cello player (who is probably white) being able to make money off of his talent while a athlete (who is probably a minority) cannot."

    A cello player playing in a college performance group will not get paid for any of the shows that they do, they may get a scholarship but no pay check.

  • Report this Comment On April 10, 2013, at 9:45 AM, ftbramwell wrote:

    CluckChicken wrote:

    "A cello player playing in a college performance group will not get paid for any of the shows that they do, they may get a scholarship but no pay check."

    A basketball player in the NCAA does not get paid for any of the games he plays. He gets a scholarship, but no pay check.

  • Report this Comment On April 13, 2013, at 10:59 PM, AJ53 wrote:

    Years ago - I went to EMU--six miles from U of M.,Both schools are Division 1. There athletes from the U of M major sports drove new cars. My teammates drove vintage vehicles. We were some from the same town's. The big name schools - The pressure is to win and the fans/outsiders from the universities forget the rules. My education at EMU got me a 6 digit income (outside sports). Participating on a team was great, Most of the University support is done by the great marketing organization's created.by the big schools. In my opinion college sports give many students a chance to get an education and the NCAA money earned has been shared to the minor sports and smaller university programs.

  • Report this Comment On April 14, 2013, at 10:59 PM, Pr0metheus wrote:

    "It's hard to imagine that, say, a Rutgers drama professor would ever get away with abusing students"

    You aren't cynical enough :)

  • Report this Comment On April 15, 2013, at 12:09 PM, KurtEng wrote:

    Really excellent article and I think it is appropriate for the Motley Fool because it relates to economics.

    The NCAA has been able to collude with the NBA and NFL to regulate the salary of top young athletes and keep all the profits they generate for themselves all while self-righteously proclaiming they are giving the athletes valuable educations. Meanwhile, they are reducing the value of the educations they are tasked with providing by providing classes that these athletes are forced to take so they can stay eligible to play sports for free.

    I say go to a free market like baseball. Fewer child molesters will get jobs at public universities that way.

  • Report this Comment On April 16, 2013, at 4:56 PM, heatmoen wrote:

    Do you think FGCU, Wichita St, George Mason, Butler, etc... can afford hundreds of thousands of dollars to pay their players? How about the teams like CS Northridge? How about Robert Morris? Yes a lot of schools make big bucks, but the overwhelming majority lose money and without these schools the NCAA tournament becomes a big school party that loses all interest to me.

  • Report this Comment On May 10, 2013, at 2:43 PM, thidmark wrote:

    If you don't think professors can be abusive, you haven't been paying attention to the news.

    This is the kind of drivel I would expect from Alyce Lomax.

    TMF articles used to be informative. Now it's like reading the high school paper, with slightly better copy editing.

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