On The Union Comment Count

Brian

We've reached a crossroads. Northwestern has had just about their entire football program sign on to an attempt to get themselves recognized as a union by the National Labor Relations Board. This is a crossroads for the NCAA for obvious reasons.

It is also one for this here blog because it is explicitly a no-politics zone. Whenever the word "union" comes up your bitter uncle who watches Sean Hannity on a loop waddles in from [email protected] to talk about how unions are the doom of America and gets in an argument with your aunt with a dozen cats who sounds like that one lady on NPR. This argument is why the hopefully-soon-to-be-fired dude in charge of NCAA PR framed his response like so:

This union-backed attempt to turn student-athletes into employees undermines the purpose of college: an education.

The unions! They're destroying education.

I don't care about any of that; I only want to look at an interesting tactic to force schools to bargain with their athletes.

So.

Can this work?

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Former UNC center John Henson

The NCAA says student-athletes are not employees, because student-athletes are student-athletes, who are not employees. This came about in the 1950s when the widow of a player who had died tried to get workmen's comp. The Colorado Supreme Court eventually found that Fort Lewis College was "not in the football business," which was probably accurate in that time and place.

More recently, a paralyzed TCU player had a long-running court battle that ended in 2000 with the NCAA winning on what seems like a hell of a technicality:

The appeals court finally rejected Waldrep’s claim in June of 2000, ruling that he was not an employee because he had not paid taxes on financial aid that he could have kept even if he quit football.

Along with a weaving series of decisions by the NLRB that erratically but generally side with universities when students who happen to also be workers ask for bargaining rights, this is what the NCAA will hang its hat on.

On the other side, a 2006 paper by a couple of Michigan State law professors (one of whom is a Michigan law alum) entitled

THE MYTH OF THE STUDENT-ATHLETE: THE COLLEGE ATHLETE AS EMPLOYEE

The article is a lot more fun than it sounds.

Why, a half century after adopting this term, should the NCAA
unceasingly intone to millions of viewers that these young men and
women are “student-athletes”? The NCAA’s purpose in this message is
to shore up a crumbling façade, a myth in America, that these young
athletes in NCAA-member sports programs are properly characterized
only as “student-athletes.” This characterization—that athletes at
NCAA-member schools are student-athletes—is essential to the NCAA
because it obscures the legal reality that some of these athletes, in fact,
are also employees.

About halfway through the authors start using the term "employee-athletes" in a delightful fashion. And I'm pretty sure that this paper is the underpinning of the case Northwestern will take to the board, because it lays out its argument specifically for D-I football and basketball players. The new College Athletics Players Association is currently restricting itself to the same players:

Huma told Farrey that only NCAA Division I FBS football players and men’s basketball players will be eligible to join CAPA — not because non-revenue sports athletes don’t deserve a voice and workplace protections, but because revenue sports athletes are in the best position to make a legal case that they should be treated as employees.

The upshot of their argument is that the most recent edict set down by the NLRB declares that students working in some capacity for the university are not actually employees as long as their work is primarily educational (ie, research assistants getting credit for their work) and if their relationship with the university is "not an economic one."

Scholarship athletes are being compensated for activities that have nothing to do with their academic goals and if they're at a number of D-I basketball and football schools they are raking in millions of dollars for their university. Therefore, they are employees*. It's hard to envision a court claiming with a straight face that Michigan is "not in the football business" these days. That they are using their football business money in bizarre ways is not the NLRB's problem.

The weakest part of the argument here comes from the fact that employee-athletes are all given the same amount of compensation. The decision this paper is basing their argument off cited the uniformity of compensation of GAs at Brown, and the fact that some Brown students got the same compensation without having to do work-like activities. The paper convincingly argues that this fourth test is nonsensical in multiple ways, but that is still a sticking point upon which the whole enterprise might founder.

I'm no law-talking guy, but I'd say there's a decent chance Northwestern gets certified.

*[As long as you accept the premise that athletes submit to a high level of control of their activities in exchange for compensation, which is entirely obvious and will be fought against tooth and nail by the NCAA.]

Then what?

Well, then Northwestern and Northwestern only would have a player union. They would have the legal right to collectively bargain with Northwestern for impermissible benefits that would give the NCAA cause to annihilate Northwestern.

States across the country with laws on the books that are friendlier to student-employee rights would see local CAPA chapters mushroom. As anyone who's dealt with a GEO strike knows, Michigan is one of these.

At this point, the entire system has to either collapse or be forcibly restructured. What the NCAA looks like in the aftermath is completely unpredictable, at least for schools in major conferences. The one thing that is clear: the firmament will be shaken as employee/student/athletes go from people watching the NCAA to half of the decision-making process.

Go team.

Comments

grumbler

January 29th, 2014 at 2:51 PM ^

Why would the universities pay for scholarships for these employees?  These employees may get some kind oa a discount on tuition (I don't know whether this is true for UM employees or not), but the players would be liable for taxes on their compensation, no?  Are there any UM employees who get tax-free scholarships as part of their compensation package?

bacon

January 29th, 2014 at 10:26 PM ^

The scholarship isn't taxable, but many graduate students get stipends, which the IRS treats different than wages.  Stipends (or at least mine) are subject to some taxes, like federal and state, but not all taxes (ie. payroll taxes).  Also, there are implications on how you can use the money (generally people who don't earn a wage can't invest in things like IRAs because they're not employed (students get a loophole for this, but postdoctoral fellows like me do not). 

As a postdoctoral fellow at a university, I have an interest in this because we exist in a tax gray area.  The courts have ruled that what we do doesn't constitute an employee-employer relationship and therefore we aren't employed.  We're sort of like independent contractors, but the rules are very fuzzy.  They're loosely defined based on test cases where the IRS took postdocs to court to define the boundaries of what was and what was not taxable.  Basically, the reason we're in a gray area is because the courts left us there and without an act of congress, we're stuck there.  The universities are scared to give us anything new (like pay for our healthcare) because then they could be sued by the IRS. 

Now with respect to the players and being employees, I imagine that student athletes being considered employees would be fertile ground for the IRS to test these definitions and tax things like the value of the healthcare the athletes are provided or their housing, etc.  I'm not sure this would change anything, from my rudimentary understanding of things, I'd guess the IRS would test the waters.

larisimilitude

January 29th, 2014 at 5:33 PM ^

It's very possible that, were the athletes to gain recognition as a union, their employment status would be legally deemed to be "different" from that of graduate students.

For the scholarship question, though, I don't think that matters. Scholarships -- those that go towards tuition and required materials -- are *always* non-taxable. Always. Doesn't matter if you're an employee, a certain kind of employee, whatever.

If a union was certified and they bargained a contract with the university, it seems very possible that scholarships could continue to be a part of the athlete's compensation. If you're a university, you'd always rather compensate with a scholarship than with a comparable amount of cash. Assuming that the athletes still have to be students, they also benefit, since the scholarship isn't taxed. Other compensation could be added to that however the parties saw fit.

I'm not saying it would certainly work out this way, but it does seem like a plausible outcome of bargaining.

 

bronxblue

January 29th, 2014 at 9:20 PM ^

Well, somewhat.  She also teaches, which really isn't in the furtherance of her education (which is research in a science), and from what I can gather she is basically treated as a lecturer for tax purposes.  It's closer to education, but professors don't receive special tax breaks on their income because they work at a school.

I absolutely recognize that the argument here is that playing football is a "job" not attached to the education.  My point is more that this idea that scholarships and employment are not always separate and universities find ways of treating the same individual in different capacities.

grumbler

January 29th, 2014 at 4:52 PM ^

Is your wife a student there, or an employee?

There would be no reason for a school with employee-athletes to have any scholarships at all, any more than there would be for employee-professors or employee-janitors.  I doubt that the majority of the employee-athletes would even be interested in attending classes, to be honest.

bronxblue

January 29th, 2014 at 9:33 PM ^

In a way, both.  She's a graduate student as well as a lecturer; both are related in some ways but in terms of compensation, they are different.  She gets scholarship to cover her academic costs, and filled out a W-2 for her lecturing.  

I think there is a place for scholarships with emplyee-athletes.  It might not be perfect, but you could award a scholarship for academic costs and then some agreed-to compensation on top of that which is taxed as income.  There are myriad of details/issues related to that which would need to be hammered out, but I don't get why people would be shocked that Universities capable of amassing billions of dollars in endownments and build massive, multi-million dollar research labs and departments couldn't figure out how to handle a couple hundred employee-athletes.

AJ1

January 29th, 2014 at 5:16 PM ^

Not all schools cost the same, so if you take out free tuition, then you would be creating a MASSIVE competative advantage for some schools over others. The cheapest schools would essentially be offering to pay athletes more cash beyond tuition fees.

So you could get the worst schools ending up with all the best players nationally, and the best schools being restricted to in-state recruiting.

In any case, it is amazing to me how poorly thought out the argument is for the advocates of paying athletes. Most of them have no appreciation for the fact that the majority of schools are NOT making millions in profit, only an elite bunching at the top. Most have no appreciation for the fact that any number you set for football and basketball MUST be double with half that total given to female athletes.

BlueMach

January 29th, 2014 at 2:36 PM ^

I think a great fall-back position for the players to take is to argue if they are deemed to be non-employees, they should be classified as quasi-employees under a sub-agency theory.

J.

January 29th, 2014 at 2:37 PM ^

The income tax argument is a non-starter; work study is exempted from taxation, as is scholarhsip money paid directly to an accredited institution of higher learning.  The only amount that might be taxed would be a cost-of-living stipend -- and all that really means is that salaries would be increased correspondingly.

Title IX doesn't affect the CAPA directly, but if Northwestern athletes manage to get certified and use their collective bargaining position to negotiate higher benefits, someone will sue to try to get a comparable number of female athletes the same benefits.

The idea that some student athletes are employees and others aren't will not pose any problem whatsoever.  The argument will be made that the other sports are actually non-profits, and that the CAPA is only representing the for-profit sports.

The biggest problem they have here is that they picked Northwestern instead of Stanford or (better yet) Duke.  If there's one BCS-level private school whose response to this would be "fine, we're going to intramurals," it's got to be Northwestern.  I doubt "Chicago's Big Ten Team" is making enough money to be worth the trouble.  They may succeed in setting a legal precedent, but potentially at the cost of destroying the institution they represent.  The heavy lifting would be done by future unions at other schools.

(PS: Michigan public-sector employees may currently have the right to organize, but laws can be changed at any time.  It wouldn't surprise me a bit to see that law repealed before Michigan athletes could unionize).

Indiana Blue

January 29th, 2014 at 2:44 PM ^

but work study is taxable income.  It is exempt from SS tax unless the STUDENT works more than 20 hours per week.

 The fact is the Work Study is for Students, and the argument is that the football players are actually Employees.

Go Blue!

J.

January 29th, 2014 at 2:51 PM ^

I don't remember filing 1040s for my work-study income.  But I guess I did. :-)  Thanks for the correction.

Regardless, I stand by my original position -- if there's income tax to be paid, ultimately it just results in the nominal salaries being higher.  It will just be one more thing to consider during negotiations.

MaizeAndBlueWahoo

January 29th, 2014 at 2:50 PM ^

The idea that some student athletes are employees and others aren't will not pose any problem whatsoever.  The argument will be made that the other sports are actually non-profits, and that the CAPA is only representing the for-profit sports.

In which case most schools could dodge unionization simply by opening their books and saying, look, we lose scads of money on this football thing.  Because most of them do.

Furthermore, simply because an auto company loses money doesn't mean their hourly workers have no right to unionization.  Making money or not doesn't have any bearing on the situation.  Could GM simply have said, hey, in 2009 we bled cash, so we're dissolving the union?  Obviously not.  Workers have a right to unionize based on their employment, so if one football team can be unionized, they all can.  And some schools make money on things like lacrosse or baseball, therefore those aren't nonprofits under your definition, and their players can unionize.

Then it's a very short step to the argument that an athlete is an athlete.  I mean, they're all under the same department.  I don't think you can divide up the department like that and say, rights for some, not for others.  If GM makes a ton of money selling Chevy trucks and loses money on Chevy Volt (which they do) they can't just de-unionize the workers at the Volt plant.  But that is what the CAPA is doing, and I think it weakens their case tremendously.

J.

January 29th, 2014 at 3:00 PM ^

Hmm.  Employees of non-profits have the right to unionize anyway, so my argument doesn't work.

If conferring a scholarship to a football player makes him an employee, then, you're saying that conferring the same scholarship to a women's tennis player also makes her an employee.  So, Northwestern would respond by dropping the women's tennis program, except for opening itself up to a Title IX lawsuit.

So, ultimately they probably keep just enough women's sports to balance out the men's basketball and football programs and drop all other sports.

Still, I don't know that this hurts the CAPA's position.  Obviously the revenue-generating sports' athletes have the most leverage.  If the non-revenue-generating sports' athletes wanted to organize as well, they could petition the CAPA to admit them or they could join their own.  There's plenty of precedent -- look at the airline industry, for example.  Pilots, flight attendants, and ground staff that work for the same airline are all unionized, but they all belong to different unions.

MaizeAndBlueWahoo

January 29th, 2014 at 4:03 PM ^

If conferring a scholarship to a football player makes him an employee, then, you're saying that conferring the same scholarship to a women's tennis player also makes her an employee.  So, Northwestern would respond by dropping the women's tennis program, except for opening itself up to a Title IX lawsuit.

So, ultimately they probably keep just enough women's sports to balance out the men's basketball and football programs and drop all other sports.

To the letter, that's exactly what I'm afraid of at the end of this unionization (and Ed O'Bannon) path.  Money has to come from somewhere, which just means higher ticket prices and fewer money drains.

You make a good point about the various unions working for airlines.  CAPA could just say "we're representing football and men's basketball just because."  Probably not a showstopper at all.  Sooner or later though, I think they'd run into gender equality issues.  What they're doing is making a men-only union, which is easy lawsuit bait.  Admitting women, though, then means they can't stand on the leg of revenue-only, which means they can't really justify leaving anyone out, and we're back to where we started.

The FannMan

January 29th, 2014 at 4:15 PM ^

The idea that the Michigan legislature (which has passed a number of laws that restricted the rigths of Unions) would repeal the state labor law over this is wrong.  As much as we love college sports, the state isn't going to make that drastic of a policy change over this issue.

Also, the current leadership saw what happened in Wisconsin in 2011 and in 2012 over right to work.  There is just no willingness on their part to repeal PERA.

Indiana Blue

January 29th, 2014 at 2:39 PM ^

as the Union would eliminate ANY footballing between Union and non-union teams.  And as an added benefit Notre Dame would finally have its conference.  However the private schools would need to develop their own salary system for the players, because how would the players be able to pay taxes on the "received income" of a scholarship to the tune of $60 - $80K for out of state students (.... er employees) per year.  Wow, talk about an finance education.  Nothing like paying taxes on "phantom income" - to play the game they love.

Obviously absurd ... but the smell of MONEY can wreak havoc on everyone.  And while the Northwestern players may actually believe they are "defending" their future ... the real advocates behind the scene are seeing $$$$.  This could become really ugly ....

Go Blue! 

Blue Mike

January 29th, 2014 at 2:40 PM ^

Anyone else find it amusing that the first shot at declaring football players employees instead of student-athletes is from a school that prides itself on its high academic standards and putting the student before the athlete?

wolverine1987

January 29th, 2014 at 2:41 PM ^

So why try and disparage the term student/athlete? It reflects a fact of what they are. They are athletes and students that GET to play sports at a high level, and get to have all expenses paid for (and oh BTW, in football and basketball getting treated like KINGS on campus) while doing it. In other words, they are living the dream, and NONE of them want out of that. IMO to even hint that there is something amiss in that bargain that requires collective bargaining is an insult to intelligence.

BTW I'm for additional stipend money for athletes (the so called "full cost" of scholarship) and for figuring out a path to compensate famous college athletes (a trust of some kind that they receive after they leave school) who sell jerseys. I'm not for pretending that they have greivances that require collective bargaining.

go16blue

January 29th, 2014 at 2:51 PM ^

At the turn of the 20th century, it was commonplace for children in the US to work in factories, under heinous conditions with miniscule salaries, to make some money for their families. These children weren't coerced into doing so, but in fact made a choice to do so - a choice that was generally good for both their families and their employers. But just because both sides agree to something, doesn't mean it's fair. 

Denard Robinson being paid the equivalent of $40,000/yr while making the university millions is not fair. Joe Kerridge being paid the same thing to smack his brain around his helmet for 4 years (while being nowhere close to a "king" on campus), without any sort of legal protection for his health, isn't fair. Just because the players buy into it doesn't mean the system is ok.

momo

January 29th, 2014 at 2:56 PM ^

with the $40K, $50K or (even worse) $200K figure that gets thrown around in this discussion. (In what other context would you talk about someone's 4-year earnings as a measure of value?)

 

It totally confuses cost with value, ignores opportunity cost altogether, and finally is a tacit agreement that players are already being paid, and that the only debate is around how much and whether it can legally be capped by a monopolistic organization.

Hannibal.

January 29th, 2014 at 3:01 PM ^

It's a hell of a lot more than $40,000.  Take $40,000.  Take out taxes.  It won't come close to covering out of state tuition for Michigan, plus all of your living expenses. 

How much would you have to earn pre-tax to attend Michigan as an out-of-state student year round for four years?  You might be up in the neighborhood of what a starting engineer makes.  That doesn't even touch on the value of being allowed admission to Michigan without the grades that you need to get in if you are a non-athlete. 

 

wolverine1987

January 29th, 2014 at 4:10 PM ^

Who is more qualified to judge the fairness of it? go16blue, or the thousands of players who have determind over the years that it is to their advantage to play? And the thousands more who want to play?

And oh BTW, 8 year old kids were not prancing to the mines to work at the turn of the 20th century, nor dreaming about doing so. The comparison is ludicrous on its face.

Seth

January 29th, 2014 at 2:55 PM ^

The players can't treat with their school's licensing partner for their jerseys, or with EA Sports for their videogame likenesses, on an individual basis. So they are forming an organization to bargain collectively for them. That's a union.

Any path to compensate famous college athletes for their likenesses and names on products etc. will require bargaining with the entity buying their licenses, and since that is implausible to be done alone either the NCAA has to step up and collectively bargain for them, or they have to create their own entity to do so. Either way, it's collective bargaining.

wolverine1987

January 29th, 2014 at 4:09 PM ^

That is, if the NCAA agrees, or is pushed, into letting a certain number (the famous ones who sell jerseys) make money from jersey sales or EA sports, there is nothing at all stopping Denard from negotiating himself or through his own representative.  More likely, the NCAA will detemine the stipends themselves, with the help of a committee, and thus no bargaining will be done. But if some is done, individuals are perfectly capable fo doing it themselves or through a representative, or through their parents.

Hannibal.

January 29th, 2014 at 2:55 PM ^

Jesus Christ -- no kidding

This is especially true of a private university like Northwestern, which is insanely expensive.  The overwhelming majority of kids who play there would never have access to that quality of education.  Financially, at least.  I would reckon most of them wouldn't be able to get in academically either. 

There are a small handful of ticket sellers like Denard Robinson that can reasonably argue that they aren't getting fair market value for their services.  For the rest of them, it's hard to make that argument. 

French West Indian

January 29th, 2014 at 3:21 PM ^

Dennard was a fun player to watch but can you honestly argue that he sold tickets?  Michigan was drawing 100,000+ before Denard was even born and has continued to do so since he's graduated.  In the big picture, these individual athletes (even the "stars") are nothing.

bronxblue

January 29th, 2014 at 4:26 PM ^

How many 16 jerseys were sold in the store, online, etc.?  How about the cover of the EA game?  Or the thousands of other officially-licensed memorabilia that included some reference to #16 at Michigan?  Attendance isn't everything.

bronxblue

January 29th, 2014 at 9:26 PM ^

But isn't that kind of the point?  Just because they would have bought another star's jersey just means THAT guy convinced you to buy his jersey.  And let's be honest - Webber sold a hell of a lot more jerseys than Louis Bullock, even though both were "stars" of their respective teams.  

My point is that this whitewashing of "people just show up to watch the laundry" doesn't really hold true; there were LOTS of empty seats this year against crap opponents as the football season derailed, and that's partly because fans weren't engaged by the players on the field.  So Hoke and co. had a mandate to get better ones and win more, and they are fairly compensated for that.  But those athletes are also part of the equation, and if Brandon is going to suddenly pull in $50+ million in profits from the department, a significant part will come from the efforts of those athletes.  So if those athletes want some additional protections against lost scholarships and injury treatment down the line, I don't see why they shouldn't be able to without it upsetting the apple cart the NCAA has set up.

French West Indian

January 29th, 2014 at 6:10 PM ^

I think these "star" players will be in for rude awakening when the see how small their royalty checks would be if they ever do get compensated for them.

After you take out the manufacturer's cut, the university's cut, the retailer's cut and then figure that a Michigan number 16 jersey has been worn by about 200 players over the past 100 years (all of whom would deserve cut), then Denard ain't getting much.  And then you've got to figure that there will be future players wearing that number too (unless it gets retired and now we've just opened up another can of political worms).

Callahan

January 29th, 2014 at 7:22 PM ^

They know how many #16s were sold between 2010 and 2012. And seeing as he was the star QB, and there haven't been any other significant #16s in several years, Denard wouldn't be sharing those royalties. 

bronxblue

January 29th, 2014 at 9:28 PM ^

It's pretty easy to look at jersey sales over a time when a player wore said number and then figure out most of those sales were due to that player.  And yes, maybe the #1 or #2 jerseys become a bit of an issue, but then again we are dealing with pros vs. college kids, and I'm sure the University and staff could figure out some historical trends and allocate for them in the payment.  And yes, the University gets a cut; why not the guy who wears the number and gives it some value?

MCalibur

January 30th, 2014 at 11:10 AM ^

And 98 is not Tom Harman's jersey

21 is not Desmon Howard's jersey

2 is not Cahrles Woodson's jersey

 

Come on, man. It doesn't matter who wore 16 before or who wears it in the future, it's Denard's jersey.

 

 

 

Seth

January 29th, 2014 at 2:50 PM ^

My expectation for all of this is the NCAA will pour so many lawyers against this that the Northwestern players who signed that petition will be parents by the time any actual decision comes out of the courts, and by then it will be out of consciousness and the momemtum of O'Bannon that led to it will be so stalled that we'll have to wait years for someone to take the next step. This is a turning point, but it could be a 25-year process to get anything meaningful out of it.

Eventually players will have their union and negotiate rights for licensing agreements in addition to their scholarships, and the people who make #16 jerseys today will lose money because they already maxed out the price point on Denard Robinson jerseys before they had to pay Denard, and the people who make the videogame will have to license with the union as well as the NCAA and since they also already maxed out the price point for their games they'll lose some profitability as well.