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Why a Free Market for NCAA Athletes Won't Mean Fewer Scholarships

The NCAA argues that paying some college athletes will mean fewer scholarships for the rest. As usual, the NCAA is laughably wrong.
David Banks-USA TODAY Sports

As revenues in college sports skyrocket—with coach pay increasing season after season and the College Football Playoff bringing in $500 million in its first year—the National Collegiate Athletic Association continues to cry poor. At least when anyone threatens amateurism, the storied sporting tradition in which everyone gets paid a free market wage except the people on the field doing the actual work of entertaining the American public.

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The latest case in point? Last week, the NCAA and 11 major conferences filed documents in federal court asserting that if college athletes are allowed to be paid a competitive rate for their services—the same way conference commissioners, university presidents, athletic directors and students working at campus bookstores are, an outcome that's the goal of a current antitrust lawsuit headed by sports labor attorney Jeffrey Kessler—then "many—if not most—Division I institutions" would be forced to reduce the number of scholarships they offer for non-superstar football and men's and women's basketball players.

Moreover, the same court filings argue that it would be "economic nonsense" to assume that college athletes could be paid free market wages by reducing expenses elsewhere.

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Of course, this is the same NCAA that uses voodoo accounting to claim—despite hundreds of millions more being poured into the system every year—that only a few athletic departments actually make money. And it's the same NCAA that pretends that big-time college sports are a money-losing industry, despite the fact that schools keep adding major football and men's basketball programs, not dropping them.

That's why, in reality, the "economic nonsense" claim is itself nonsense.

"I want to tell a lie this big." Tyler Kaufman-USA TODAY Sports

The NCAA's argument basically boils down to this: in order to cover the extra expense that a free market for athletes would undoubtedly entail, football teams would have to offer fewer scholarships overall. Pay superstar players more? Everyone else will have to make do with less. Right now, every team offers 85 scholarships. If the current market already was unrestricted and every team just happened to have enough money (and not a penny extra) to pay for those 85 scholarships, the NCAA would be somewhat correct—higher labor costs could and/or would force a reduction in on-field football staffing.

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However, the college football labor market is extremely regulated, and the 85-scholarship limit is not a bar set by affordability. Rather, it's simply set to maintain a semblance of competitive balance, meaning many schools—especially those in the Power Five conferences—likely would offer more and more lucrative scholarships than currently allowed, if only the rules were different. The fact that every single Division I team currently offers right up to the 85 scholarship limit suggests that the money exists to offer more.

Of course, this all assumes that scholarships really do cost universities money. They do. But not as much as athletic department accounting would have you believe. Remember: college sports don't take place in a vacuum. Athletes are not taking the place of other students at the university—every University of Alabama football player given a "free" ride does not force the school to turn down a chemistry major who would have paid full tuition—and the scholarships athletes receive don't actually "cost" the university what the (relatively random) grant-in-aid check states. These total scholarship costs are simply meant for accounting and government reporting purposes, not for measuring the actual amount of money a school "pays" to keep its athletes.

Any school expecting to save money by replacing scholarship players with walk-ons—as the NCAA's court filing purports—would be in for a rude awakening. The gap between the tuition a standard walk-on pays and the actual money a school spends on a scholarship athlete is not as wide as suggested, and scholarship players are simply more valuable, as demonstrated by the standard practice of offering as many scholarships as allowed. Any school that chose to spend so much money on star players that it could only offer half of its scholarships—presumably a school that generally recruits relatively "cheap" recruits in the first place—would not be able to stay competitive.

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The relatively negligible price schools actually pay for scholarships is far from bankrupting them, and that's part of the reason none of the Power Five schools were at all deterred from committing to offering $5,000 per year stipends, plus cost-of-attendance benefits—both real money, rather than hypothetical costs—after they were announced this year. And given the massive revenue bumps they're expected to see in coming years—the Big Ten's revenue is expected to double to $44.5 million per school per year—it is hard to see a scenario where any school that plays in the Football Bowl Subdivision would bankrupt itself without severe money mismanagement.

If the Kessler lawsuit produces a free market for big-time college athletes, here's what would happen: there would be spending cuts in certain areas, since schools would finally be forced to pay their labor. However, that labor is also the very last place where schools would skimp. Schools may not currently be forced to recognize that this labor has value, but getting better players is more correlated to winning than anything else, and schools will not first look to cut the very source of their revenue.

Fun fact: the NCAA used a variation of this defense—claiming that money for coaches and facilities is more important in recruiting than money for athletes—in the recent Ed O'Bannon antitrust case, and the same judge overseeing the Kessler litigation "rejected" that theory.

The current scholarship limit—like amateurism itself—is not a noble cost-saving tool that allows schools hand out additional winning college education lottery tickets to needy young men and women who just happen to be really, really good at sports. It's a cynical way to maintain arguably illegal economic control over an entire class of American citizens with obvious market value, a long con dressed in bishop's robes, imposed in the name of "competitive balance" so that a school like Ohio State University won't acquire all of the top-level talent that it already acquires.

A tool like that has no place in the discussion and debate surrounding the financial situations of Division I schools. In fact, some just might call it nonsense.