The NCAA: Big brother or Modern Day Crook?
Over the past few years, the National Collegiate Athletic Association (the “NCAA” or the “Association”) has flexed some serious muscle with respect to its enforcement arm in Division I College 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. The NCAA has therefore been perceived by many as the guardian of college football: an organization willing to take extreme measures to clean up the sport and prevent agents, boosters, and similar individuals from exploiting the student-athlete. Unfortunately, a thorough review of the NCAA Compliance Rules and records exposes the Association as a fraud; while declaring that its number one priority is education and ensuring that student-athletes experience college in a manner no different than the general student body, the NCAA is an organization that makes annually hundreds of millions of dollars off of the same student-athletes it supposedly protects from similar professional and commercial “exploitation.”
The NCAA is a body or organization consisting of semi-volunteers who govern collegiate athletic programs. The Association is funded by revenue generated from, among other things, (i) regular and post-season play; (ii) television and marketing rights; (iii) sponsorships; and (iv) sales related to its 1,281 institutions, conferences, and organizations (among three divisions). According to its website, the NCAA returns more than 90 percent of its revenue to its member conferences and institutions in the form of direct distributions or services. Therefore, individual institutions benefit from the success of the Association. Though it maintains a non-profit status, the NCAA upholds many of the qualities of a private, profit-generating company. In particular, the Association is driven by its ability to generate revenue. Indeed, in 2009, the NCAA doled out $6 million to compensate fourteen of its highest-ranking executives. The Association has its own marketing and licensing arm. Moreover, its total operating revenue for 2010-11 amounted to $757 million.
The Association therefore has structured and designed its Compliance Rules to sustain the revenue it has grown accustomed to realizing. After spending two weeks delving into the NCAA’s 2010-11 Division I Manual—consisting of the Constitution, Operating Bylaws, and Administrative Bylaws governing Division I institutions and student-athletes—I liken the Manual to a screen play consisting of three Acts, where the audience doesn’t realize until the last 15 minutes of the Third Act that the apparent hero (i.e., the NCAA) is actually the villain. While the NCAA governs nearly twenty different collegiate sports, the focus of this article is the relationship between the NCAA Compliance Rules and the “big two” revenue making machines—college football and college basketball.
In Act I of the NCAA’s 2010-11 Division I Manual (the “NCAA Manual”), the Association is the guardian of the student-athlete—an innocent young adult who has chosen to participate in college sports on a “recreational” basis as a hobby. The Association’s primary goal is to ensure that the student-athlete assimilates with the general student body, excels in academics, and is protected from exploitation by the professional and commercial villains.
For example, Constitution, Article I of the NCAA Manual asserts that “[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 [i.e., hobby], and student-athletes should be protected from exploitation by professional and commercial enterprises.”
The NCAA depicts itself as being the guardian and facilitator of the student-athlete’s attainment of an education via the lifestyle of the stereotypical college student. However, if this isn’t deception by the Association, I don’t know what is. Let’s be real. The vast majority of student-athletes who have scholarships to play either college football or college basketball are treating the institution as a stepping-stone to “the League,” and the NCAA knows this. These young adults understand that if they put in enough time with the right coach, perform in front of the proper media channels, and stay away from considerable off-the-field trouble, they stand a good chance of getting drafted into their respective professional leagues. For these student-athletes, education is a far second on the priority scale below athletics, and with respect to their motivation of assimilating with the general student body, the only student bodies they intend on seeing are those that visit after the clock strikes twelve.
In Act II of the NCAA Manual, the Association, via its “hard-earned” revenue, provides the student-athlete valuable opportunities through athletic competition and an abundance of education.
Indeed, Constitution, Article II of the NCAA Manual elaborates on the NCAA’s role as the provider: “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.”
Here, the NCAA continues to portray itself as a hero. Based on a quick read of Section 2.16, one would think that the NCAA disburses most of its revenue in order to create for student-athletes the aforementioned rosy college experience. However, though the NCAA returns more than 90 percent of its revenue to its member conferences and institutions, the student-athlete rarely reaps much of the reward. Remember, in 2009 alone, the Association doled out $6 million merely to compensate its own executives. As I will further explain below, at most, the student-athlete receives aid from its institution for the cost of attendance and benefits constituting meals, lodging, travel, apparel, supplies, and transportation tied to competition. This fact leaves me, and probably you, wondering where does all of the money go (i.e., $757 million in 2010-11)? That’s a tough question to answer, but considering that the NCAA is a non-profit organization consisting of more than 430,000 student-athletes, each athlete conceivably earned, but did not receive, approximately $1,760 of revenue.
In Act III of the NCAA Manual, the Association finally reveals that the character it portrayed throughout Acts I and II constituted nothing more than a ruse. The NCAA fully adopts the role of the villain here. Particularly, In Constitution, Article II of the NCAA Manual the Association limits and controls the student-athlete where it matters the most—financial aid.
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 restraints surrounding financial aid received by student-athletes. Article 12 emphasizes that a student athlete loses his amateur status by receiving improper pay, aid, expenses, awards or benefits. In particular, “[improper pay] is the receipt of funds, awards or benefits,” constituting “more than actual and necessary expenses for participation on the team.” Thus, 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 own business, he may not use his “name, photograph, appearance or athletics reputation…to promote the business.” With respect to a job, he may be compensated solely “for work actually performed…at a rate commensurate with the going rate in that locality for similar services.” The student-athlete may not accept compensation for advertising, recommending, or promoting a commercial product or service.
Wow! That’s a lot to digest, I know. But basically, the student-athlete is entitled to very little from the NCAA or his institution, outside the cost of his education and the essentials for participating and competing in his sport. Additionally, the student-athlete cannot use his status as a college athlete to garner income.
Let me be clear, I do understand the NCAA’s justification for prohibiting the student-athlete’s receipt of aid, benefits, and gifts from agents, boosters, commercial entities, and professional organizations, because the financial opportunities provided to the student athlete should not be vastly different from those opportunities provided to the general student body. Moreover, if the aforementioned individuals are legally permitted to infiltrate college sports, you risk dirtying the water with student-athletes who are conflicted and incapable of fairly performing on the field or court. I also realize that it would be similarly risky to permit a student-athlete to promote or market a product or business based on his status as a collegiate athlete.
That being said, the NCAA conceivably could, and really should, provide student-athletes reasonable compensation for the time they spend practicing and competing away from the classroom, the library, and their friends and family. For instance, as a full tuition Trustee Scholar at USC, I worked at the school library and was fairly compensated by the University for the work I completed. Certainly, participation as a student-athlete on a college team for any of the Division I or Division II member institutions similarly constitutes work.
As further justification for the argument that the NCAA and member institutions should reasonably compensate student-athletes, merely observe the manner in which these parties exploit for revenue the name and image of their student-athletes, while prohibiting everyone else under the sun—including the student-athletes—from doing so.
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.
You ask: what does the student-athlete get in return for his participation in these activities? Naturally, he receives “actual and necessary expenses…related to participation in such activity” (i.e., meals, transportation, lodging, etc.).
In sum, through a simple review of the NCAA Compliance Rules, one can glean that the Association is an absolute farce. Acting as both a hypocrite and a fraud, the Association has structured the NCAA Manual in such a way that it benefits from exactly what it prohibits—the use of student-athletes as income generators during the rising popularity of college football and basketball.
 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 contracts 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 institution or an individual upon whom the student-athlete is a dependent, where the aid is primarily received for reasons other than athletic ability.