There is a need to determine a comprehensive payment model for student athletes. The debate over the management of revenue generated by successful student athlete programs has been a prominent fixture in the industry for over two decades (Murphy 1994). The initial plan for compensating student athletes was simple. Students who were normally ineligible to qualify for attendance to institutes of higher education, were granted access to such education for free and in exchange they participated in college sport programs (Murphy 1994). As these programs grew, the gross revenue generated grew and in 1989 on of the first billion dollar contracts in connection with the successful business administration of college sports programs (Murphy 1994). Now as the governing organizations have grown, eventually becoming the NCAA, contracts totaling in the billions are negotiated seasonally. While this is a very profitable business for the managing entities, the student athletes who make up the primary source of entertainment, continue to receive compensation in the form of access to education and room and board. In fact while college programs and the NCAA experience profits totaling in the billions, student athletes are prohibited from financially benefitting from their talents in any manner.
The financial benefits are especially problematic in light of the socioeconomic status of most college athletes. The majority of the players are ethnically classified as minorities and already face the challenge of being the first in their family to attend college (King 2001). Most student athletes come from families that have struggled financially, and often see playing college or professional sports as a way to economic success (Pflum 2017). These students rarely see any fair percentage of the gross revenue generated and must decide between playing and receiving an invaluable educational experience and making millions at a young age. If student athletes do not begin to receive fair compensation for their services, they will begin to elect entry into professional drafts early. This will result in multiple losses, on the side of student athletes, they may experience great financial success at a young age, but will face greater challenges maintaining that economic status without the proper economical education. On the other side, the student athlete options available to large programs will diminish significantly, ultimately hurting the bottom line of all NCAA institutions. Although participating in the college experience may seem like a non-factor when compared to the prospect of making a large amount of money, if the NCAA and sports programs begin to provide attractive compensation programs, the value-added by the combination of an education with a lucrative compensation package will entice more athletes into remaining. This in turn will boost the already successful machine that is collegiate sports.
Background of Study
College sports have been the home for most talented students who take it as a chance to make money. The changing environment of collegiate sports has led to an increased effort on the part of educational institutions to compensate the student athletes who generate a sizable amount of money for both the institution and the NCAA. Although the debate concerning this compensation has been rigorous, reaching as far as the Supreme Court of the United States. Before the debate the general consensus was that student athletes were governed by the amateurism clause set forth in the NCAA Division I guidelines that states that any student who has received pay for their athletic talents that exceeds the cost of education in ineligible to play (NCAA 2017). As more players began to take issue over the extent to which the NCAA and educational institutions used their likeness for profit the need for legal governance became more and more apparent. Governing organizations decided on a universal basis for this compensation through Title IX, which stipulates that it is illegal to deny any individual, regardless of gender or ethnicity, the benefits of any educational program or activity that receives federal assistance (Office for Civil Rights, 2015). As such, this provides a loophole that allows collegiate athletes compensation through scholarships. These scholarships have very little to do with academic ability, which gives the NCAA flexible guidelines for awards, which has resulted in the disbursement of over $2.9 billion in scholarships to over 150,000 athletes each year. Because of this, the NCAA has also been able to impart a great deal of influence over the athletic departments recruiting programs as well as the general principles encompassed by most Division I institutions.
Student athletes and the NCAA fight out the degree to which Limits exist for compensation and types of activities in which college athletes may participate. According to the NCAA (n.d.), incoming college athletes must be certified as "amateurs." As such, they are not permitted to enter into contracts with professional sports teams, play with professionals, receive any salary for participating in athletics, receive any prize money exceeding necessary expenses, or delay full-time enrollment in school to participate in sports competitions. It is because of rules governing college sports that the student athletes are not able to benefit.
Amateurism rules prohibit student athletes from receiving any type of salary or prize money associated with their athletic abilities. While this is very clearly set forth, the rules regarding the use of an athlete's likeness in commercial ventures is very murky and to date students remain ineligible to receive monies generated through the royalties created through such use. In the case of O'Bannon v NCAA, Ed O'Bannon, 1995 star of the UCLA Men's Basketball Team, discovered that a video game company used his likeness in a college basketball video game. The game replicated his physical characteristics, jersey number, and signature shooting style. He argued that NCAA rules prohibited him from receiving any compensation for the use of his likeness during and after college resulting in unjust enrichment on the part of the NCAA (McLeran 2017). The United States Court of Appeals ruled that the NCAA rules unnecessarily restrained opportunities available to college athletes and thus has opened the pathways in which student athletes can receive compensation.
The case of receiving recompense along with a number of others has generated a number of conversations surrounding employment, tax and copyright issues, including the amount any student athletes should receive. Some believe compensation should not exceed any costs associated with the cost of attendance while others believe students are entitled to a percentage of any revenue generated at a result of their athletic talents. As a result, leaders have been unable to agree on a payment model to adopt that will fairly compensate student athletes. There is no question that the NCAA and collegiate sports earn a significant amount of revenue due to these athletes. During the 2013-2014 school year, the NCAA took in $497,600,000 in gross revenue. Earlier in 2010, the NCAA partnered with CBS and Turner Sports for a 14-year, $10.8 billion agreement for the media rights to collegiate men's basketball teams. In the last year alone, the NCAA generated over $11 billion in revenue. The NCAA claims that revenue such as this is distributed among Division I institutions to provide scholarships for athletes as well as the economic support necessary to run a Division I program successfully. In addition to the NCAA revenue, the top five athletic programs in the United States grossed over $120 million in revenue over a six-year period. Clearly, there is no lack of funding and revenue generated by college athletes and therefore a viable payment model is fundamental to reward these students for their work.
It is only the NCAA that is responsible for the revenue earned by the Organization and universities. While those in opposition to student athlete compensation argue that they should not share those earnings, supporters continue to express the idea of editing amateur sports described by the NCAA (Grimmet-Norris 2015). The latter argue that paying student athletes would remove the distinction between college and professionals and create an un-level playing field as well as disparities in payment of participating athletes.
There are a number of considerations in the equation that determines how student athletes are paid. One must look beyond the NCAA revenue generation model and use other models to determine the fair market value of the players. Currently, athletes do not necessarily receive enough grant and scholarship money to cover expenses associated with attending college. Most student athletes are not able to pay for college themselves and but for Title IX, would not be eligible to attend institutions of higher education. With that in mind, consider the average scholarship shortfall is just over $3200. That amount may seem like a non-issue for those from more economically stable household, but for most student athletes, that may be an inconceivable amount to produce (Grimmet-Norris, 2015).
Even worse, up to 90% of college athletes who receive "full scholarships" are left in poverty outside of life within the institution. Students who are seeking a higher payday and therefore seek professional athlete status have a steep uphill climb toward attaining that goal. According to the NCAA guide for Student Athletes, more than 480k students seek professional status and less than 2% of these students make it (NCAA 2017). That means that the chances of even the best student athlete of joining a professional team are very small, whereas the probability that they will successfully train and matriculate into a lucrative professional position. Under the current NCAA eligibility rules, once a student works out with a professional team, they are no longer eligible to play for a collegiate program (NCAA 2017). If colleges offer a more inclusive compensation opportunity to those students who may not be able to make the criteria to become a professional athlete, they will provide a number of students with the opportunity to not only play in a competitive arena, but also a quality education and networking system that paths the way to a financially successful future. This model will also ensure that collegiate level programs continue to experience financial success, which contributes to a greater experience for all students.Problem Statement The rapidly changing landscape of collegiate sports, specifically football and basketball demand the creation of a standardized approach to the way student athletes receive evaluation and payment for their performance (Berry 2017). To do this criterion must be universally identified and accepted by the NCAA Division I organization, educational institutions as well as the student athletes themselves. The specific problem is there is limited information on this subject resulting in uninformed decision making as well as the refusal to incorporate any payment model from fear of disparities in player payments (Berry 2017). The NCAA and educational institutions must develop and agree on a standardized compensation model that determines payment, how they are payment is received, the duration of eligibility for this payment under a student athlete employment program. Currently institutions of higher education have claimed educational and organizational scholarships to be the only way to compensate student athletes. The pay for play model is the other most discuss...
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