The Case for Paying College Athletes

Tonight is the NCAA basketball championship game. At the risk of being a party-pooper, I would like to focus on a serious injustice associated with college sports: the existence of a cartel that prevents college athletes from being paid. Economist Gary Becker summarizes the arguments against the cartel here:

Every year prior to this final tournament, and sometimes even during the tournament, different violations become public of NCAA rules on behavior of players and coaches. Violations of these rules by colleges are to be expected because the rules are basically an attempt by the NCAA to suppress competition among schools for college basketball and football players, the two most lucrative and most watched college sports, and thereby increase the profits to schools from these sports.

The toughest competition for basketball and football players occurs at the Division I level. These sports have both large attendances at games-sometimes, more than 100,000 persons attend college football games- and widespread television coverage…. Absent the rules enforced by the NCAA, the competition for players would stiffen, especially for the big stars…

To avoid that outcome, the NCAA sharply limits the number of athletic scholarships, and even more importantly, limits the size of the scholarships that schools can offer the best players….

It is impossible for an outsider to look at these rules without concluding that their main aim is to make the NCAA an effective cartel that severely constrains competition among schools for players. The NCAA defends these rules by claiming that their main purpose is to prevent exploitation of student-athletes, to provide a more equitable system of recruitment that enables many colleges to maintain football and basketball programs and actively search for athletes, and to insure that the athletes become students as well as athletes.

Unfortunately for the NCAA, the facts are blatantly inconsistent with these defenses….

A large fraction of the Division I players in basketball and football, the two big money sports, are recruited from poor families; many of them are African-Americans from inner cities and rural areas. Every restriction on the size of scholarships that can be given to athletes in these sports usually takes money away from poor athletes and their families, and in effect transfers these resources to richer students in the form of lower tuition and cheaper tickets for games…

That players are recruited as students as well as athletes applies to a considerable extent to Stanford, Duke, Notre Dame, and a few other Division I schools that have high academic standards. The NCAA points out that the overall average graduation rate is about the same for student-athletes as it is for other students. That result also applies to African American and Hispanic students. However, the graduation rates for these minority students-athletes are depressingly low. For example, the average graduation rate of Division I African American basketball and football players appears to be less than 50%.

Some of the top players quit school to play in the NBA or NFL, but that is a tiny fraction of all athletes who dropout. The vast majority dropout either because they use up their sports eligibility before they completed the required number of classes, or they failed to continue to make the teams.

I made similar criticisms of the cartel in this post written on the night of last year’s NCAA championship game. There, I noted that the NCAA cartel is not just a private arrangement. It is propped up by the federal government, which uses the threat of denying federal funding to force schools to comply with cartel rules. If this federal intervention were lifted, the cartel might well fall apart. I also pointed out that many Division I athletes get little benefit from their “free” education, because they cannot possibly do well in classes most are academically unprepared for while simultaneously holding down what amounts to a full-time job playing football or basketball.

Richard Posner tentatively defends the cartel in this post. His main argument is that “eliminating the NCAA cartel… would make colleges and universities poorer, and this would be a social loss if one assumes (plausibly) that higher education creates external benefits.” But even if colleges and universities do create external benefits, it doesn’t follow that the cartel is justified. Posner provides no evidence showing that higher education would be underfinanced in the absence of the cartel. The fact that some institution creates external benefits does not prove that any and every increase in its resources is necessarily a good thing. Even if it would be, there are other ways to raise money for schools that are not as inefficient and arbitrarily unjust as the cartel.