U.S. Markets closed

Does the NCAA make its money from indentured servants?

Daniel Roberts
Senior Writer

In 2009, former UCLA basketball player Ed O'Bannon led a class action lawsuit against the NCAA after a relative showed him that he was a character in an EA Sports college basketball video game. O'Bannon had been unaware his likeness was in the game, and he had certainly not been paid by the game maker. O'Bannon's much-discussed suit would prove successful in a number of ways. First, in 2013, EA Games agreed to a $40 million settlement with the athletes in the class action suit; then, in 2014, when a judge ruled that indeed, the NCAA's policy of "amateurism," which restricts athletes from being paid for their likeness, violates antitrust law.

And yet, after all that, "the practical effect has been minimal." So says New York Times columnist Joe Nocera, whose new book "Indentured: The Inside Story of the Rebellion Against the NCAA," which he co-wrote with Ben Strauss, comes out swinging against the nation's de facto governing body of college athletics. "The courts have been unwilling to say that since the [NCAA's] rules are against the law, they need to change," Nocera says. "But the fact that they have been found to be in violation of antitrust laws has potential for other lawsuits down the line."

And so the debate over how exactly to compensate college athletes rages on. The NCAA brings in an estimated $900 million in revenue each year, while college athletics overall, Nocera's book estimates, is a $13 billion business. That's bigger than the NFL, America's fattest pro sports cash cow. Over the years, mega sponsorship deals we're used to seeing in the pros (for naming rights to bowl games and tournaments, or TV advertising campaigns, and more perks) have made their way to the college level, bringing big money to the NCAA's perennial "partners" as well, such as Coca-Cola (KO), Capital One (COF) and AT&T (T). Meanwhile, Disney-owned ESPN (DIS) pays big money for the right to show college games. All of this is why Nocera calls the NCAA, "College Sports Inc."

Nocera sees three problems with collegiate athletics today. First of all, the athletes are promised an education, but in fact don't get the same one their fellow students get because they devote the vast majority of their time to their sport. Second, the NCAA's strict rules around amateurism bring down harsh punishments on athletes for even the tinieist of infractions. (Nocera's book is full of examples, and some of the stories certainly inspire shock and awe.) The rules, the author says, "are especially punitive if you're poor and black." The third problem is the big money the NCAA sees, while its athletes see none of it. "The NCAA is running a cartel," Nocera rails, "where everybody gets rich except the labor force." He likens NCAA athletes to indentured servants; it's a comparison that has been made before by others.

And Nocera's solution is one that has long been proposed by others: Pay the athletes. But that's easier said than done.

For starters, Title IX, the education amendment effective since 1972, dictates that men's and women's athletics be treated equally by institutions. Many say that this throws a wrench into the idea of paying football players and men's basketball players, because it would mean a school must pay all its athletes equally, from the women's field hockey team to the gymnasts. In an appendix on "excuses" at the back of the book, economist Andy Schwarz, a prominent source in the main body of Nocera's book, argues it is a misconception that Title IX "mandates equal funding," and that it can be interpreted more loosely as something that "aims for gender equity in participation." As a result, he believes, the men who play the money-making sports can be paid more than the female athletes. Then again, Nocera says, "I fully acknowledge that there would be lawsuits over this. My argument is that football players and men's basketball players are in effect employees first, and students second... If you characterize them as employees, I think you could pay them without having to pay everybody else on campus. But I acknowledge people would litigate it."

Moreover, even if schools could legally pay their football players and basketball players more than their other athletes, how would they determine what to pay them? Easy, says Nocera: Let the market decide. Schwarz makes the same case in the book's appendix: "Let schools make offers, and let incoming high school athletes and their parents decide which to accept," he writes. "This is how salaries are set across the world."

Again, that's a tall order. When the first school cuts a contract with a star prospect for tens of thousands of dollars (at least), wait and see how the public responds. You can expect at least somewhat of a backlash, because the idea of a student athlete is, for many fans, something cherished. Would paying a student to play tarnish the idea of college sports? Nocera dismisses it. "The essential element of college sports is that the players be a student at the university," he argues, not that they be unpaid. "Everybody else on campus can have an extra job... only the athletes are prevented from making any money on the work they do."

He's not alone in complaining about this system—the many people written about in "Indentured" have done so, and are actively fighting it. But it's a battle that will take years to play out, and it will develop incrementally, not all at once. The NCAA has major incumbent power, and is happy to fight long, sluggish legal battles in court.

But lest you think the athletes have no power of their own, Nocera brings up the protests that happened at the University of Missouri last year. When the school's football team threatened not to play, the college president resigned in a matter of days, putting a stop to the fiasco. As Nocera says, "that's power."

[Yahoo Tourney Pick’em: Fill out your bracket for a shot at $50K]

--

Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. 

Read more:

Reports of ESPN's demise have been greatly exaggerated

ESPN ends exclusive advertising deal with DraftKings

Pluto aims to bring TV to the Internet