The advent of cable television gave universities vast opportunities to profit from football and basketball, and the large and most lucrative programs dominate the national championship tournaments and earn huge sums.
Northwestern's football program reaped an $8 million profit on its $30 million in revenue during the 2012-13 season, for example, and it is hardly a perennial powerhouse like Notre Dame or Alabama. Yet student athletes — who are expected to train year-round and work 40 to 60 hours a week during the season — receive only scholarships for tuition, room and board and limited expenses.
The National Labor Relations Board in Chicago last week ruled that Northwestern football players are employees of the university who can vote to form a union. The football players are not necessarily seeking salaries as much as better opportunities to complete degrees and get additional health insurance.
The ruling undermines a mandate by the National Collegiate Athletic Association, saying that players are amateurs who can't be paid salaries. The rule made it possible for universities to monopolize the market for athletes' services and to deny them the value they create with their labor and unique talents through ticket sales, concessions and TV rights.
Universities twist admissions standards and faculty bend grades to attract and retain winners and appease wealthy donors. And the lives of athletes are tightly controlled —when they study, use social media and practice.
Star athletes like Alabama quarterback AJ McCarron, who delivered two national championships, are simply worth millions more than the scholarships they're offered and are terribly exploited.
Most athletes, unlike Mr. McCarron, will not enter a pro league, but instead leave college with either a degree in a soft major that has little value in today's tough job market or with no diploma at all. Many leave with medical conditions from injuries but no financial assistance to pay for care. Meanwhile, coaches can earn millions, universities use sports profits to subsidize other activities, and the fans get cheap entertainment.
The NLRB's decision regarding Northwestern will greatly aid plaintiffs in two pending antitrust suits that seek to break NCAA rules prohibiting salaries and permitting universities to use player images and names in endorsements and promotions without compensation.
Those suits have the potential to do to college sports what free agency did to professional football, baseball and basketball after the courts struck down owners' monopoly practices similar to current NCAA rules.
The top 30 or 40 programs in each college sport will be able to pay top dollar to attract the best athletes, and the other universities will not be able to effectively compete.
The solution may be to permit the top 30 or 40 major universities to form football and basketball teams "affiliated" with their institutions and a major pro franchise, but require that those be self-financing based on game day revenues and contributions from the professional team.
Pay the athletes, offer them the opportunity to earn a degree over five or six years, but don't require them to enroll if they are not capable or are simply disinclined. By disengaging university-sponsored athletics from academic programs, the potential to corrupt admissions and faculty would be greatly reduced, and a broader range of gifted young athletes would have the opportunity to participate.
Then all the other universities could have walk-on programs for genuine amateurs, and those programs, in a manner similar to the Ivy League schools and military academies, could compete at a level that complements a decent university education.
After all, a quality education is why young people should go to college.
Peter Morici is an economist and professor at the University of Maryland Robert H. Smith School of Business and a widely published columnist. He tweets @pmorici1.
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