NCAA pay for play?

NCAA pay for play?


Jerry Kutz
5/5/2014

" I am not sure where you come up with this sentence: "Some of them end up with millions in profits even after
paying for all those other sports (I believe FSU cleared something like
$10 million in profit this year, I know UF cleared something like $12
million 2 years ago, which they then donated to the school).

FSU's Athletics Department relies on Seminole Booster contributions and transfers of more than $15 million per year to break even. UF also depends on member contributions to balance its budget. VERY few schools operate without private contributions to balance their operating budget and those VERY few usually are blessed with large endowments or stadiums paid for with private contributions.

Having said that, I do not think the COST of paying student-athletes is the real issue in this debate (I explain in the next paragraph). I think the real issue is what the unintended consequences would be to THE STUDENT-ATHLETE by paying the student-athletes in terms of the IRS (would their scholarship benefit now be taxable as an employee), payroll taxes and withholding, and the effect it could have on qualifying for Pell Grant money. There's also some curious discussions about the relationship between the student-athlete and his professor in a grade dispute, or with a coach, as both would be employees. I wish the mainstream media would sink their teeth into these issues and give the players the information they need on the possible unintended consequences of what some of them wish for.

Its important to know that in addition to room, board, books, fees, tuition, medical services, tutoring, trainers, per diem for travel, the NCAA provides every student-athlete (not need based) with access to $500 per semester for clothing or other incidentals and access to emergency travel money in the event of family issues. Student-athletes can also qualify for Pell Grants (based on need) which are upwards of $5000 per year. A student-athlete who receives Pell and the NCAA money, has $6000 per year or $500 per month spending money as the college scholarship pays for virtually everything else. My understanding is that is tax free money that they don't have to pay back. Their net-net right now may be far better than their net-net as employees if the government legislates anything that causes them to lose the tax-free benefits of their scholarships, NCAA money and Pell Grants.

If the Federal Government mandates players be paid, I believe the member institutions can handle it with some adjustments. I've done some simple math and if you pay every one of the 500 male and female student-athletes who play for FSU (which Title IX would mandate) $10 per hour for their 20 hours of NCAA regulated weekly participation, your total payroll would be $10k per student athlete per year or a total payroll of about $5 million per year at FSU not counting the cost of administration.

While that is a lot of money, it does not compare to what the NCAA and its member institutions dealt with in the late 70s when the federal government mandated Title IX Gender Equity, which athletics directors and most sportswriters said that it would lead to the financial ruin of college athletics. Once could argue that Title IX has driven athletics budgets of schools like FSU up by $35-40 million per year to provide equal scholarships, facilities and budgets for women.

We managed to do it and I would argue we are better off for it.
How did we do it?

Title IX led to some sports like men's wrestling, gymnastics and soccer being dropped at some schools and led to the need to start Booster organizations (like Seminole Boosters) to start ticket priority policies to raise the money to fund 20 mens and womens sports when only two or three can do better than break even. It was a contributing factor to the need to be more professional in terms of selling tickets, marketing rights, licensing and other creative means to generate revenue.

The same would be true if the govt. mandated paying players. You'd see schools like FSU adapt with ticket priority policies, higher ticket prices, asking more from our marketing partners and coming up with more creative projects that generate revenue. Those schools who couldn't find a way to pass the cost on to fund salaries, would likely drop as many men's or women's sports (staying within the NCAA minimum for Division 1) as they needed to in order to comply.

So, I don't think this is about whether we can afford to pay players, or even if it is the right thing to do, as much as it is about what are consequences -- to the players -- if we were to pay them.

It led to higher ticket prices. But the NCAA and its member institiutions have been able to make it work in spite of the cost of athletics doubling to accommodate that legislation.


Jerry Kutz is Senior Vice President of Seminole Boosters and was the co-founder and columnist of the Osceola."

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You are correct in your thinking that the money raised by Seminole Boosters and the revenue generated by FSU Athletics should be combined when considering total revenue and total budget for exactly the reasons you stated. In more than half the schools the Boosters are a part of the athletic department rather than a non-for profit corporation as it is at FSU.

Where we deviate is on the surplus. We have not enjoyed a surplus of revenues in quite some time. In fact, the previous administration ate into reserves and very nearly suffered a deficit two years ago.

What you have to be careful of when looking at fundraising numbers is that some of the gifts are restricted to a specific sport, or to a facility like the IPF, or to scholarship endowments, or are booked as will gifts and therefore not spendable in the operating budget. You also have to be careful not to look at pledge commitments rather than money in the door as many pledges are paid over five or more years and sometimes not at all.

I don't mean to come across as argumentative in this thread just trying to be realistic about how much unrestricted operating revenue an athletics department has to work with in their budget. Virtually every decision we make is constrained by available operating funds and we are probably in the top 25-30 programs in terms of operating revenues which means 80 or more Div. 1 schools have tighter budgets than we do..

I think the unrestricted operating revenue is the key issue to focus on as most of an athletic director's budget is fixed. Dave Hart once told me that 97 percent of his budget was fixed in terms of what the Athletics department has to pay for things like tuition and scholarships, coaches salaries, "rent and operating expenses" paid to the university for facilities and fields, insurance, utilities, travel, equipment, etc. Only about three percent is controllable. Revenue is similar outside of ticket sales and Booster contributions as television contracts, conference payouts, marketing rights are usually longterm contracts and things like royalty revenues and concessions change very little from year to year.

Jerry Kutz is Senior Vice President of Seminole Boosters and was the co-founder and columnist of the Osceola."