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On the Trail: Introducing the Exploitation Index

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In part one of his attempt to counter the "pay for play" angle in Orson Swindle's rebuke of the exploitive NCAA/university monopoly (what a more knowing commenter clarified in the response post as a "monospony"), SMQ explained why in his opinion the NCAA has a competitive interest in preventing the direct buying of recruits. This is in service not only of facilitating better competition among its own schools and avoiding direct competition with the NFL - for consumer interest, advertisers and ticket sales, if not players, as long as the League refuses to take teenagers (except in extremely rare cases, like that of Doogie Okoye) - by retaining the "amateur" model. In that argument, ascribing the parlance of libertarian/Objectivist ethics, the "virtue" being protected is competition rather than amateurism, which has no inherent virtue, however stubbornly the NCAA might prefer to argue otherwise. Players participate voluntarily because the benefits of the system are frankly obvious compared to the option of not participating.

On that note, before we move on, there is a choice; players do opt out - one of SMQ's high school teammates did, in fact, an utter monster of a kid who quit after starting several games at one of the big time SEC schools as a redshirt freshman. He didn't mesh with the new coach and wasn't doing great in school, so he dropped out, returned to his very poor family and at last notice was working as a bouncer at a club, or occasionally in construction, these being his marketable skills outside of playing offensive line. This was his decision.

Elsewhere, this arrangement has been unfavorably compared to the Medieval "guild" system. The fact it is tradition is irrelevant except to the extent the sport's success in the market derives from that tradition, which SMQ believes it substantially does. From that angle, he does definitely dispute the NCAA's stated goals of enhancing the education of athletes when, as Brian Cook noted Monday, "every relevant decision made by the NCAA and its member schools over the past decade [has] been made in an effort to maximize the hell out of said revenue at any cost..." It's a hugely profitable organization whose profits are increased by maintaining amateurism.

What's good for the NCAA "cartel" can hardly be described as fair to players, though, unless the average player is getting a return that somewhat matches his value to the school. SMQ already referenced an old post in the first part of this argument by I'm a Realist relating to devaluing college football to the consumer, but he quotes the same effort here relating to player benefits from the university:

Ignoring the fact that their education is paid for...[c]onsider that they have unlimited access to typically grandiose facilities, including healthcare on demand. Their room and board is paid for. Their meals are paid for. Their travel expenses are paid for. They get clothes and other perks that aren't afforded the "ordinary" population of students. Does it cover everything? No. But, leaving college with debt isn't reserved solely for athletes. The vast majority of college graduates leave their institutions with some sort of debt hanging over their heads. College is an instrument through which you learn many valuable lessons of life. Included in those lessons should be some sort of career path that you would not be privy to without your newly acquired college education. The future earning potential of a college graduate compared to a high school graduate is well worth the debt you take on to attain your degree. And besides, if the debt is too much, you can always turn down your scholarship and take a job at the local hardware store.

This is the opposite of the main thrust of Orson's argument, which states players do not get back in all those tangible amenities - education, facilities, healthcare, room and board, meals, bowl schwag - the value of what they put in on the field (the often staggering intangible amenities we'll avoid for now).

To get an idea of the extent of this exploitation by universities, which SMQ does not fundamentally dispute, he pulled a few numbers from federally-mandated financial report for nearly every I-A school and conference published last May in The Orlando-Sentinel [Hat Tip: The Wiz]. That repot covered athletics as a whole for the 2004-05 academic year, not football specifically, but included each reporting athletic department's revenue, expense, remaining balance and number of male and female athletes as well as the Sentinel's own calculations of the amount each school spent per male and per female athlete (these categories are specific allocations in the federal report; most money is "unallocated." Check the link for more specifics as to how these figures were reported and calculated).

Non-credentialed math ahead. Proceed with caution. You have been warned.
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Using these numbers, SMQ came up with his own tally, "Revenue Per Athlete," and compared that to "Expense Per Male Athlete" (since he is focusing on football). The difference between the numbers is the main thrust of what he'll crudely dub the "Exploitation Index":

NCAA Athletic Exploitation Index (Numbers reported for 2004-05 academic year)
Total Revenues Total Athletes Revenue Per Athlete* Expenditure Per Male Athlete Exploitation Average Average Balance**
ACC $466,134,895 5,912 $78,845 $56,232 - $22,613 $2,003,729
Big East*** $293,351,152 4,743 $61,849 $54,544 - $7,305 $940,143
Big Ten $645,113,291 7,424 $86,895 $60,307 - $25,588 $4,625,326
Big XII $591,794,988 5,647 $104,798 $65,242 - $39,556 $3,685,387
Pac Ten $415,571,053 5,944 $69,914 $56,097 - $13,817 - $712,776
SEC $624,101,644 5,399 $115,596 $71,260 - $44,336 $3,982,835
All I-A Schools $4,017,743,032**** 59,251 $67,809 $48,031 - $19,778 $1,731,400

* - SMQ calculated revenue per athlete by dividing total revenue by total number of athletes, male and female
** - Athletic departments reported the difference between total department revenues and total expenditures (not shown here)
*** - SMQ replaced Temple's reported numbers with those of then-C-USA members Louisville and South Florida to reflect the Big East's current makeup.
**** - That is more than four billion dollars in overall revenue, a number so large SMQ had to seek out a calculator on the Web because it didn't fit the space allowed by the one on his desktop. But this was also true of overall expenditures.

First, caveats: "Crude" is a good word for this chart, because it is not specified what counts as "revenue" or allocations for "per athlete" spending. Many, many factors SMQ can't really begin to understand factor into what could possibly constitute an athlete's contribution to a university, and a university's contribution to an athlete, that don't show up here. Determining a "value" per player is impossible because every sport figures into this equation, football being vastly the most profitable in every case, and money obviously is pushed around in disproportionate sums to keep less lucrative programs afloat. Federal laws also mandate this. Football players clearly are responsible for more of the "per athlete" revenue than women's field hockey players, but also get more back in the "expenditure per male athlete" category than male soccer players (SMQ thinks such creatures exist outside of the South, because they do not at colleges here; notice the vastly greater number of total athletes in the Big Ten than elsewhere, the majority of them female, despite having one less school than three other conferences represented). For our purposes, we'll have to hope the latter effects more or less cancel each other out and leave an accurate picture here.

Taking it at face value, the most striking feature is how much money departments have left over after expenditures. We're often led to believe most athletic departments operate in the red, which may be the case when considering hundreds of schools scraping by with no TV contracts in smaller divisions, but is true for only about a dozen of the big boys. Even the little big boys. Including non-BCS leagues, the Pac Ten is the only I-A conference whose members "average" an overall loss, but even there only three of its schools, California, Stanford and Washington, actually run departments at a deficit (three others break even, including USC, and three others have relatively meager balances; only Arizona State, with $1.5 million "profit," has a somewhat decent amount left over).

(Aside: the other shocking feature in the "expense per male athlete" category, if you go down the whole list, is the most generous per capita spender in the nation: Vanderbilt. The Commodores dwarfed the rest of the SEC by allocating more than $115,000 per male athlete, a number only Texas Tech, at about $113,000, came close to matching. Vandy also allocated more than any other school per female athlete. SMQ doesn't know to what extent reporting these "allocations" by category is perhaps a manipulatable exercise, but Orson specifically mentioned Vanderbilt as an example of a school whose players get about what they're worth, and relatively he couldn't have been more right: it reported a final balance of $1 in its athletic budget, and its difference in per athlete revenues and expenditures in the "Exploitation" column was only about $200, by far the lowest of any single school for which SMQ has run the numbers. Read below to see why, especially as a private school - and a perpetually losing private school at that - it's probably giving way more back to players than it's getting out of them financially. Or physically).

So, about that "Exploitation" column, which is intended as the gauge between what players "deserve" in return for their moneymaking talents and what they actually get: the average I-A male athlete in 2004-05 was shorted a little shy of $20,000 relative to the "average" worth of all athletes to the department (again, male athletes are surely worth more to departments in dollar terms, but also receive significantly more back per capita than female athletes at all but a handful of non-national players). Jane Massengale in Southern Miss' athletic business office confirmed for SMQ that reported expenses for athletic departments are "all-encompassing," including scholarships, which according to a USA Today report three weeks ago are worth nearly $13,000 at the average public university and more than $30,000 at a private school.

The deficit is clear, though depending on your perspective it's not particularly egregious. Gaps are larger at some schools than at others, and there are minor factors not shown that ease them (what about the tens of thousands schools pour into supporting and developing redshirts and transfers for a year with no return at all during that period?). In a private e-mail, Orson mentioned to SMQ paying players along the lines of work-study, or of a typical student employee in the university bookstore or some arrangement on those lines. If it was a small, evenly-distributed stipend that applied equally to every player (so as not to influence the recruiting process), SMQ sees no reason a token for, say, apartment rent would alter the existing order (as long as it's not subsidizing Leinart-esque digs). For the "average" player who is not going pro, especially one who is redshirted for a year and goes on to earn a degree, who is more or less interchangeable with little to no effect on ticket sales or TV deals where revenue is concerned, this doesn't seem like a particularly lopsided exchange.

It's different for the few top-end, draft-worthy stars whose talents are tied more directly to  financial success. These players benefit more than others in ways that don't show up on a balance sheet, of course, in terms of status, groupies, much more accessible academic support and the like, but that could hardly be measured evenly, and wouldn't nearly make up the player's value if it could. One aspect  of the university's contribution to these players though, one that straddles the line, and that SMQ hesitates to mention, is the opportunity afforded to the players to eventually make millions. This returns to the I'm a Realist observation about the value of obtaining a career path the student would not be privy to without college. The NFL isn't hiring them out of high school; the development potential and level of play offered by college is almost the equivalent of an education in itself, like earning a degree that's necessary for students to prove their skill set to an employer. Commenters at EDSBS made points this morning about similar exploitation of young, untested labor in lots of market-based fields we rarely complain about:  rock bands, young associates at law firms, residents at hospitals. All of these professions make huge money - when they have been wrung through the requisite filter of a rigorous system in which they can demonstrate their talents are unique enough to deserve it.

It's an accepted fact a football player who doesn't succeed on the higher level afforded by a college has virtually no opportunity to catch on in the pros. Playing college football, even just as a route to an average college education, undoubtedly leaves players in a far better position to succeed in life than they would otherwise (whether most athletes actually get that education is another argument entirely). Orson's term "football intern" is a sharp one. To what extent is this opportunity or any opportunity  a commodity in itself? SMQ isn't sure. He doesn't want to advocate this argument now, only to present it; analogies in other areas of society don't necessarily justify the situation in any of them. Setting up football players across from doctors and lawyers is comparing apples to oranges and tangerines.

But consider the odds of an NCAA football player becoming a professional.  Two percent of NCAA football players from 1982-1999 were fortunate enough to make a living in the sport. Far less than one percent of high school players over that span - just under one-tenth of one percent, to be precise - wound up as pros. So attending college is an essential filter, and represents in itself a major value to players hoping for eventual riches, and at least as financially valuable to those who eventually achieve those riches as the players are to the college in the brief interim.

But the same argument will be made about high school as a filter for talent worthy of college money, if players were eligible for it, and they won't be wrong. The value represented by college in this case is circumstantial, not inherent.

One area SMQ would not hesitate to relent on the payment front: merchandising, licensing or any other profitable effort based on selling a specific player. Reggie Bush estimated before he was drafted he alone had been worth $500,000 to Southern Cal during his college career (though he may also cost the school a great deal more before Yahoo! Sports calls off its one-trick investigative dogs). Based on ticket sales and TV deals, which are based on the entire team, that's difficult to prove; based on prodigious Reggie Bush jersey sales and Web sites that charged specifically for behind-the-scenes footage of Reggie Bush, it's not. There's no way to justify that sort of blatant peddling of Reggie Bush's identity while denying Reggie Bush the right of consent or profit. Either profiting from the likeness, jersey or related property of an individual athlete should be banned (this would probably extend, much as SMQ hates to consider it, to EA Sports college franchises) or the player should be offered a small percentage of revenue after giving his consent. Someone will argue the USC `5' jersey does not necessarily have to represent Bush, as there have been and could yet be other players with the distinction to wear `5' for the Trojans. So make manufacturers declare the identity of the player whose jersey they're hawking before granting a license. That is truly egregious exploitation by third parties who play no role whatsoever in benefiting the player.