Imagine that you’ve been offered a job at Company X. This job is based on the fulfillment of a contract, which we’ll get to in a bit. Company X is a multibillion dollar, not-for-profit organization, but instead of offering you a salary they exempt you from paying a scholarship fee at one of the hundreds of on-site locations that you choose to attend. Other than this scholarship, which is performance based and can be rescinded at any moment, they give no benefits package other than food and a small weekly stipend.
This may not sound so appealing, but wait until you hear about what you’re actually required to do for Company X. Company X requires that you give up large parts of your year for grueling training, conditioning, and of course, contests where they make a good portion of their profits.
The contract you signed allows you to work for Company X for four years and deems your employment status as amateur to keep you from requesting substantial pay. Throughout these four years, if you become popular enough to market and profit off of, your contract is automatically terminated, and your hiring manager’s job may be in jeopardy as well.
Unlike you, your hiring manager can find other work for Company X automatically, while you are permanently banned from ever working at Company X again. Other stipulations for contract termination include: receiving improper benefits, gifts and any other outside pay, as well as certain injuries.
How many of us would take this pseudo-indentured servitude? Not many! But as Company X, more commonly known as the National Collegiate Athletic Association (NCAA) shows, many may not have the choice. The NCAA’s employees, student-athletes, often depend on these scholarships to advance their lives and careers, but they’re also the grunt workers for a multibillion dollar industry and don’t receive just payment for it.
The most recent auditable numbers from the NCAA’s revenue show that they made $871.6 million in 2011-12, with 81% of it coming from TV deals with CBS and Turner Sports Broadcasting alone. And that’s before the College Football Playoff deal that they reached with ESPN.
The NCAA and ESPN have a multi-year contract. This television deal grants ESPN the right to televise 24 NCAA sports, spanning all three divisions, which adds up to more than 600 hours annually. When the college football playoff format was introduced 5 years ago, they agreed to a $5.64 billion deal ($470 million annually) with the NCAA for exclusive airing rights for those three games each year.
Let’s breakdown the numbers in the 2016 College Football Playoff. The NCAA caps in-season student-athletes at 20 hours of “countable athletically related activities.” If those teams max out their 20 hours during the week (4 hours per day), and there are 85 scholarship athletes on that team then the math (below) is staggering:
85 Student-Athletes * 4 teams = 340 Student-Athletes
$470 million in annual revenue / 340 Student-Athletes = $1,382,352.94 per student-athlete
$1,382,352.94 per student-athlete / 20 hours of scheduled practice time = $69,117.65 per hour
Through this calculation we see that the NCAA makes $1,382,352.94 off of just a single athlete. When broken down further this turns into $69,117.65 per athlete, per hour practiced. Note this calculation only takes the TV deal into account, and while it may be the largest source for their income, we’re still excluding ticket sales, vending and merchandise revenue from these three games.
So what does the NCAA give back to the student-athlete that they so handsomely profit off of? Hope. Hope that through an education and scholarship they can better themselves and their family. The problem with selling a student-athlete on hope is that it isn’t a tangible asset. A degree is a long term commitment that one must still work hard to earn. And while the NCAA may claim that student-athletes graduate at a higher rate, that isn’t always the case.
Truth be told, the NCAA has a tremendous business plan. The average scholarship to one of the schools in the 2016 College Football Playoff was $26,284 annually, making their ROI massive. Furthermore, it’s the schools who fit the bill on most student-athlete expenses, such as scholarship, travel and lodging and other non-championship athletics related activities. Oh, and as mentioned before they’re a nonprofit organization and are thus tax-exempt. Now all they have to do is sell these young men and women on hope and education and they have cheap labor that receives only a fraction of the revenue in return.
According the the NCAA’s mission statement it maintains its nonprofit status through their sharing of a “common academic mission” with participating colleges and universities. They claim 96% of all funds are allocated towards championship expenses and services for student-athletes.
Outside of those championships and services, most of the NCAA’s other expenses fall under day-to-day operations. Directly from the NCAA’s website: “[Expenses] This includes the costs of running the national office and supporting its 500 employees, who administer 89 championships, maintain a governance structure sustaining approximately 1,100 member schools, provide educational services to coaches and athletic administrators, and manage financial systems for membership.”
Where many, myself included, find dissatisfaction is in the large salaries that many NCAA executives pocket. Mark Emmert, NCAA president, earned $1,900,000 in 2014 and now-retired COO Jim Isch received more than $2,700,000. Both salaries may be common for executives of large corporations, but not an organization who claims their main goal is a “common academic mission.” In comparison, the median college president salary (a position that should be similar in mission) only nets $266,475 with the top 10% earning around $470,016.
Head coaches of these institutions also make out like bandits. After Monday’s victory in the NCAA Division I basketball championship, University of North Carolina head coach Roy Williams received a $925,000 bonus from UNC for achieving tournament-related goals. And while sports will always be a results based industry, $925,000 is enough to cover tuition at his university thirty seven times over without the athletes seeing a dime of that.
Over the last few years the NCAA has released a series of commercials with a common tag line:“There are over 400,000 NCAA student-athletes, and just about all of us are going pro in something other than sports.”
The commercial ends with “still think we’re a bunch of dumb jocks?” As a student-athlete, this has always resonated with me because they’re attempting to knock down a stereotype of student-athletes, all the while making money hand over fist for their inexpensive efforts. Hypocritical, yes, because the NCAA happily keeps their jocks dumb and broke.
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