On April 22, 2010, the NCAA reached a 14-year agreement, worth $10.8 billion, with CBS and Turner, granting the two media companies joint broadcasting rights to the NCAA Division I Men’s Basketball Tournament. In April 2016, the NCAA and CBS/Turner extended their agreement for an additional eight years, through 2032, and increased the payment amount by an additional $8.8 billion.
While the NCAA collects its annual multimillion-dollar broadcasting rights fee, 351 of its member institutions support a Division I men’s basketball program, which, separate and apart from the NCAA, grant over $174.5 million in annual scholarships to 4,511 student athletes. For a Division I men’s basketball player that scholarship is worth, on average, $38,250 per year, according to www.scholarshipstats.com. But is this scholarship amount fair value based on the revenue generated by the NCAA from its agreement with CBS/Turner? The NCAA maintains that it is.
Since its inception in 1906, the NCAA has held firm to its principle that student athletes are amateurs who should not be compensated for their athletic skills. However, the NCAA’s long-standing belief may be coming to an end. In March 2019, a federal court found that the NCAA’s position regarding “amateurism” is fundamentally flawed and its rules regarding student-athlete compensation violate federal law. In the matter of Alston v. NCAA, a federal judge held that the NCAA can no longer limit the scholarship packages offered to student athletes and it must allow its member institutions the opportunity to offer additional education-related items such as computers, science equipment, musical instruments and tutoring, to name a few. The court’s ruling does not force member institutions to change their student-athlete scholarship packages, nor direct them to pay traditional salaries; it holds that the NCAA may not be able to stop them from doing so.
As a result of this ruling, it may be time for the NCAA to modify its age-old position and establish a fair and objective way to compensate student athletes. To do so, the NCAA should look to the professional sports leagues for guidance where two important concepts may assist them: 1) minimum salaries, and 2) equitable distribution of revenue. As a fair way to compensate its athletes, each of the major sports properties has a set minimum salary that escalates for a player the longer he is part of the league. In addition, they also have an income-sharing structure, wherein there is a formula to divide league revenue between the owners and the players, with the divide being on average around 50 percent.
Using the professional sports league model, revenue received from the NCAA’s agreement with CBS/Turner should be divided equitably between the NCAA and the 4,511 Division I men’s basketball players. With that being said, the following policies should be implemented:
1) The NCAA to be responsible for the full cost of covering all Division I men’s basketball scholarships and relieve its member institutions of this obligation.
2) The NCAA will follow the professional sports league model and will share the entire amount received from the rights fees with CBS/Turner for the fiscal year 2019. The total amount of $879,000,000 will be divided equally, with the NCAA retaining $439,500,000 and the Division I men’s basketball players retaining the balance of $439,500,000.
3) The NCAA will divide the balance of $439,500,000 equally to all 4,511 Division I men’s basketball players, with each player’s share being $97,429.
4) From the $97,429 share, the NCAA shall be responsible for covering the cost of the student-athlete scholarships, an average of $38,250 per year (or the scholarship amount at each individual player’s college or university). The balance ($97,429 - $38,250 = $59,179) will be held in trust/escrow for the benefit of the student athlete and will become available to the student athlete upon graduation or within one year from the time the student athlete leaves his college or university.
5) If the student athlete decides to continue with his education, either to earn a bachelor’s degree or by enrolling in medical school, law school or other graduate program, the vested/escrowed amount will remain in trust, with proceeds being used to fund the student athlete’s continued education.
6) If a balance remains after graduation from a postgraduate program, the balance will become available to the student athlete upon graduation or within one year from the time the student athlete leaves his postgraduate program.
7) For a Division I men’s basketball player whose value to a team is considerably more than the $97,429 share (Zion Williamson comes to mind), that athlete is entitled to additional compensation paid from other revenue-generating sources such as ticketing, merchandising and/or in-season broadcasting rights fees.
8) All other intercollegiate sports shall follow this or a similar model.
Robert J. Romano is an assistant professor of sport management at St. John’s University.
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