TMQ's Asinine Take on the Compensation of College Athletes

Below is an excerpt from this week's TMQ column concerning the compensation of college basketball players.

Last winter, Richard Vedder of the Center for College Affordability and Productivity, what we call in Washington a "boutique" think tank (it's really small), argued in the Wall Street Journal that college sports stars "receive compensation that amounts to only a very small percentage of what they would have earned if they sold their services in a competitive market." Vedder noted that Kevin Durant got about $33,000 in "compensation," in the form of tuition and expenses, in his year at the University of Texas, then jumped to $3.5 million a year when he entered the NBA. Colleges are keeping the money that basketball stars generated, Vedder contends, and therefore college athletes should form unions and demand pay.

Many, including TMQ reader Nasr Abdul-Mujeeb of Detroit, also think Division I football and men's basketball players should be paid: "The NCAA is using a free-labor system that lines the pockets of coaches, ADs and NCAA administrators, but provides little benefit to players, many of whom don't get a college education anyway." (Under "one and done," a college basketball player can attend classes in the fall, and then pay much less attention to classes in the spring, continuing to perform for that college while maintaining eligibility based on fall credits.) Surely if one considers only star players such a [Kevin] Durant, the NCAA is indeed benefiting from a free-labor system. But is that the way we should look at matters?

During Durant's college season, 2006-07, there were 343 Division I men's basketball teams, each awarding 13 full scholarships, and 270 Division II basketball teams, each awarding 10 full scholarships, for a total of 7,159 men's basketball scholarships. (The numbers are now slightly different.) The following season, Durant's rookie year, there were 55 NBA players who had just left college, either early or as seniors. Since 55 from that college season advanced to the NBA, we can roughly judge that 55 of the 7,159 major-program basketball players that year were being exploited financially, while the other 7,104 were not. The other 7,104 players were coming out way ahead financially, as they were receiving free college educations -- if they had enough sense to go to class -- plus experiences that might help them in later life, especially in the business world. ("Wow, you played basketball at Boston College?")

Divide 7,159 by 55, and get 130. So each player from Durant's college season who might have been earning an NBA salary was supporting the college educations of another 130 players. This is the key thought missing from free-labor complaints about college basketball. Yes, the tiny fraction of players capable of advancing to the NBA do perform for far less than their market price, but they create economic value that lets large numbers of others go to college on scholarship. Assume the typical basketball scholarship is worth $33,000, which sounds a little low. (Full cost at the University of Texas for out-of-state students is currently $40,426) Those 7,159 scholarships are worth $236 million. So it's not pure exploitation -- $236 million is going to the players who make the college basketball system possible. It's up to those players to have the good sense to attend class and study -- what you accomplish in life is ultimately always up to you. But the scholarships created by the "free" play of NBA-capable collegians are the key consideration. In Durant's college year, he essentially donated 130 scholarships to other basketball players, worth $4.3 million. So actually his "compensation" was more than the $3.5 million he received the following season in the NBA. It's just that the compensation was not money in his pocket, it was the admirable act of financing other people's educations.

This is an embarrassingly weak defense of the status quo. The main reason lies in the sentences I put in bold. TMQ assumes that any college player who cannot play in the NBA is not being financially exploited, and will come out "way ahead." This assumption is completely unsupported, and in my estimation probably very untrue, especially for players in the power conferences (Pac-10, Big-10, ACC, Southeastern, Big East, Big 12). Even if a college hoopster does not play in the NBA, they are still providing a service for their university, and one off of which the university often makes a lot of money. They have worth to the university. (TMQ apparently disagrees, as he seems to think all scholarships are earned by future NBA players, and then "donated" to everybody else.*) I don't think it's at all appropriate to use what a college player will make in the NBA ($0 for almost all players, as TMQ points out) to establish their worth because they are not playing NBA basketball. Their worth should be determined by the college basketball market. But there is no real college basketball market, and that's exactly the point.

The basic argument for exploitation goes something like this. If a big name college basketball program had to pay their players, how much would they pay per year for a full squad? Is it safe to say $1.4 million? I think that's an underestimate, probably even a ridiculous underestimate, considering how much schools are willing to pay their coaches ($1.2 million per year for the power conference teams in the 2008 NCAA tournament) , not too mention how much competitive bidding for talent would drive up player compensation. Even using the modest estimate of $1.4 million per year, that's double what colleges pay their players now, assuming $40,000 (to be conservative I use this figure instead of TMQ's $33,000) per player per year. For better or worse, colleges are almost certainly paying their players a very small fraction of what they would be making under a free market. Players are getting a small slice of a big pie that they largely baked. To many, this is exploitation. If college players were paid market value, Kevin Durant probably would not have to "donate" scholarships to other players. They would be earning them outright, and then some.

*This is truly an asinine notion. Each year, there are hundreds of good college basketball players, who are key parts on good teams, who help draw fans and bring in money, that never crack the NBA. Why should their scholarships be considered donated?