March madness? NCAA fights full-court press on player pay

A few years ago, former UCLA basketball star Ed O'Bannon made a startling discovery: A college basketball video game included a player who very much appeared to be him. O'Bannon, who now works at a car dealership outside of Las Vegas, was not being paid for the use of his likeness. But he knew someone out there was.

Ed O'Bannon
CBS

"I felt betrayed," he says. "How would anyone feel if their likeness, at any level, is sold and they aren't compensated? They weren't even asked if their likeness could be sold?"

O'Bannon's anger led to an antitrust lawsuit that fundamentally threatens the business model of the National Collegiate Athletic Association, the governing body that rules over college athletics. Lawyers are now gearing up for a crucial June hearing that will decide whether the case will go forward as a class action; if the plaintiffs are successful, it could mean thousands of previously-unpaid college athletes laying claim to billions of dollars in revenue. The case has the potential to transform the college sports landscape in a way that will leave some fans lamenting the dismantling of a system they don't believe needs to be fixed. 

At the heart of the suit is this question: Does the NCAA, which runs the "March Madness" college basketball tournament that kicks off next week, work with colleges and universities to exploit the young athletes that it purports to celebrate?

"To not compensate the players is not the way our economic system is structured," says David Berri, a sports economist at Southern Utah University. "These players are clearly being exploited. At the end of the day, you're saying you should have people work for you and not pay them."

The NCAA - which declined to directly answer questions for this article - does not see it that way. In an interview with PBS' "Frontline," NCAA president Mark Emmert said that "student-athletes" are given "remarkable opportunities to get an education at the finest universities on Earth" while developing their athletic skills. 

"There are many, many students around the world who would love nothing more than to be able to come to an American university and gain access to American intercollegiate athletics, because it's such a great place to develop skill and to have that great experience," he said.

Table - Universities Sports Revenues
CBS

Critics say that's not nearly enough. In 2010, the NCAA announced that it had reached a 14-year, $10.8 billion deal with CBS Sports and Turner Broadcasting to broadcast "March Madness," which works out to more than $770 million per year. (CBS Corporation is the parent company of both CBS Sports and CBSNews.com.) The conferences also have their own lucrative TV deals: The Atlantic Coast Conference, for example, has a 15-year deal with ESPN worth $3.6 billion - more than $17 million per school per year. Schools, conferences and the NCAA also profit from gate receipts, sponsorship deals, apparel sales, video game and rebroadcast rights and other income sources. 

The resulting revenue has flowed to Emmert, who makes an estimated $1.6 million per year, and other executives at the NCAA. It has driven a massive inflation in the salary of collegiate coaches, including the University of Kentucky basketball's John Calipari ($5.2 million per year) and University of Alabama football's Nick Saban ($5.62 million per year). It has also meant the construction of state-of-the-art training facilities at universities around the nation, which are used to convince top recruits to join the program. 

But it has not gone directly to any of the players who are ultimately responsible for generating all that revenue, the vast majority of whom will never make it to the NFL or NBA. Under NCAA rules, players cannot be paid for their efforts or given gifts of any kind. They also cannot cut individual sponsorship deals - despite the fact that many are required to wear uniforms that are affixed with corporate logos.

"Any other American can capitalize on their status, on their fame, on their value, and receive it fully," said Ramogi Huma, a former UCLA football player who is president of the National College Players Association. "But college athletes are being carved out."

Fair Market Value

As Sports Illustrated's Seth Davis has pointed out, the players are paid in one sense: Most are provided scholarships that cover the cost of their education and a significant portion of their living expenses. There are no guarantees, however, those scholarships will last.

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