College football celebrations will be in full swing on Saturday when teams begin the 2022 season, but there is one tradition that must end — the NCAA insisted its players are amateurs. Players are now free to earn money from Name, Image, and Likeness (NIL) contracts but NCAA policies prevent them from achieving their full market potential. Federal policymakers should resist calls to legislate these misguided rules and the NCAA should embrace the free market instead.
With annual revenues in excess of $18.7 billion, college sports are big business. The Power Five schools alone—69 programs competing in the NCAA’s most prestigious conferences—earn about $8.3 billion annually from various sources, such as the new seven-year, $1.2 billion annual Big Ten Media Deal.
But the players receive nothing in the form of wages, despite the fact that the average economic value of a Power Five football player is estimated at $1.3 million over four years of teamwork. This is because the NCAA has long considered athletes to be amateurs, not professionals, and strictly prohibits most forms of compensation and threatens players and programs with severe penalties for violating its bylaws.
That model took a beating in the NCAA’s decision against Alston last year, when Supreme Court Justice Brett Kavanaugh’s opinion raised antitrust concerns, stating that “the NCAA business model would be wholly illegal in almost any other industry in America.” While the unanimous decision was limited in scope, finding the NCAA could not limit education-related payments to athletes, Kavanaugh cautioned against a “late course correction.”
Alston’s decision prompted the NCAA to create a temporary NIL policy and at least 28 states have passed laws enshrining the rights of collegiate athletes to NIL compensation so they can pursue endorsement deals, autograph sales and other money-making projects previously blocked by the NCAA. But the NIL Temporary Policy and NCAA Guidelines stick to its fanciful story, making it difficult for players to get the best deals possible.
Notably, the NCAA still prohibits recruits from communicating with third-party enhancers, and NIL agreements cannot be tied to enrollment in a specific organization. This makes it difficult to shop for the best deal and has led to unilateral contracts with unfavorable terms for athletes, according to reports from The Athletic. Under the rules, deals must be based on the value each player brings to the NIL agreement, which means they can’t get extra cash just because they’re a star quarterback or a missionary recruit.
The NCAA appears very intent on determining how much players can earn from the NIL, claiming that the rules promote competitive balance by putting schools on an equal playing field for recruits. But given that donations account for 24 percent of Power Five college athletes’ earnings, they likely don’t want to compete for the $2 billion funding pie that helps fund cutting-edge facilities, multimillion-dollar salaries, and expanding bureaucracies.
For example, the University of Alabama is upgrading $600 million to its athletics facilities and recently awarded Nick Saban a $93.6 million contract. While boosters have plenty of cash to throw in, NIL deals can eat up sports departments’ budgets, threatening their lavish status quo.
But the NCAA knows its rules may be on shaky legal grounds, which is why it is lobbying Congress for a federal policy that would preserve its monopoly. Ultimately, they seek an antitrust waiver to prevent an attack from lawsuits once they begin imposing NIL restrictions with penalties and other penalties.
For anyone who spends their fall Saturdays watching football, inviting the likes of House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Chuck Schumer (DN.Y.) to organize college sports is a recipe for disaster. Americans need less politics – not more – in their lives. But more importantly, the federal legislation would likely codify an unfair player-defaulting system in favor of the NCAA and its 1,100 member colleges and universities.
Rather than seeking solutions for Washington, the NCAA should embrace the free market by allowing promoters and players to agree to whatever financial terms suit them best. This is how society organizes itself and team athletes should be no different.
Aaron Smith is Director of Education Policy at Reason Foundation. Follow him on Twitter Tweet embed.