By Matthew J. Mitten
Professor of Law and Director,
National Sports Law Institute and
LL.M. in Sports Law Program for Foreign Lawyers
Marquette University Law School
The National Collegiate Athletic Association (NCAA), a non-profit association whose member colleges and universities make the rules, currently limits the economic value of a full athletic scholarship to the costs of room, board, tuition and fees, and books, which vary by academic institution. The value of an athletic scholarship is estimated to be approximately $2,500-3,000 less than a student-athlete’s full cost of college or university attendance, which includes personal expenses and travel home as well as the foregoing components. To further its objectives of preserving the “amateur” nature of intercollegiate athletics, maintaining competitive balance, and limiting the adverse effects of commercialized college sports, the NCAA prohibits its members from providing any “extra benefits,” including the full cost of attendance or any “pay for play” in excess of this amount.
Because the athletic programs of the vast majority of NCAA member schools operate ‘in the red’ (i.e., their respective costs exceed their revenues if proper accounting principles are used), only Division I universities with extremely profitable football and men’s basketball programs (probably only members of Bowl Championship Series conferences) could afford the substantial costs of increasing the value of athletic scholarships to cover the full cost of attendance for all intercollegiate athletes. If doing so were economically feasible for all Division I student-athletes across-the-board, then the amateur nature of this level of NCAA intercollegiate athletics and the existing degree of competitive balance therein likely would not be adversely affected. However, serious Title IX gender equity issues would arise if only male student-athletes participating in net revenue-generating sports such as football and basketball receive scholarships covering the full cost of attendance. Title IX currently requires proportionally equal benefits for both male and female student-athletes, including scholarships, so providing full cost of attendance scholarships only to men would be illegal.
Even more significant legal issues would arise if any student-athletes receive more than the full cost of attendance or “pay for play.” Those that did probably would be characterized as university “employees,” which has some significant legal implications. Currently, the economic value of a college athletic scholarship is not considered to be “pay” or wages, which is subject to any federal, state, or local income or other taxes. This favorable tax treatment, however, would likely change if its value exceeds the full cost of attendance at an NCAA college or university. If those participating in intercollegiate sports are paid professionals rather than amateurs, profits generated by university athletic departments are more likely to be characterized as unrelated business income by the Internal Revenue Service that would be subject to taxation.
Although most states do not expressly include or exclude scholarship athletes from workers’ compensation coverage, some state workers’ compensation statutes exclude intercollegiate student-athletes from coverage. Based in part on the nature and current value of an athletic scholarship, courts generally have refused to characterize a student-athlete who suffers an injury while participating in intercollegiate athletics as an “employee” who is eligible to recover workers’ compensation benefits. If college athletes receive “pay for play” in excess of the full cost of attendance, there is a strong legal argument that they are paid professional athletes who should be covered by otherwise applicable state workers’ compensation laws.
For purposes of state law, another significant potential consequence of “pay for play” and the creation of an employment relationship would be that a university may be vicariously liable for an intercollegiate athlete’s foreseeable on-field tortious conduct that injures fellow participants during competition. (Most states have adopted an intentional or reckless liability standard for co-participant injuries.) If an intercollegiate athlete is an “employee” of a public university, he may be entitled to governmental immunity that protects a state’s public employees from liability for certain torts (usually only negligent conduct).
As paid professionals who are university employees, intercollegiate athletes would seemingly be able to unionize under federal labor law. Doing so would enable them to collectively bargain their wages and benefits (e.g., amount of “pay for play”), working conditions (e.g., number of games, practices, required offseason training), and other terms and conditions of employment (e.g., number of years of intercollegiate athletics eligibility, academic eligibility requirements). They would have the right to strike and choose not to play in games if their collective bargaining demands are not met.
If intercollegiate athletes are paid to play, courts are unlikely to continue their historical practice of characterizing NCAA student-athlete eligibility requirements (e.g., prohibiting the giving or receipt of any “extra benefits” in excess of the value of room, board, tuition, fees, and books) as noncommercial regulation of intercollegiate athletics that is either not subject to antitrust scrutiny or is virtually per se legal. These requirements have been judicially recognized as necessary to preserve amateurism, academic values, and competitive balance in college sports. Thus far, courts have consistently accepted preservation of amateurism as a justification for NCAA rules limiting competition among its member institutions, which significantly reduces the cost of an essential input necessary to produce intercollegiate athletics. Paying student-athletes to play would significantly increase the costs of producing intercollegiate athletics and change the fundamental nature and tradition of college sports.
The bottom line is that professionalizing intercollegiate athletics by paying student-athletes more than the full cost of attendance or any “pay for play” in excess of this amount will open up a hornet’s nest of legal issues with stinging effects felt by colleges and universities, student-athletes, and college sports fans.
(Editor’s note: In the next issue, we will look at the Title IX implications of Play for Play.)
