How much money are college football players worth?

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.

2 responses to “How much money are college football players worth?

  1. I think your post makes sense in the context of your question, but maybe you aren’t asking the right question. When trying to answer whether or not schools should pay college athletes, it’s hard to argue against, since they are so wildly profitable. I also think that you are correct that “amateur sports purists” are fighting a losing battle. As you say, it’s naive to think that any sport can remain pure when there is so much money at stake. But wouldn’t the question be a lot simpler if college football wasn’t so profitable? I think that the NFL should form a minor league system similar to baseball. Let individuals choose to go to college or to be paid to compete. I have even seen in baseball where clubs sign minor league players with the inclusion of a paid future college education, should they choose to quit professional sports. Therefore no individual would truly have to choose between their education and sports. Furthermore, colleges could still offer the sports. It seems a solution like this would create a clear distinction and rescue college football for the “amateur sports purists”. I’m sorry if this ruins things for the “college football purists” though, or maybe they should just be called “nostalgics”, since that time has clearly already passed. In summary, why worry about who gets paid with the profits, why not just take the profits out altogether.

  2. I wholeheartedly agree. There’s something odd about non-profit schools making so much money on football, even though these institutions don’t make profits overall. If I were the NFL, I would do this right now. You could put age restrictions on the minor league (18-22 only, for example), and include a college scholarship up to $30k per year, good at any institution. It’s hard to imagine players not taking advantage of this.

    The NFL might lose money on it for a few years, since they would have to pay out these scholarships and pay some sort of salaries, while competing with traditional college football for attention from your “nostalgics.” However, the NFL has plenty of money to burn, and in the long run it would give them more control over their product. They would get all the best players, so it would just be a matter of time before it killed college profits.

    If I were a parent of a top recruit (or the top recruit himself), I would try to form a union that boycotted college football until players were paid. You could see this working in Texas, for example, where high school football generates profits as well. If the best Texas seniors banded together with some financial backing, I’m sure they could play some well-attended exhibition games. If it doesn’t work, your college scholarship will be just around the corner the next year.

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