The NCAA Gives In…A Little
The idea of paying student athletes for their contributions to colleges and universities has been a slow-boiling controversy. The NCAA has long-maintained that college athletes are amateurs and therefore should not be compensated for their performances beyond scholarships. This view is not unreasonable. College is pricey and the scholarships alone are worth $20-50,000 a year, depending on the institution. Moreover, athletes receive additional support — food, housing, tutoring, travel, etc. In the end, the vast majority of college athletes will not go on to professional sports but into careers aligned with their majors (athletes as a group tend to have higher GPAs than the general student population). For almost all of them, that’s the payoff.
On the other hand, the current support being given to athletes is a small part of the trainloads of money involved. A typical top tier football program, for example, brings in tens of millions in revenue. The entire industry is worth $14 billion. Coaches are routinely paid in the millions and the top athletes, if they leave for the pros, can make millions. While most student athletes are paid above their market value in benefits, many are paid well below it. If an athlete is injured while playing, the institution has zero legal responsibility for his care. NCAA rules prevent athletes from even making money off of endorsements or their own image, which seems increasingly odd in a day when college students like Olivia Jade can have monetized YouTube channels and college students like Mark Zuckerberg can start tech companies which lead to them being grilled by Congress. And the claims that paying student athletes would ruin college sports are somewhat undermined by the precedent of the Olympics, where athletes were once banned from making money off their talent. That ban was dissolved in the 80s and the Olympics are doing just fine.
This situation has not been helped by the NCAA’s long history of using amateurism as a shield against…everything, including liability. Nor has it been helped by their tendency to be incredibly petty about rule enforcement, such as punishing athletes for things like easting pasta or engaging in Orwellian revisions of wins, trophies and championships over rules violations. When it comes to athletes’ images and names specifically, they’ve been incredibly controlling, even banning Tim Tebow from putting bible verses in his eyeblack. The NCAA has made it clear, over and over again, that the purpose of athletes is to generate revenue and that everything about them belongs to the NCAA. They have instituted draconian rules to punish athletes who try to pursue their own interests and fought bitterly against every lawsuit.
Yet the lawsuits and campaigns have continued. And a growing chorus of voices have said that student athletes should at least get something for their trouble. Earlier this year, California became the first state to crack the NCAA’s wall, passing a law that would allow college athletes to talk to agents and make money off of their own likeness. This created a problem. California schools couldn’t stop athletes from profiting off their likeness and be in compliance with the law. But allowing them to do so might mean getting banned from national events by the NCAA.
The NCAA gave in, unanimously passing a rule that would get the ball rolling on allowing athletes to profit off their image. The details have yet to be worked out. And the NCAA is still going to fight California’s law because they want to retain ultimate control over sports (and presumably Florida if they pass a proposed law following California’s lead). But this is pretty big.
Of course, wherever there’s a controversy, there’s a politician ready to barge in with a fat load of stupid. To wit:
If college athletes are going to make money off their likenesses while in school, their scholarships should be treated like income. I’ll be introducing legislation that subjects scholarships given to athletes who choose to “cash in” to income taxes. https://t.co/H7jXC0dNls
— Richard Burr (@SenatorBurr) October 29, 2019
This is an incredibly dumb and punitive response. For most athletes, the “cashing in” will amount to a tiny check for endorsing the sports store back home or a slender payout from EA for using their likeness in a video game. And if you think the NCAA fought hard against compensating athletes, they would go to hell and back on this one. Scholarships are not considered income under US law. The only way they would be is if athletes were changed to employees. But that would open the NCAA up to all kinds of things such as paying compensation to injured athletes.
(Not to be outdone on the Politician Blundering Into A Controversy To Push An Agenda Front, Elizabeth Warren tweeted that athletes should be allowed to join unions. Which would also make them employees and turn their scholarships into taxable benefits.)
Ultimately, there are a lot of details to be worked out here. We don’t even have a roadmap yet. But I see this as a positive step. Athletes will not be paid for playing but they will, eventually, get back the rights to their name and likeness. This will be worth a small fortune to some but very little to most of them. It may mean a few stars are more incentivized to stay in the college ranks a bit longer. Or it may have no effect whatsoever. A lot will depend on how the actual rules are written.
But the most important aspect of this is that the scales, long tipped against the athletes in almost every way, have been slightly tipped back. I’m not in favor of making college athletes salaried employees. But making a few bucks off their image is something I’m fine with. And wresting some of the power in college athletics away from the NCAA is something I absolutely support.
Seems to me, though, if one wanted to poke a finger into the eye of higher ed, trying to make some scholarships (with perhaps an implication, all scholarships) into taxable income would be a way to do it.
I’m no fan of how “student athletics” is done on college campuses (it’s worse than a full-time job for the athletes, and faculty are sometimes asked to bend over backwards to do stuff, like unlimited lab make-ups because practice time conflicts with lab) but….if we make scholarships taxable income, there will be people who turn them down and, I guess, don’t go to college. I mean, maybe it should work that way to begin with, where promising athletes go major league out of high school, and then save their money to go to college later on….but taxing athletic scholarships feels more like a, I don’t know, emotional response to how someone feels about higher ed rather than a “this is actually a fairness issue” or something.Report
Luckily, introducing a bill in Congress is still little more than a bit of public signalling and political theater.Report
It is always worth keeping in mind that the distinction between professional and amateur athletics is not and never has been nearly so straightforward as we tend to imagine. The ideal of amateurism arose in England, where it was overtly a matter of class, saving Oxbridge boys from competing with working class men who rowed for a living. In its most extreme version, one rowing association disqualified anyone who had ever held a job involving manual labor. Look up the incident of John Kelly, Grace Kelly’s father, to see where this led. Nothing this blatant could ever fly in the US, but a more discreet version could. College football became big in the 1890s. Various schemes arose at the same time to bring in ringers. There was a lot of effort (not entirely successful) put in to ensuring that players were actual students enrolled in the school. The athletic scholarship was the natural way around this: pay the player’s tuition, and don’t look too hard at his academics. The earliest version was where the students who were wealthy scions pitched in to pay the lower class jock’s way. This was later institutionalized. It was very controversial at first. It is, after all, compensation for playing. In many definitions of amateurism at the time, this was clearly professionalism. We don’t think of it that way nowadays, but this is mostly due to long habit.
So turning to the matter of endorsements, if this is as far as things go, in ten years people will think of this as fitting comfortably within amateurism, and forget that it was ever controversial. The concept of amateurism is plenty flexible to accommodate this. So much so that it is hard to see why the NCAA historically has gotten such a hard-on about it. The simplest explanation is reflexive wankerness. There may be some way that the NCAA will lose revenues here, which would make it self-interested wankerness. But I’m not sure. Wankerness is pretty much a core principle of the modern NCAA.Report
A. J. Raffles is a character created by Arthur Conan Doyle’s brother-in-law, and is to thieves what Sherlock Holmes is to detectives, a brilliant and talented amateur. Why does he steal? Well, he’s university educated and renowned for his cricketing, but doesn’t come from money. If he wants to stay popular and a gentleman, no other source of income is open to him.Report
At first glance, Burr’s idea makes a certain amount of sense. If this does end up with the students getting paid for things outside of the area, such as using their likeness, then it is income. Full Stop. Much of the other issues seem ancillary; injuries should have always been covered by the schools, no they should not be able to have control over bible verses or eating pasta, etc. But those are also on the schools, for giving into such ludicrous rules in the first place. And once you give an inch…
But a scholarship is not, at this time, taxable income. Could that change? Sure, as more and more states have budget issues there will be pressure on this untapped resource. Of course, that leads to the iron law of consequences, both foreseen and unforeseen. In the end, I don’t see how this really benefits the student-athletes.Report
If I go to school on an engineering scholarship, and while in school, I invent a widget and start selling it, why should my scholarship be at issue?
The income from my widget, sure.
But the scholarship?Report
I was talking about the income from the widget. I brought up scholarships being taxed in the second para to distinguish them, sorry I wasn’t clearer. But I do think that this opens a Pandora’s box, and Burr is just the first example of that. For some people, this would push them outside the fiction of being amateurs, and not in a positive way for the students.Report
This is one of those things where if the teams and the parent institutions are making pro-level money, hasn’t the whole edifice already pushed outside the fiction?Report
Oh, I agree, but that line of thought pretty much kills the scholarship angle. At that point, it is pay and thus taxable.Report
Well the whole tax issue opens a whole can of worms.
A full scholarship was no big deal when college tuition cost $500 a semester. It’s quite different when they charge $80K a semester and wave it for some pampered legacy student by claiming it’s a scholarship for fencing or lacrosse, just to keep their white enrollment numbers up so they’re one of the “premier” places to the elites to network.
And that drags in questions about what their actual classes are worth, as classes, versus what that networking and stamp of elite status are worth, and whether such scholarships should count as gifts.
We’ve built a big house of cards out of a deck of motivated reasoning, and everybody is afraid to touch it.Report
I think payment to the student for his likeness is taxable income, unless possibly the payment is funneled through the school somehow that avoids it (which is doubtful). What the Senator is tweeting doesn’t make much sense in that he seems to be saying that if an athlete receives something from stream A (such as for product endorsements), he or she should be taxed on stream B (scholarships). Maybe the tweet lacks sufficient character(s) to evaluate.
Scholarships are currently taxed if they are compensation for services to the school; so one can see that the arrangement is right up to the line as it is.Report
“If an athlete is injured while playing, the institution has zero legal responsibility for his care.”‘
Schools are always going to have liability under state law concepts of negligence and/or premises liability. The NCAA also requires schools to provide an insurance policy for athletically related injuries up to a certain amount, and most schools will cover all such injuries above the student’s own health care policy. (BTW/ our daughter’s school required us to show proof of healthcare insurance coverage, or they were going to add health care insurance to the bill and she’s not an athlete. Don’t know how common this is.)
NCAA also provides disability insurance coverage, but I don’t know if schools can pay for it or do. It basically insures against the risk of a college injury precluding a professional career after graduation.
There are probably gaps here and there, but “zero legal responsibility” isn’t accurate.Report