If you’re invested in the status quo of major college sports, these are wary times. The enemies are at the gates. Tearing down the NCAA’s current definition of amateurism is now a bipartisan issue in Washington, and California lawmakers are well on their way from forbidding their universities from preventing their athletes from accepting name, image and likeness payments.
What’s College Sports, Inc.’s response to all this? “Hey, at least we don’t make them pay taxes!”
Seriously, that’s the focus of Tom McMillen’s “Byte of the Week” for this week.
“Our 130 FBS schools collectively spend more than $1 billion on athletic student aid,” he said. “This aid includes tuition, fees, room and board, books, summer school and much more, which is effectively tax free for these student-athletes. On an after-tax basis, student-athletes receive more in athletic spending than either all the athletics department administrators or even all the coaches. Now, the prevailing public perception is that student-athletes do not receive their fair share, but collectively, on an after-tax basis, they receive more than anyone else in the athletics department.
“And one more point to keep in mind — many of these student-athletes are the first in their family to go to school. They’re given an education, academic support services, nutritional counseling, health care services, fitness and training opportunities, and a lifetime support structure that is unparalleled.
For those who haven’t heard of him, McMillen is the president and CEO of LEAD1. I’ve been told that LEAD1 is not a lobbyist organization for FBS athletics directors, but:
- the group lists the first objective of its mission statement as “influencing how the rules of college sports are enacted and implemented”
- one of its “key themes” is to “Develop strong ties with Congress, state legislatures, and other governmental bodies”
- guests at its annual fall meeting included “Members of Congress”
- it’s led by a former three-term Congressman
- it’s headquartered in Washington, D.C.
Other than all that, it’s definitely not a lobbying organization.
All that said, let’s break down the argument LEAD1 plans to make to Congress:
“Our 130 FBS schools collectively spend more than $1 billion on athletic student aid.”
The NCAA said there were 181,512 student-athletes in 2018. Since it’s impossible to quantify “more than $1 billion,” we’ll note that $1 billion works out to $5,509 per athlete.
“This aid includes tuition, fees, room and board, books, summer school and much more, which is effectively tax free for these student-athletes.”
Let’s be honest about what’s going on here. A scholarship has real value. That scholarship athletes are largely exempt from the $1.6 trillion in student loan debt hanging around the neck of this country is not nothing, but that doesn’t mean a scholarship is worth what the schools say it is. Just because a university would charge a regular student $15,000 for in tuition, room and board doesn’t mean it costs the school $15,000 to educate a scholarship athlete. You don’t get credit for not charging scholarship athletes a “processing fee.”
Did McMillen brag to his children about not charging them for groceries?
“On an after-tax basis, student-athletes receive more in athletic spending than either all the athletics department administrators or even all the coaches.”
Again, there are more than 181,000 Division I athletes. The 123 FBS head football coaches listed by USA Today made roughly $290 million alone in 2018.
“Now, the prevailing public perception is that student-athletes do not receive their fair share, but collectively, on an after-tax basis, they receive more than anyone else in the athletics department.”
The NCAA has based its entire legal argument in federal court that college athletes are not employees, so why is the NCAA — err, LEAD1 — seeking a pat on the back for not passing a tax burden on to people it does not employ? Can you imagine that conversation? “Son, we’re excited to offer you this scholarship, but it’s going to cost you between $3-5,000 a year in taxes, depending on how often you go to tutoring.”
“And one more point to keep in mind — many of these student-athletes are the first in their family to go to school.”
That’s great, but what does this have to do with anything?
“They’re given an education, academic support services, nutritional counseling, health care services…”
Are they given that stuff, or did they earn it because they’re really good at sports? It seems to me that schools spend millions to build their portfolio of fringe benefits — from cold tubs and lockers to trainers and nutritionists — because there’s a market for athletes’ skills and that schools provide those things to beat their competition for the athletes’ services. In many cases, these benefits are provided conditionally — you stop producing, we stop providing.
“… fitness and training opportunities…”
Another term for this is “games and practices,” which, again, are a condition for receiving the (un-taxed!) benefits in the first place.
“… and a lifetime support structure that is unparalleled.”
There’s a reason McMillen frames the argument toward the aggregate of Division 1 athletes. For the majority of athletes, the status quo is a good deal. The Maryland tennis player, the Colorado State cross country runner, the Western Michigan volleyball player, all of them bring in less (much, much less) revenue than their respective schools spend to train and educate them.
But what does this mean for Trevor Lawrence, for Jalen Hurts, for Sam Ehlinger?
In Lawrence’s case, he’ll spend the next two-to-three years as a walking billboard for Clemson, for the ACC, for Nike, for ESPN and all its accompany advertisers. Each of those entities will try to leverage the public’s interest in his labor into money for themselves — and there’s nothing wrong with that, this is still America, after all.
But Lawrence is shut out of his own market, which is why support for the Olympic model — thus, allowing Lawrence and others the market deems worthy to profit from his own name, image and likeness — has seen its support surge from the California assembly to the halls of Congress.
Meanwhile, this is happening.
Holy cow, Jimbo! pic.twitter.com/GsgM6zugyh
— SEC Network (@SECNetwork) July 16, 2019
And, look, not everyone is on board with adopting the Olympic model. Not even all college athletes. Reasonable minds can disagree, but let’s at least be reasonable in disagreement.
Lee Dufour, OL for UAB on paying the players: "I can afford rent, I can afford food, I'm alive, I'm getting a college education for free. I think I'm ok where I'm at for right now."
— RedditCFB (@RedditCFB) July 17, 2019
Lawmakers in Washington and Berkelely are storming the castle, and LEAD1 plans to use “At least we don’t make them pay taxes!” as part of their defense. Let’s see how many are swayed by it.