Basketball is Worth Billions?

For anyone familiar with the quintessential American “college life”, they know that intercollege sports are a big deal for student athletes, parents and coaches alike. What most people fail to recognize is, however, just how big the industry is. In 2017, the National College Athletic Association (NCAA) earned $1.06 BILLION in revenue- just by selling television and media rights for its March Madness basketball championships and its ticket sales. The money then flowed out through conferences, championships and scholarships amongst its 48,000 student athletes. The largest payouts include Stanford, which received $3.25 million in 2016, and the Big Ten Conference. So college basketball earns a lot of money. So what? Here’s where the controversy comes in: 

Since the beginning, NCAA’s amateurism model has capped the amount athletes can earn and prevented them from hiring managers and advertising. By “encouraging students to earn degrees, not money”, this model effectively funneled NCAA’s booming revenue away from the deserving athletes to its own members and coaches, quietly making it one of the largest monopolies in global markets today. On Oct 29 after a myriad of lawsuits, the Board of Directors finally allowed players to profit from their names, marketing and earn higher than their tuition fees. Starting from 2021, the NIL policy promises big changes in NCAA’s existing monopoly but are they all good? 

In an idealistic world, the NIL acts as an excellent dampener upon NCAA’s monopoly. College athletes ought to benefit: with increased incomes closer to their market value, the ability to promote themselves and create an image to build their future professional careers, NIL could be highly promising for them. For the highly skilled players who typically received their extra funding under the table, this marks a clear shift from the restrictive model before. College programs could also leverage upon social media branding, managers and the like to boost their own images as good sports colleges. Should both effects be felt to their fullest degree, they would create balance in an otherwise highly unequal and monopolistic industry and reform a decades old exploitation of some of the nation’s best athletes.

In reality, the exact benefit still remains largely clouded by NCAA’s lack of transparency and the effects on other stakeholders. Foremost, NIL is supposed to be carried out “in a manner consistent with the collegiate model” which doesn’t clarify whether moves like professional endorsement will be allowed or not. If it isn’t, NIL would be a large promise with little effect for the big players. Moreover, it would still increase competition for mediocre players who now have to play in an unequal playing field. All athletes would also be indirectly affected by the losers of the redistribution: if increasing funds are distributed to major players, the flip side would be reduced earnings for the NCAA, schools and conferences. In the long run, this could mean reduced full ride scholarships, less non athletic sports being supported and changes in the sale of television/media rights- in short, a very different picture from the idealistic world.

Having presented both the rose tinted and pessimistic version of events, the reality is most likely to be somewhere in the middle, and a long way in the future. A large part of it depends on NCAA’s clarification of its regulations between now and 2021, and individual colleges’ responses to the policy. But one thing remains certain: NIL will bring a stark change to the billion dollar industry and unlike its initial impression, it won’t bring all fun and games for America’s college athletes.