The Economic Value of Football Players

by Kevin on September 12, 2013

There is no doubt that every single major college football team has some nook and cranny that is dirty.

I have no doubt that Alabama is paying players. I have no doubt that despite Tennessee’s awful performance in recent years that there aren’t some players getting paid there, too.

Sports Illustrated is releasing an extensive report on Oklahoma State that alleges significant NCAA violations spanning from 2001 to 2011. Players getting paid, extensive drug use that was ignored, and worse.

One of the topics of discussion during this off-season is whether or not players should be paid at the collegiate level. This will bring further pressure on the NCAA as that discussion will not be going away anytime soon.

From the personal finance and economics side of things, I’m torn. It all comes down to economics.

Should College Football Players Be Paid?

The NCAA has placed collegiate sports on a pedestal where amateurism reigns and everyone must play by the rules.

The only problem is those rules severely undermine the economic value of the efforts of some of those players, specifically college football players.

The Welfare State

During some of the discussions this summer the NCAA said (and this is a paraphrase) that paying players would destroy the collegiate system because not only would everyone have to be paid, but that college football pays for a ton of non-revenue generating sports at those schools.

So let me get this straight… you want my son to come play football for the cost of tuition (when he might be able to get other forms of scholarship) so that his efforts on the field, and the money that is generated there, can pay for tennis, wrestling, and swimming?

That sounds like a welfare state to me. It’s not the college football player’s fault that his sport generates a bajillion dollars in revenue while the other sports don’t. That’s the problem of the other sports. You don’t hold down the football player because of it.

Players are Paid Right Now

Economically speaking I see no feasible way the current system continues. At the end of the day, college players are paid right now. It’s just against the rules. But those boosters, the $100 handshakes, the magic envelopes of cash, the getting paid for yard work you never did, that is all economics trying to balance out the value of those players efforts on the field with how they are compensated.

Where else in America, the land of working hard and being rewarded for that work, does someone go to work for virtually free, generate millions of dollars for the organization, and not get some form of compensation?

Players are Trapped, Coaches Aren’t

Can you imagine a company where the top sales representative pulled in $20 million in revenue for the company and wasn’t paid a dime of it? Or was just paid in free housing and some free food?

That’s preposterous. That sales rep would leave and find another company to go generate millions in revenue for.

But for the college football player, that’s a problem. Once you sign to go to a school you are locked in at the Division I (FBS) level at that school unless you take a one year break, go to Division II (FCS), and then sign with a new school. You can’t just switch teams like you would switch jobs.

Yet the football coach that recruited you can do just that. He can leave in the middle of a recruiting dinner (Tommy Tuberville leaving Texas Tech to go to Cincinnati) or after one year and inform the team the day after he left via text message (Todd Graham leaving Pittsburgh to go to Arizona State).

Some of the kids on those teams turned down offers from other schools and coaches on the promise they would be utilized in that coach’s system. Now they are left high and dry, unable to transfer without losing a year of eligibility, hoping the next coach likes them as well as the last one.

It’s an unfair and economically unfeasible system.

What Would You Tell Your Son?

What would you do if your son was good enough to play college football at the highest level?

Would you tell him to ignore the potential for serious injuries that could impact his living the rest of his life and just play for free?

Would you tell him that no where else in the country do you do such significant work for such little pay?

Would you tell him that high performance is never rewarded in other professions?

I don’t think I could just from a straight economic standpoint.

The “invisible hand” will always rebalance things. If the NCAA rules are set up to hold down the economic value of football players the invisible hand of economics will find ways to bring that economic value back up. Maybe not to the full point of where it should be, but definitely a step in that direction.

What would you do?

{ 3 comments }

Crystal September 12, 2013 at 4:52 pm

My husband and I are just now thinking about having kids. If we have a boy that wants to play football, it would be very hard for me to be super approving especially in college. I think there are a ton of problems with the current system including pay and safety gear. Did you know that rugby players suffer fewer life-endangering injuries than football players? Less safety gear means that you only hit as hard as your body lets you. It’s actually safer for your brain. And making a college a ton of money by sacrificing your time and body only to be told that you can’t earn from it? That’s just wrong.

Golfing Girl September 12, 2013 at 7:26 pm

I think you totally missed the aspect where you can consider college football an unpaid “internship” at a giant company, where at the end of the internship you get offered a great job. That is how I see it. You intern at Illinois or Michigan and if you do a great job, you get a well paid position at a high profile “firm” like the Jets or Buccaneers.

Kevin September 12, 2013 at 9:34 pm

I can’t tell if you are serious or kidding.

What other unpaid internship puts your life at risk? Or puts you at risk of injury that could hobble you for the rest of your life?

Let’s do some math.

There are 242 FBS and FCS schools in the NCAA. The revenue data I am looking at is from 2011 and has 227 entries, so we’ll go with that. (I’m assuming some of those schools not listed are private institutions.)

Each team has 85 scholarship players and probably another 25 walk-on/players without scholarship for a total of 110.

That means in those 227 schools there are 24,970 players over a 4 year period.

The NFL draft is 7 rounds of 32 teams (224) plus a supplemental draft of ~25 players. We’ll call it 250 per year for round numbers, so 1,000 players drafted over 4 years. (And many of the later draft picks never make it, get cut from the team, etc.)

So 23,970 players go undrafted in a four year period.

Those players, plus the 1,000 drafted, helped generate $7.25 billion in revenue in 2011.

$7.25 billion.

In one year.

So… over 4 years… $29 billion.

That’s $1,161,393 generated per player over a 4 year span.

So now not only are you risking life and limb for free, but you are also helping generated over $1 million in revenue over 4 years.

You could make the argument about that’s revenue and not profit because school expenses are high. Imagine how much higher they would be if they had to compensate their employees for the work that generates all the revenue?

It’s unfathomable.

Comments on this entry are closed.