In the United States, college athletics have long been a lucrative business. As of 2017, there were more than two dozen schools that generated upwards of $100 million in annual revenue through their athletic programs. Among 127 of the 131 schools in the National Collegiate Athletic Association’s (NCAA) Division I Football Bowl Subdivison, the average revenues from football alone exceed $30 million. The NCAA itself—a large portion of whose revenues come from its recently completed men’s basketball tournament—raked in more than $1 billion in 2017.
But while some, including many coaches, are making small fortunes off of college sports, compensation for one group is meticulously limited: that of the athletes themselves. To be eligible to play NCAA sports, players must maintain amateur status, which means they can’t be paid for participating. This prohibition includes indirect payment, such as money from endorsements, though they may receive compensation of a sort via scholarships to live and study at their respective schools.
The NCAA says that “maintaining amateurism is crucial to preserving an academic environment in which acquiring a quality education is the first priority.” However, the growing imbalance between how much money college athletic departments generate and how fully they can compensate their players has led to questions of fairness.
Do the NCAA’s rules restricting player compensation benefit schools at the expense of players? To find out, Chicago Booth’s Initiative on Global Markets polled the members of its Economic Experts Panel, who answered with a resounding ‘yes.’ Among respondents, 92 percent agreed that “NCAA Division I schools coordinate compensation for men’s basketball and football players (precluding actual pay and limiting non-monetary benefits), providing rents to member schools (which may be shared with others) at the expense of those players.” The remaining 8 percent of respondents registered no opinion.
Some respondents noted that though the statement may be true, the NCAA’s rules could still be justified.
“There may be socially appropriate reasons for the practice described,” wrote Stanford’s Darrell Duffie.
Austan Goolsbee, Chicago Booth
“A top NBA coach gets $7 million–$8 million per year, and a top player makes four times that. A top college coach gets $6 million, but the players get nothing.”
Response: Strongly agree
Michael Greenstone, University of Chicago
“Only hesitation in complete agreement is that there is lots of redistribution across sports and even within basketball/football players.”
Robert Hall, Stanford
“Wrong question. Should be ‘Are the NCAA’s limitations on contracting with athletes socially harmful?’”