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Volume 21 No. 1
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How could money be distributed to athletes?

One of the key questions college administrators ask is how the money would be distributed to the athletes.

“There has to be a mechanism created, because that’s the only way to do group licensing,” said Jeffrey Kessler, a prominent antitrust attorney who has worked with all the major professional players unions. “That’s the only way to effectively have some group association that’s going to speak for the athletes collectively. So some structures have to emerge.”

Antitrust lawyer Jeffrey Kessler says a group could be named to speak collectively for athletes.
Photo by: AP Images
Kessler said the group doesn’t have to be a players union, per se, but it could be an advocacy group, not unlike AARP for the elderly, or a trade association like the American Bar Association. It could be the National College Players Association, an advocacy group for college athletes. The NCAA also has a student-athlete advisory council, made up of male and female athletes from football, basketball and Olympic sports who could serve as something of a board for the association with, of course, an administrator.

For the purposes of this exercise, we’ll call it the Student Athletes Association. Each conference would pay 25 percent


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of the designated media revenue into the SAA fund each year, with payment to the athletes distributed from there.

Another concern we heard from administrators, and to some extent even player advocates, was that putting $10,000 to $50,000 of discretionary income into the hands of 18- to 24-year-old students each year might create as many problems as it addressed.

Our plan recommends holding most of the money in trust while the athletes remain in school, distributing enough to cover cost of attendance each year but allowing the rest to accrue, to be paid when the athletes sever their relationship with the school.

That could be four or five years worth of licensing money — potentially $50,000 to $200,000 — if the athletes played through the exhaustion of their eligibility.

As long as the athletes remained on scholarship, they would accrue earnings. When they left, they’d be paid — and taxed — just as anyone else would be in exchange for the use of their likeness.

With any scenario, there are trade-offs.

One is the Pell Grant, which pays up to $5,600 a year to students who qualify. At Ohio State, for example, about 150 student athletes receive aid from the Pell Grant, Athletic Director Gene Smith said.

With money being paid into a fund for athletes, some who currently receive the Pell Grant wouldn’t be eligible for that aid after their freshman year. Sandy Baum, a student aid expert who teaches at George Washington University, said that even money in a trust would count as income.

“It’s earnings, just like any other earnings. The method of payment doesn’t matter,” Baum said. “You’d be hard-pressed to develop a public policy that says an athlete who’s getting paid should also get the Pell Grant.”

Whether the licensing relationship makes the athlete an employee of the university is a matter of debate. Students from all over campus are paid by the school — ROTC members, campus newspaper editors, officers in student government, just to name a few. And they’re not considered university employees.

A significant roadblock to compensating athletes is the concept of amateurism that the NCAA advocates. In the eyes of the NCAA, athletes are either amateurs or professionals, and as NCAA President Mark Emmert said in a September address at Marquette, there’s no movement to professionalize the athletes.

“One thing that sets the fundamental tone is there’s very few members, and virtually no university president, that thinks it’s a good idea to convert student athletes into paid employees. Literally into professionals,” Emmert said.
“Then you have something very different from collegiate athletics. One of the guiding principles [of the NCAA] has been that this is about students who play sports.”

But amateurism, by definition, doesn’t mean that athletes can’t be compensated. Amateurism is whatever the NCAA says it is. If the NCAA says that athletes who make no more than $30,000 a year are amateurs, then they’re amateurs. Each regulating body, whether it’s the NCAA or any sanctioning body, determines its own rules for amateur status.