“But the NCAA earns millions of dollars!” protests resonate loud and clear from people in support of paying college athletes. Does it, now?
Today, we’ll look at the numbers and refute the misconception of the NCAA earning too much money to know how to handle.
Recent trends point to an increased growth in Division I athletics expenses outpacing the revenue increases.
While schools in the five autonomy conferences (Atlantic Coast, Big 12, Big Ten, Pac-12 and Southeastern) generate more revenue than their counterparts in the rest of Division I, “median expenses at those 65 schools exceeded their total generated revenues by $2.6 million in 2018,” according to the NCAA’s 2018 Finances of Intercollegiate Athletics.
In 2014, the NCAA’s Division I board of directors voted to allow the schools in the top five conferences to write many of their own rules, implementing autonomous measures.
When looking at the remaining Division I schools without football, “median expenses outpaced generated revenues by $13.3 million.”
The autonomy schools bring in 73% of the $10.3 billion generated among all NCAA athletics departments of 2018, yet only account for 43% of the total spending.
NCAA’s 2018 Financial Database Home Page breaks down the finances into summaries of revenues and expenses, where the money comes from (revenues) and where the money goes (expenses).
DI FBS (Football Bowl Subdivision, the most competitive subdivision of NCAA Division I) Autonomy median revenue trends increased from $60.08 million in 2009 to $106.34 million in 2018. While DI FBS Non-Autonomy, DI FCS (Football Championship Subdivision, formerly Division I AA) and DI Subdivision have exhibited relatively stable revenue streams since 2009.
Meanwhile, DI game expenses have superseded revenue streams. In 2018, for example, DI FBS generated $1.5 million in median revenue (image above), while expenses in the same year were estimated at $4.6 million (below).
When we look at how money is allocated within schools, an astronomical amount launches off into space, for administration. For example, coaches and athletic directors rake in the big bucks and for the most part it’s the football coaches.
Clemson University’s Dabo Swinney brings in a check totaling to $9,315,600. Alabama’s Nick Saban isn’t far behind, with a total pay racking up to $8,857,000, according to data by USA Today Sports.
Obviously, coaching and direction is important for a successful team and the demand and cost for the best ones has been accompanied by large price tags to attract them. Many argue that the players who drive the revenue don’t receive the true value they bring to their schools. Let’s tackle a case study. Next on the starting line-up: the University of Wisconsin-Madison, a Big Ten Conference school.
Salaries and fringe benefits made up $55,864,348 of the actual 2018-19 budget, while financial aid made up $10,007,993, according to the Wisconsin Athletics 2018-19 Annual Report (pages 24-25).
After filtering Madison.com’s UW-Madison salary database, the first seven-highest ranking salaries of the public institution are from the athletics department.
Paul Chryst, UW’s football coach who who started coaching in 2007, has earned a total pay of $3,759,998.96. Next up, Gregory Gard, men’s basketball coach, $2,398,500.37. Director of Athletics, Barry Alvarez earned a total pay of $1,156,250.04.
Colleges compensate their student-athletes with the cost of attendance. As opposed to dishing out multi-million payouts to coaches and administrative staff, more money should be allocated to student-athlete scholarships, in reflection of their hard work on the field. In exchange for hours training in the weight room and on the field, athletes receive full or partial scholarships and a diploma.
The market value of an education pays off for the 98% of athletes who don’t go pro. Georgetown University conducted comprehensive research on the economic value of college majors. STEM, health and business majors are the highest paying, averaging $65k or more annually not including raises and progression over a recipient’s career.
Those who don’t pursue as lucrative majors or don’t receive scholarships often carry the weight of the student loan debt for the rest of their lives. A new report from Student Loan Debt found 80% of participants in their student loan survey average debt loads of $87,500, in comparison to a $60k average annual salary, preventing future retirement savings.
The NCAA utilizes amateurism to keep collegiate athletics from becoming anticompetitive trusts and morphing into semi-professional leagues.
In 2017, Business Insider calculated the fair market value of college football players at the 20 most profitable programs:
We used the NFL’s most recent collective bargaining agreement, in which the players receive a minimum of 47% of all revenue. Each school’s football revenue was split between the school and the athletes, with the players’ share divided evenly among the 85 scholarship players.
This method allows us to estimate that the average college football player at Texas is worth $666,029 each year, based on the program’s average annual revenue over the past three years of $120.5 million. The average player at Alabama, the top program in the country, is second, at $545,357 a year.
Overall, the average FBS player is worth $163,087 a year, with the average football team taking in $29.5 million in revenue each year.
Not all schools are making those big bucks–the NCAA would have to step in and adjudicate if some schools paid their athletes and others failed to do so.
Complications arise when arguing for paying college athletes more outside of the standard tuition, room and board associated with scholarships. Title IX feathers would get frizzled, punches would be thrown from non-revenue generating sports desiring equal treatment as their football and basketball (revenue-generating) counterparts.
To Pay or Not to Pay? That’s the question.
Follow us on Instagram @SportSpek and comment on our posts–we’re eager for weigh-ins on the issue.