College basketball is going to be dominating winter sports until the NCAA’s March Madness championships finally end in April. Meanwhile, between games there’s another contest taking place: debates about whether colleges should pay athletes in two big-time sports—football and men’s basketball. This replaces 1980s television beer commercials pitting “tastes great” versus “less filling” factions among sports fans.
So, to start the “play for pay” games, let’s assume that salaries replace scholarships in big-time men’s college sports. What happens, for example, to the college player if he were paid $100,000 per year?
A full athletic scholarship (a “grant-in-aid”) at an NCAA Division I university is about $65,000 if you enroll at a college with high tuition. This includes such private colleges as Stanford, Duke, Northwestern, University of Southern California, Syracuse, and Vanderbilt. The scholarship is $45,000 for tuition and $20,000 for room, board and books. At state universities, the scholarship would be lower if you were an “in state” student—because tuition would be about $13,000. But if Michigan coach Jim Harbaugh recruits nationwide and wants a high school player from California or Texas, the University of Michigan out-of-state tuition bumps up to about the same as that charged by the private colleges.
That’s the old model. In the new era, a coach could offer a recruit a salary instead of a scholarship. Does a $100,000 salary give the student-athlete a better deal than the $65,000 scholarship?
The $100,000 salary is impressive. A future Heisman Trophy winner might command more, but $100,000 is not bad for an 18-year-old high school recruit. But since it’s a salary, not a scholarship, it is subject to federal and state income taxes. Tuition and college expenses would not be deductible because the income level surpasses the IRS eligibility limit.
So, a student-athlete paid a salary would owe $23,800 in federal income tax and $6,700 in state taxes, a total of $30,500. In cities that levy an employee payroll tax, the salaried student’s taxes go up about $2,400 per year. Income taxes then are $32,900. And, as an employee, the player would have to pay at least $2,000 in other taxes, such as Social Security, for a total of $34,900. This leaves the college player with $65,100. Since college bills come to $65,000, the player has $100 left.
By comparison, how bad was the scholarship model? According to the federal tax code, the $45,000 tuition award is deductible, but room and board are not. The student-athlete will be able to deduct book expenses and qualify for a tax credit under the American Opportunity Tax Credit (AOTC), reducing his tax. The bottom line is that the student-athlete gets a $200 refund in federal taxes and pays $820 in state taxes, for a total tax bill of $620. There’s no local payroll tax because he was not an employee. This means $64,380 of the $65,000 scholarship can go toward paying academic expenses of $65,000.
How does the salary compare to the scholarship for student purchasing power? The $100,000 salary gives the college sports “employee” an advantage of $720 per year, the difference between his net salary of $65,100 versus the scholarship player’s net of $64,380. That’s not great news for the salaried player. It’s bad news for the athletics department which paid $100,000 in salary rather than $65,000 in scholarship, driving up expenses $35,000.
What’s clear is that paying salaries for college players is a taxing situation. Each case will vary by state. The case above used a moderate tax state, Kentucky. Massachusetts (a.k.a. “Taxachusetts”) will be more painful. In following all the “pay for play” contests, the skilled players will be dueling accountants and agents.
There’s crucial a human dimension to the “numbers game.” Star high school athletes are talented. Coaches and sports journalists reinforce this perception. But players and their families often overestimate a player’s market worth. They fail to recognize how many equally talented players are competing for a salary. Many All-State players may be surprised that college coaches are not willing to pay them $100,000 or even $50,000.
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High school and college players understandably use the National Football League and the National Basketball Association salaries as the gold standard. Multimillion-dollar contracts make professional sports part of the American Dream. But since the NFL and NBA are the pinnacle, it’s good to add the full range of professional sports leagues when a college player plans his financial future. Former college stars on professional indoor football squads make about $225 per game—with a $25 bonus if the team wins. Outside the NBA, players in the professional developmental league—one step from making a NBA squad—make about $43,000 per year. The college scholarship model may not be so bad for student-athletes after all.
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John Thelin, a professor at the University of Kentucky, is author of A History of American Higher Education, published by Johns Hopkins University Press. In 2006 he was selected for the “Ivy League at 50” roster of outstanding scholar-athlete alumni. He most recently wrote for MONEY on Why Students Are the Biggest Losers in Today’s College Bowl Games.
The debate as to whether or not college athletes should be paid has really heated up in recent years. It seems to arise every March when the NCAA Men’s Basketball Tournament arrives, and once again when the college football season begins. While I respect the time, work, and excitement college athletics brings to the world of sports, they should not be paid.
The key in my statement is they shouldn’t be paid, I didn’t say they shouldn’t be compensated.
Athletic scholarships are their compensation and a fair one at that. Essentially they receive a free education and in return they represent the school in a certain sport. College athletes don’t have to worry about student loans, paying for textbooks, the cost of on-campus living, and meal plans.
According to Institute For College Access & Success, in the state of Pennsylvania 71 percent of students leave a public four-year institution or private non-profit four-year institution in debt. The average debt is $32,528. That is an enormous burden for kids who may, or may not have a job awaiting them upon graduation.
When you look at it that way, plenty of college students would be happy to play a sport for four years if it meant they did not have to take on that financial hardship.
Another problem with paying college athletes is the ambiguity in the importance of each sport. Would all the athletes get paid the same amount? If so, that certainly seems strange and borderline unfair. No offense to the athlete who plays a sport that doesn’t air on national television but it doesn’t seem acceptable that they get paid the same amount as the college football player competing in the National Championship with 33 million people watching them. That being said, is that the athlete’s fault who plays a “non-revenue producing” sport. They may work just as hard, so shouldn’t they be rewarded equally?
The NCAA reported that 28.3 million viewers watched the 2015 NCAA Men’s Division I National Championship between Wisconsin and Duke. They also reported there were 3.1 million viewers for the 2015 NCAA Women’s Division I National Championship between Notre Dame and UConn. Obviously those numbers are vastly different, so should the men and women basketball players be paid differently? The statistics show more people are interested in watching the men play, but is that the women’s fault who work so hard too? They can’t control the popularity and ratings of the sport they play.
The reality of the situation is there is too big a gray area when it comes to analyzing different sports. The same goes for Division II and Division III sports. Why shouldn’t those athletes be paid the same if they put in the same amount of time to practice, travel, and play games?
The argument athletes should be paid emanates from the mammoth revenue the NCAA generates. USA Today reported that the NCAA’s revenue in fiscal 2014 was $989 million. What is wrong with that? Couldn’t it be said that they are being rewarded for a strong business model? Whether it is college football, or tournaments in college basketball, they have built up entities that drive up TV ratings. As a result they deserve the financial upturns for their excellent marketing work.
People get caught up that all this money is being made and the college athletes are completely getting exploited. I wouldn’t label earning a free college education exploitation. If players are that good and feel they deserve to be paid, they can make it to the professionals. The NFL draft commences tomorrow evening in Chicago. According to the new bargaining agreement, each player can earn a four-year contract. Last year’s first pick Jadeveon Clowney signed a four-year contract that included $22.272 million guaranteed, and a $14.518 million signing bonus. The point is, the players who are so good and entertain us in college will eventually get paid.
People need to drop the act that athletes are props and labor away for multi-billion dollar businesses. Television helps these kids market themselves. For better or worse even if an athlete does not pan out in the professionals, they at least made a name for themselves. It will help them find a job when they graduate - - debt free - - out of college. For those who “have nothing because their sport didn’t make them rich and famous” that’s their own fault. If they fooled around and didn’t take their academics and “life after a sport” serious, that’s their own wrong-doing. It may seem harsh but it is the truth. There are thousands of students who don’t play sports and fail out of college each year and they receive little to no sympathy from the general public.
Take a step back and look at the big picture. College is a place for people to obtain a degree and help jumpstart their “real world” career aspirations. Whether people want to capitalize on that opportunity or not is on them. However it is not a place for athletes to get paid to play sports, that’s why the professional level exists. Remember student comes first in student-athlete.