Money in college sports

Recruiting scandals plague college football and men’s basketball. These sports generate huge fan interest and lots of revenue for schools (or so we’re told). As the story goes, schools stand to gain a lot from recruiting top players, so rule-breaking is inevitable.

There’s been a lot of interest in this topic lately. The firestorm began with a September National College Players Association report estimating that college football players are worth 6 figures to their schools on average. Likewise, the report argues that men’s basketball players are worth over $1 million each! The Atlantic followed with a feature piece in October arguing that players should be paid and a debate forum with all kinds of opinions. Sports Illustrated published their own piece in November, suggesting ways that athletes could be paid without eliminating many sports or breaking the bank.

The issue is complex. Many love the principle of amateur college athletics. Even those who espouse paying athletes understand that only football and men’s basketball are profitable, and these profits subsidize all the other sports. Under the current philosophical and financial framework, paying athletes isn’t feasible.

However, ESPN the Magazine approached my friend Jeff with a different angle. In a hypothetical world where schools could pay players whatever they wanted, and there were no pesky NCAA or Title IX rules forcing them to offer other sports, what would player salaries look like? Following the NCPA report above, we called these salaries “fair market values” for the players.

The NCPA report used revenues, but we recognized that costs matter too (for a good example of the trouble that revenue-based salaries can create, see the NBA). We used the University of Florida as a case study and calculated total profits/losses (revenues minus costs) for each varsity sport. Football makes boatloads of cash (think tens of millions) at schools like Florida. Men’s basketball is profitable, but not by much. All other sports are extremely costly; the University loses 6 to 7 figures per sport per year. It all balances out in the end, with football profits covering up all the losses.

After that, we ranked football and basketball players with input from ESPN’s experts. We assumed that the college players would receive all of the profits for their sport in an open market and used relative salaries by rank in the NFL and NBA to estimate what each player would earn. As you might guess, football players are worth a lot (the top players are in the millions), while basketball players are worth a couple hundred grand tops. You can check out all the numbers at ESPN (Insider required) or in the Magazine.

This “open market” will probably never exist. However, our numbers loosely define the value of recruiting good college athletes. Given their size, it’s no wonder we see scandals! There are other drawbacks of course (we didn’t bother with intangibles like prestige or donations due to athletic success), but these numbers feel about right to me.

As an aside, I wonder if the NBA owners are going to regret the lockout agreement struck last week. The general perception is that the NFL is extremely profitable while the NBA is not, just like at Florida. I bet non-labor costs offset a much higher percentage of revenue in the NBA than in the NFL. Yet, the NFL and NBA revenue splits for players are pretty similar. Not a good sign for the NBA.

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2 responses to “Money in college sports

  1. Pingback: Fair market value for college athletes | Causal Sports Fan

  2. Pingback: How much money are college football players worth? | Causal Sports Fan

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