A few months ago, my friend Jeff and I worked out how much University of Florida athletes are worth to the school for ESPN the Magazine. The key to our approach — in contrast to other studies — is that we looked at profits generated by each player, rather than revenue. Revenue is not so relevant if it is outrun by costs. What matters is profit (before subtracting player compensation). Profit tells you how much schools could actually pay their players.
The numbers at Florida
The short answer: the best college football players at Florida are worth millions per year, the best basketball players are worth a few hundred thousand, and all other athletes cost the school quite a bit of money. If you have ESPN insider, you can view the full article online. How much of this profit do football and basketball players see? Very little. Player compensation in the form of scholarships is between $15,000 and $50,000 per year per player at most schools. By contrast, other athletes are getting a great deal. Not only do they get a free education, but Florida spends tens of thousands more on each player to ensure that they have awesome coaching, facilities, and equipment.
Football profits across the FBS
Today, Jeff and I have a related project at ESPN, which will also appear in ESPN the Mag soon. We argue that college football players should be paid. Why? Average profit generated by FBS football players — before scholarships — is about $164,000. The average scholarship payout is just $27,000 by our estimation. So, “non-profit” schools are making an average of $137,000 in profit per player. And if that’s not enough, look at the breakdown by conference (all numbers are from the U.S. Department of Education for the 2010-2011 season):
The SEC and Big Ten are making over $300,000 per player! It’s no wonder we see recruiting scandals every year. They won’t disappear until schools are allowed to pay players closer to what they are worth.
For the curious, here’s the top 10:
Paying players is the right move
We thought about the arguments against paying college athletes. A common one is that payments would ruin parity because some schools can clearly afford to pay much more than others. A handful of schools lost money on football. However, college football has very little parity already. I’ve been calling for a “College Football Premier League” for awhile now because of the lack of parity in the FBS. We could have salary caps as well, just like in the pros.
Another popular argument is that scholarship costs don’t capture all the benefits of a college education. For example, Patrick Rishe for Forbes argues that a college degree is worth $2 million in extra wages. This is probably wrong, since he calculates this number by comparing wages for college grads and non-college grads, who are surely of different ability. Also, $2 million in extra wages over the 45 years after college is not the same as getting $2 million in just four years during college. Rishe is an economist! He should know these things.
Even if that number is right, it’s not relevant to the argument at hand. Another economist, Andrew Zimbalist, has a better interpretation. In a similarly wrongheaded USA Today article, he is the dissenting voice; he argues that player compensation should be measured as tuition plus room and board only (or even less, since many players don’t graduate and thus their tuition payments are a waste). However much you think a college education is worth, the athlete could go out and buy that education for precisely the cost of tuition, so tuition is the most accurate measure of the value of a free education. This is the approach we took in measuring player compensation.
Another complaint: schools use football profits to fund other important programs. This is partially true. Schools like Texas and Michigan (my team of choice) make so much money on football that some of it kicks back to the universities’ general fund. However, many schools blow their football profits on other sports. These other sports compete in the same division as FCS schools with tiny football profits. Their luxurious treatment at football players’ expense is unnecessary.
The only argument we had left was something ephemeral about the purity of amateur sports. Unfortunately, that’s gone. Texas made nearly $800,000 per player in 2010-2011 and recruiting scandals happen all the time. Proponents of amateurism are fighting a losing battle in a sea of money. It’s high time that players received their share.