When employers gain the lion’s share of the value created in the workplace, we commonly call this economic exploitation. Slavery is the extreme example, but exploitation can occur when workers gain something more than zero percent of what is produced.
A nation’s “wage share” provides a rough approximation of how the value of what a country produces is split between workers and employers. In the United States, the wage share is about 58 percent.
Bear with me a minute, because I’m now going to relate this to March Madness.
Like millions of others, I enjoyed watching the just-completed NCAA basketball tournament referred to as March Madness. Something about seeing those young athletes play and experiencing the passions of each matchup is captivating in a way that the NBA is not.
But let’s be clear that despite its emotional appeal, college basketball is a business. You can’t watch it without seeing dollar signs everywhere. And like any successful business, schools’ and the NCAA’s decisions follow those dollar signs.
That fact doesn’t particularly bother me so much as the economic exploitation that follows.
Here’s an illustration. The NCAA recently signed a $10.8 billion television contract with CBS that gave CBS exclusive broadcast rights to 14 years of March Madness games. Do the math, and you’ll see that every single March Madness game now generates more than $12 million in TV revenue.
Each March Madness game involves 30 players, so an average player who makes it to the tournament’s final game has through his labor produced $2.5 million in TV revenue. Collectively, the University of Louisville’s players who won the tournament earned $37 million in TV revenue for the organizations – the NCAA and their colleges – that lay claim to it.
NCAA rules prohibit colleges from paying their athletes, so colleges instead provide them with free tuition, room and board. At elite private schools like Duke, this runs about $60,000; at a place like Louisville, it’s half that.
For a player who makes March Madness’s final game, then, this “payment” amounts to about 1, maybe 2 percent of the tournament’s TV revenue he generated. And we haven’t even begun to account for the countless other ways that players produce profit for their schools.
Consider, for instance, that Adidas and Louisville’s athletic department rush-ordered a $24.99 T-shirt with Louisville player Kevin Ware’s number on the back to cash in on the sympathy created after Ware horrifically crashed to the court, shattering his leg before a national TV audience. Such a raw show of runaway commercialism is, to say the least, stunning. Especially since none of the T-shirt money will go to Ware. Nor will it help with any of his future medical expenses.
Twhe president of the National College Players Association explained it this way: “If Kevin has lifelong medical bills, he could be responsible ... These things are not guaranteed to players that are injured, no matter how hard it might be to understand (that).”
Players on professional sports teams typically receive 50 to 60 percent of the revenue generated by their sport, a “wage share” consistent with the national average. Whether it’s the right amount or not is another question, but it’s the share that (mostly) competitive labor markets produce.
Yet labor markets for college basketball and football are far from competitive; this is why players receive so little of the revenue these sports produce.
And who does get that money? Start with salaries. NCAA Mark President Emmert, former president of the University of Washington, makes more than $2 million annually; Louisville’s coach makes twice that. Next move to facilities, such as the NCAA’s $80 million headquarters. Finally look to colleges’ intercollegiate athletic programs. That’s where the money goes.
However you slice it, the rules of the game in college basketball and football leave many young men exploited. That it is the vaunted enterprise of higher education exploiting them, and not “capitalists” or “private enterprise” seems to cloud our moral compass.
But it shouldn’t. When it comes to labor issues, we should expect more, not less, from higher education. It’s time colleges own up to this fact and treat the athletes who make them so much money fairly. Removing prohibitions against paying them would be the best place to start.Katie Baird is an associate professor of economics at the University of Washington Tacoma. Email her at firstname.lastname@example.org.