Finance Professor Develops Pay System for College Football Players

Johnny Manziel NCAAF Pay System

According to Karl Borden, a professor of finance at the University of Nebraska at Kearney,  Division I football players should receive some form of compensation. Especially the 98 football players this year who are declaring for the NFL draft in May. Since many of these players will go undrafted and will “be out of school after having contributed to a business worth billions, but with little to show for it and, too often, few skills to negotiate post-football life,” Borden believes now is the time to pay.

Many of you will say, well these players should not get paid during collegiate competition because of their amateur status. Well, Borden came up with a payment system that will establish a fund that does not pay student-athletes while they are amateurs but instead in the future.

Don’t compensate student athletes while they are playing and (one hopes) studying. Set a future date when funds will be made available to them. Six years after ending their college athletic careers? Eight? Pick a number. The current scholarship system should stay in place with the costs built into the long-term compensation formula (paid as a component of the compensation package).

Division I universities should pay funds for player compensation annually into an investment pool, and athletes should earn “Participation and Achievement Points” based on a formula that rewards and encourages athletic and academic achievement. The points could be earned by suiting up for a game, by participating in plays on the field, by serving as a tackling dummy on a practice squad (think “Rudy”), by serving as team captain, etc. Points would also be earned by completing academic credits, maintaining a high grade-point-average, finishing a degree, or earning professional certification in careers such as accountancy, nursing and teaching.

The delay in player access to the fund pool provides a time after athletic eligibility to set new professional goals and complete academic work. Some provision might be included to allow the pool to pay out continuing scholarships to assist players after their athletic scholarships end, but the waiting period is essential to encouraging accomplishment on the field and in the classroom.

Once the delay period is completed, athletes should be given the usual range of investment-fund payout alternatives: lump-sum vs. term or life annuities vs. retirement-fund options. The value of players’ payouts would be determined by their Participation and Achievement score. The fund should also require that participating athletes receive (at fund expense) solid financial advice and counseling. Universities are good at managing investment accounts. Let the fund be managed professionally by a board elected by the foundation directors of participating universities.

Schools could also allow players to sign advertising and promotional contracts during their playing years if the revenue is paid into the fund to benefit fellow players. Participation and Achievement points could be awarded for doing so—but the big revenue producers would be the Heisman candidates and winners, like Johnny Manziel, and other high-profile players who would be well compensated by the NFL and shouldn’t need the fund.

If the players are like Johnny Manziel, who will receive sponsorship and extra money, they could forgo their fund.

The NCAA might even encourage those big-name players to forgo their own fund participation and use their popularity to generate revenue that benefits the other 95% of players who help them reach stardom but will themselves never play on Sunday.

I must say, for all the big schools like Texas and Alabama, this is not a bad compensation proposal that could benefit players after college and encourage student-athletes to stay longer in college, improve academics and etc.

[WSJ]

Dolphins Channing Crowder Hypothetically Sold College Jerseys

The debate on whether college players should sell their items to earn money continues as Dolphins linebacker Channing Crowder has entered the debate.

The former Florida Gator said Sunday during the debut of his new two-hour weekly talk show on WQAM radio in Miami that “hypothetically” he didn’t have any of his Florida jerseys, because some Jacksonville businessmen really liked his play.

What does that mean? Either you sold your jerseys or you didn’t.

Anyways, Mr. Channing also expressed support for former Ohio State quarterback Terrelle Pryor, who traded in signed equipment, championship rings and other memorabilia to a tattoo-parlor owner for cash and discounted tattoos.

The NCAA really do need to find away to pay these players because we all know that most of them are breaking the rules and getting some change-change on the side.

I know these student athletes are getting free rides to school but every now and then they want to see a movie or go out to eat or buy new shoes. And they can’t do that if they’re broke.

So, until they start paying them these kids will continue to break the rules.

 

Why Can’t We Pay Student Athletes?

Wake up. Hit the training facility gym for 2 hours. Practice with the team for 4 hours. Body treatments. Meeting with coaches. Hit the training facility gym for 2 more hours. Head home. And then you start to study. How many of you initially thought that I was referring to a professional athlete? This is the life of your typical college athlete. So, when does the college come in? Let’s investigate.

College football can have up to 13 games per season, some of them on the road. College basketball can have up to 40 games per season, some of them on the road. College baseball can have up to 60 games per season, some of them on the road. For those of us that have attended college as an actual student, there is complete clarity about how much time paper writing, studying, researching, stressing about grades and class time can occupy. For those that haven’t attended college, please trust me when I tell you that the only other thing you can squeeze into your week is drinking with your friends to complain about class or studying with your friends and complaining about class.

So how do these “students” maintain a normal class schedule? They don’t. And that’s the basis of my challenge with the NCAA and it’s rules regarding student athletes. No one with the Internet and the ability to use Google believes that these athletes are truly students, Duke withstanding (I couldn’t resist). We’ve heard them attempt to speak and struggle to do so in spite of media training (YES, they receive media training). We have proven accounts of student athletes receiving a degree without knowing how to read. We know the Wonderlic scores. School isn’t a priority. It’s not even an afterthought. It’s simply not on the radar.

The NCAA rules do not allow their athletes to use their names for pay or use their likeness to directly endorse commercial products. This has not stopped the NCAA, a non-profit institution that pays no taxes on its income, from profiting. Pertinent bullets:

• The NCAA brought in more than $700 million in 2009 largely due to television rights fees.
• $75 million in tickets sales generated.
• Collected $12 million in membership fees.
• Collection more than $7 million in rights and royalties.
• Paid its top 14 executives $6 million in compensation.

So why can’t college athletes be paid? Why do we force them to exist in financial purgatory as a student? Keep in mind that athletic scholarships and grants disallow the “student” athletes to hold jobs further lending to the financial challenge that so many of them face. The arguments that I’ve heard range from “they’re getting a free education” (failed logic) to “they get to audition for a million dollar job while in college”. We’ve clarified that true schooling isn’t happening. We also know that only 1% of college athletes make it to the professional level so what about the other 99% that can’t read, has gotten hurt and lost their “free audition” opportunity and now have to figure out how to survive post athletics? What’s the billion-dollar NCAA’s obligation to these students?

Finally, there is an incredible level of inconsistency in how student athletes are regarded. Work study students provide a service for the university and they get paid. Research assistants provide a service for the university and they get paid. Resident assistants provide a service for the university and they get paid. Student athletes provide a service for the university AND GENERATE MILLIONS yet they receive no compensation. Again, I ask, why can we not pay athletes?

There is no easy business model to determine equitable pay amounts but in a billion dollar organization, someone should be able to figure it out.