With March Madness underway, there are numerous articles on how basketball players are under paid. This article from The Atlantic is pretty typical; http://www.theatlantic.com/business/archive/2014/03/if-we-paid-ncaa-basketball-players-what-theyre-really-worth-this-is-what-theyd-earn/284559/
While I empathize with student athletes who are juggling impossible time demands while pursuing their dream, all of these “NCAA athletes are underpaid” articles are fantasies far-removed from the real world.
The first mistake all of these writers make is that the student athletes in football and basketball should be paid the same percentage of gross revenues as what NFL and NBA players get. This is a false argument.
They say that NCAA is a business and they should pay like other businesses. Great! Do you know what other successful businesses pay their employees? About 10% of the gross revenue. That shining beacon of American business, Apple, pays $1 in salary for every $8 the make in profit(! Not revenue!!!). And we are talking about a company full of highly educated, highly skilled employees working in a very competitive market. The share NCAA athletes get in scholarships, support, and coaching is much larger in comparison.
You cannot separate football and basketball from all other varsity sports. From the employer’s (the university) point of view, the athletic department is what they are funding, not individual sports. This is the same in the “real world”. Microsoft makes most of its money in Windows and Office, and lose money in Xbox and Bing. That does not mean that employees in Xbox and Bing get paid nothing and employees in Windows and Office get paid millions. The employees in all of those divisions get equivalent pay. Yes, the executives in charge of those divisions may get paid differently (just like coaches in NCAA), but you will not find much difference in pay scale between those divisions even though the revenue generated per employee differs greatly.
NFL and NBA players are best of the best. They represent top 1% of the players coming out of college. These are highly skilled, very valued employees. There is a reason why MLB players make millions (even the worst MLB player) while AAA and AA players do not even make 1/10 of that salary. To argue that 99% should be paid the same way top 1% players are paid is a fallacy. The pay scale is a logarithmic curve, it goes up dramatically as your skillset goes up into the rarified field.
The pro franchise owners can also afford to pay a greater share of revenues to athletes because the owners make money in other ways – the value of the franchise when they sell. The owners make hundreds of millions when they sell their franchise, they can afford to pay more in salaries. The athletic department of a university is not an asset that they can sell, it CANNOT act like a pro franchise, the economic model is not equivalent.
So, what we are REALLY talking about is few star (<1%) players who are getting compensated far below what they could get if they were pros.
But then why would you rip the system apart just for a very small minority of players? Wouldn’t it be easier just to tell them to go and join a pro team so that they can be paid fairly? Yes, some pro leagues do not allow that to happen, but why is that NCAA’s problem? Why should NCAA pay because pro leagues (who make BILLIONS) won’t?
I understand the fairness issue, and it would be great if everything is fair and square. However, very little in life is fair and square.