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The NCAA and Amateurism

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LordJeffBuck

LordJeffBuck

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BP Recruiting Team
In the wake of several scandals involving improper benefits, many college football fans are left wondering why the NCAA is so adamant about maintaining the the amateur status of college athletes. As usual, it is all about the money.

In discussing the commercialism of college athletics, the NCAA states:

College athletics programs generate many expenses, including salaries, travel, facilities,equipment and (in Divisions I and II) financial aid. Institutional athletics programs seek to raise as many funds as possible to offset those costs.

Tickets sales, donor and booster contributions, subsidies from the university general fund, NCAA and conference media agreements, and marketing opportunities are the main ways Division I schools generate revenue for their athletics programs. Athletics departments use revenue-generating sports to produce money that is distributed across the athletics department to support a variety of sports programs. The approach is similar to the university model, where revenue-generating segments of the institution help support those that do not generate revenue. In Division I, the median level of institutional support is about 1 percent of the overall institutional budget at Division I Football Bowl Subdivision schools and less than 4.5 percent at Division I Football Bowl Subdivision institutions. That level of subsidization is well within acceptable parameters for higher education.

Some fans believe institutional relationships with corporate entities somehow tarnish the amateur status of those who play the games. However, the NCAA maintains that ?amateur? describes intercollegiate athletics participants, not the enterprise.

The annual budget for all NCAA intercollegiate athletics programs combined is about $10.5 billion. Only about two dozen athletics departments, all in Division I, are self-sustaining. Commercial dollars help thousands of student-athletes reap the benefits of athletics participation that is part of the college experience. Commercial funds also reduce institutional reliance upon allocated funds to support athletics, thus freeing dollars for other purposes. Even with the financial challenges that intercollegiate athletics presents, campus leaders support intercollegiate athletics because they understand the value it brings to student-athletes, campuses and surrounding communities.
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Yes, you got that right - those "amateur" athletes generate $10.5 billion a year ... and they receive not one dime of that money. But they are still amateurs, even though the business they're working for is very much professional.

Actually, those athletes really generate over $11 billion per year, as the NCAA itself took in $757 million during the fiscal year ending August 31, 2011. Of that $757 million, $144,100,000 was allocated to organizational expenses, $579,905,000 was directly distributed to member institutions, and $32,995,000 was kept in a cash reserve.

So why does the NCAA care so much about athletes violating their amateur status, when they don't seem to care at all about athletes violating real laws? Well, that's because the NCAA is a tax exempt entity:

The NCAA is a nonprofit, higher education association that is exempted from federal income tax by section 501(c)(3) of the federal tax code.

That status has been challenged from time to time, most recently in late 2007 in a U.S. House of Representatives Ways and Means Committee review of tax-exempt organizations. In responding to the committee?s letter of inquiry, the NCAA disagreed with the committee?s underlying presumption that intercollegiate athletics is not part of higher education. The NCAA stated its mission is to ensure that intercollegiate athletics remain an integral part of higher education while also making certain that student-athletes remain an integral part of the student body. The NCAA also asserted that its not-for-profit status should not be linked to the amount of revenue it generates but rather to how the revenue is spent. In the Association?s case, 96 percent of its revenue is returned to the membership through direct distributions, championships or other services.

The NCAA is no different than other highly visible nonprofit organizations that raise significant revenue but spend it in beneficial ways that are consistent with federal law. In the case of the NCAA, the benefit is the education of student-athletes within the collegiate model of athletics. That model calls for student-athletes to participate in sports as an avocation while balancing their academics, social and athletics experiences. The NCAA believes the entertainment qualities of intercollegiate athletics do not diminish the educational value of those programs.
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So the NCAA is currently exempt from federal income taxation, but their tax exempt status has been under attack recently. If the NCAA's revenue after expenses - in the amount of $612,900,000 - were subject to federal income tax at the standard 35% corporate rate, then the NCAA's tax bill for its most recent fiscal year would have been $214,575,000. And that's not even counting the state, local, real estate, and sales taxes that are now being avoided by the NCAA under its tax exempt status.

So while a $500 tattoo may be no big deal in the grand scheme of things, a quarter of a billion dollar tax bill certainly is. If the NCAA doesn't at least create the appearance of trying to eliminate professionalism from college athletics, then it will lose its tax exempt status overnight. And the colleges might lose theirs as well, at least with regard to their athletic departments.

So amateur athletics is all about the money after all. But you already knew that....
 
Good post, LJB. You may be aware that Jay Bilas is on record as saying that the NCAA's emphasis on amateurism among student-athletes is misplaced, and that there is no compelling reason why the actions of Terrelle Pryor (for example) that got tOSU in such hot water should be prohibited.

Bilas does not support paying athletes per se, but believes it is improper and unnecessary to prevent student athletes from profiting on their star status. I agree wholeheartedly.

The NCAA should have as its primary objective to optimize benefit to the student-athlete. The fact that it's not an objective at all is an indictment of how mismanaged the institution is. I wrote Mark Emmert regarding this; as you can imagine, I received no response whatever.

If we continue to insist that the athletes be amateurs, then I think it is essential to constrain the ridiculous salaries of coaches, who are now profiting immensely from the labor of the students. I'd propose that no coach make more than $500k, and that no coaching staff have salaries in excess of $1.5 million in aggregate.
 
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MaxBuck;1979448; said:
Bilas does not support paying athletes per se, but believes it is improper and unnecessary to prevent student athletes from profiting on their star status. I agree wholeheartedly.
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They are paid, hundreds of thousands of dollars in some cases, via a college scholarship.
I also agree that they should be allowed to profit on their star. They have a marketable talent and should be able to take advantage of it just like they did in earning a college scholarship in the first place...
 
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strohs;1979481; said:
They are paid, hundreds of thousands of dollars in some cases, via a college scholarship.
I also agree that they should be allowed to profit on their star. They have a marketable talent and should be able to take advantage of it just like they did in earning a college scholarship in the first place...
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That's what's bullshit about the whole thing. The NCAA has made it clear that you can buy access to athletes...you just have to go thru them.
 
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strohs;1979481; said:
They are paid, hundreds of thousands of dollars in some cases, via a college scholarship.
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The fallacy of this being that, for a top D1 football player, the time commitment necessary to gain a truly useful degree is usually unavailable. There are a few exceptions, of course, like William White (electrical engineering), Darryl Baldwin on the current team (mechanical engineering), and Craig Krenzel. But the education afforded to the average student is not feasible for most of those with football-related time obligations. So they end up in fields like leisure studies, communications and family resource management. I'm not knocking those degrees, but in most cases they're not particularly helpful in finding a real-world job.
 
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MaxBuck;1979497; said:
The fallacy of this being that, for a top D1 football player, the time commitment necessary to gain a truly useful degree is usually unavailable. There are a few exceptions, of course, like William White (electrical engineering), Darryl Baldwin on the current team (mechanical engineering), and Craig Krenzel. But the education afforded to the average student is not feasible for most of those with football-related time obligations. So they end up in fields like leisure studies, communications and family resource management. I'm not knocking those degrees, but in most cases they're not particularly helpful in finding a real-world job.
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They end up in easier degree programs because a good percentage of them just aren't cut out for college and never would have made it in if not for their athletic ability. I know quite a few people who worked full time jobs and then some during college and were able to graduate with useful degrees...
 
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