The NCAA: Part of the solution or part of the problem?
Over the past few years, the National Collegiate Athletic Association (the “NCAA” or the “Association”) has flexed its muscles via the enforcement arm of Division I Collegiate Football. The Association has investigated and/or sanctioned a number of elite programs and former or current student athletes, including my alma mater the University of Southern California (USC) and former USC running back Reggie Bush. Many individuals and organizations perceive the NCAA as the guardian of student athletes and an organization that takes extreme measures to clean up the environment surrounding intercollegiate athletics by, among other things, preventing the infiltration of the NCAA and its collegiate institutions by agents, boosters and other outsiders that aim to exploit student athletes. However, a cursory review of the NCAA’s Compliance Rules and their actions related thereto exposes the Association as an antagonist. While declaring that it prioritizes providing to student athletes a quality education and ensuring that student athletes experience college in a manner no different than other students, the NCAA derives annually hundreds of millions of dollars by monetizing the same student athletes it purportedly protects from commercial exploitation.
The NCAA is the organization that oversees and regulates all of the intercollegiate athletic programs. The NCAA is funded by revenue generated from, among other things, (i) regular-season and post-season play; (ii) television and marketing rights; (iii) sponsorship deals; and (iv) merchandise sales. According to the NCAA’s official website, each collegiate institution benefits greatly from the success of the NCAA, as it purportedly distributes more than ninety percent of its annual profits to its member conferences and collegiate institutions in the form of direct distributions and services. However, though it maintains a not-for-profit status, the NCAA maintains many of the characteristics of a for-profit organization. In particular, a measure of its success is the Association’s ability to maximize profits and to funnel these profits to the NCAA’s leadership. Indeed, the NCAA has its own marketing and licensing arm, and in 2009, it doled out over $6 million to compensate its core executive team. Surely, these simple facts will cause you to question whether the Association’s goal is to fulfill the student athletes’ needs or to maximize profits for the benefit of its executives.
The NCAA has structured its Compliance Rules to sustain the revenue that it has grown accustomed to realizing. After delving into the NCAA’s 2010-11 Division I Manual (the “NCAA Manual”)—consisting of the Constitution, Operating Bylaws, and Administrative Bylaws governing Division I institutions and student athletes—I liken the NCAA Manual to the final act of stage play that comprises two scenes, wherein the audience fails to realize until the final fifteen minutes of Scene II that the apparent protagonist is actually the antagonist. While the NCAA’s Compliance Rules regulate nearly twenty different intercollegiate sports, this article will focus on the relationship between the NCAA Manual and the “big two” revenue-generating machines: college football and college basketball.
For many student athletes, an athletic scholarship primarily represents a stepping-stone to success. These young adults understand that under the tutelage of a knowledgeable and skilled coaching staff, they stand a good chance of reaching their respective professional leagues. Even so, in Scene I of the NCAA Manual, the Association paints itself as being the guardian of student athletes, where these young adults have chosen to participate in intercollegiate athletics on a “recreational” basis. In such a role, the NCAA purportedly ensures that student athletes, first and foremost, excel in academics and assimilate with the general student body and, secondly, maintain their amateurism.
Constitution, Article I of the NCAA Manual declares:
“[t]he purposes of this Association are to initiate, stimulate and improve intercollegiate athletics programs for student-athletes and to promote and develop educational leadership, physical fitness, athletics excellence and athletics participation as a recreational pursuit… A basic purpose of this Association is to maintain intercollegiate athletics as an integral part of the educational program and the athlete as an integral part of the student body and, by so doing, retain a clear line of demarcation between intercollegiate athletics and professional sports.”
Similarly, Constitution, Article II of the NCAA Manual states:
“[i]ntercollegiate athletics programs shall be conducted in a manner designed to protect and enhance the physical and educational well-being of student athletes… Student-athletes shall be amateurs in an intercollegiate sport, and their participation should be motivated primarily by education and by the physical, mental and social benefits to be derived. Student participation in intercollegiate athletics is an avocation, and student-athletes should be protected from exploitation by professional and commercial enterprises.”
In Scene II of the NCAA Manual, the NCAA continues to paint itself as being the protagonist who invests in student athletes. Constitution, Article II further declares:
“Intercollegiate athletics programs shall be administered in keeping with prudent management and fiscal practices to assure the financial stability necessary for providing student-athletes with adequate opportunities for athletics competition as an integral part of a quality educational experience.”
Shortly thereafter, the NCAA wholly adopts the role of antagonist. Indeed, in Constitution, Article II of the NCAA Manual, the Association transitions from playing the role of a friend to that of a foe by placing restrictions on student athletes where it impacts them the most—their pockets.
Section 2.13 states, “[a] student athlete may receive athletically related financial aid administered by the institution without violating the principle of amateurism, provided the amount does not exceed the cost of education… Any other financial assistance, except that received from one upon whom the student-athlete is naturally or legally dependent, shall be prohibited unless specifically authorized by the Association.”
Bylaw, Articles 12, 15, and 16 of the NCAA Manual further describe the restrictions that the NCAA places on financial aid received by student-athletes. Article 12 emphasizes that a student athlete loses his/her amateur status by receiving improper compensation, aid, awards, benefits or other forms of remuneration. In particular, “[improper compensation] is the receipt of funds, awards or benefits,” constituting “more than actual and necessary expenses for participation on the team.” A student athlete may receive benefits and remain an amateur only where (i) the benefits constitute meals, lodging, apparel, supplies, transportation and similar benefits directly tied to competition; or (ii) “it is demonstrated that the same benefit[s] [are] generally available to the institution’s students…or to a particular segment of the student body (e.g., international students, minority students) determined on a basis unrelated to athletics ability.” Amateur status is lost where the student-athlete receives “any direct or indirect salary, gratuity or comparable compensation,” any abnormal “educational expenses,” or “preferential treatment, benefits or services because of the individual’s athletics reputation or skill or pay-back potential as a professional athlete.”
Similarly, the student-athlete may not receive “[c]ash or the equivalent thereof…, as an award for participation in competition at any time, even if such an award is permitted under the rules governing an amateur, non-collegiate event in which the individual is participating.”
Moreover, should the student-athlete garner a job or establish his/her own business, he/she may not use his/her “name, photograph, appearance or athletics reputation…to promote the business.” With respect to a job, (s)he may be compensated solely “for work actually performed…at a rate commensurate with the going rate in that locality for similar services.” Student athletes may not accept compensation for advertising, recommending, or promoting a commercial product or service.
That’s a lot to digest, I know, but essentially, student athletes are entitled to minimal remuneration from the NCAA and their collegiate institutions, outside of the costs associated with education and their essential needs for participating and competing in intercollegiate athletics. Further, student athletes may not use their status as athletes to garner income.
To be clear, I do understand the NCAA’s justification for prohibiting a student athlete from receiving aid, benefits or gifts from agents, boosters, commercial establishments or other organizations outside of his/her collegiate institution, where such aid, benefits and gifts would objectively interfere with the student athlete’s ability to perform as an amateur. Where the aforementioned individuals and organizations are permitted to infiltrate intercollegiate athletics, you open up the door for these individuals and organizations to dirty the water such that student athletes are conflicted and incapable of fairly performing on the field or court. However, where does either the NCAA or the student athlete benefit by the NCAA prohibiting him/her from receiving compensation “because of the individual’s athletics reputation or skill or pay-back potential as a professional athlete”?
Bylaw, Article 12 of the NCAA Manual states that “[t]he NCAA [or a third party acting on behalf of the NCAA (e.g., host institution, conference, local organizing committee)] may use the name or picture of an enrolled student-athlete to generally promote NCAA championships or other NCAA events, activities or programs.” Member institutions may exploit the student-athlete in the following additional ways: (i) to support its charitable or educational activities; (ii) “to promote generally its fundraising activities at the location of a commercial establishment”; (iii) to “distribute…player/trading cards that bear a student-athlete’s name or picture”; and (iv) to advertise an institution’s wallet-size playing schedule that includes the name or picture of a student athlete.
Well, there’s your answer to my question above. The NCAA and its collegiate institutions benefit immensely by prohibiting student athletes from monetizing their own name and likeness.
In short, the NCAA could conceivably reinvest a portion of its hefty profits in student athletes as reasonable compensation for the time that each athlete devotes to practicing and competing away from the classroom and his/her family and friends. Arguably, this compensation would be no different than the weekly payments that I received from the University of Southern California as compensation for my on-campus job that the university completely understood would supplement my full-tuition Trustee Scholarship. Further, the NCAA could similarly grant student athletes an opportunity to work outside of their collegiate institutions to support themselves and their families. Commercial establishments regularly compensate non-athletes based on their value to an organization. Rather than support these student athletes with resources that are generally available to the student body, the NCAA has structured its rules in such a way that it benefits from what it guards against—commercial exploitation.
 The NCAA has also recently investigated and/or sanctioned the Ohio State University (OSU); former OSU quarterback Terrelle Pryor; Auburn University; former Auburn University quarterback Cam Newton; the University of North Carolina Chapel Hill; Florida State University; and the University of Alabama Tuscaloosa.
 The NCAA has or recently had sponsorship agreements with AT&T, Coca-Cola, CapitalOne, Nissan (Infiniti), Hershey’s (Reese’s), LG, Lowe’s, Kraft (Planters), Unilever, and UPS.
 In 2010-11, the NCAA generated $680 million in revenue as a result of its “Television and Marketing Rights Fees,” $67.8 million in revenue through its “Championship Revenue,” and $9.2 million in revenue via “Sales, Fees and Services.”
 As an exception to the general rule, a student athlete may receive aid from a source other than his/her institution or an individual upon whom the student athlete is a dependent, where such aid is primarily received for reasons other than his/her athletic ability.