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The College Athlete:
Overworked and Underpaid

May 2009 | Opinion

By RICHARD VEDDER and MATTHEW DENHART

March (and April) Madness has come and gone, but a troubling reality lingers as the NBA Draft Lottery approaches: The players who entertained us through those months receive compensation that amounts to only a very small percentage of what they would have earned if they sold their services in a competitive market.

Take Kevin Durant, for instance. After a stunning freshman season with the University of Texas in 2008, Mr. Durant elected to forgo his final three years of college and enter the NBA draft. Selected by the Seattle Supersonics (now the Oklahoma City Thunder), he agreed to a contract paying $3.5 million in the first year. By contrast, his yearly compensation at Texas (in the form of room, board, books and tuition fees) amounted to about $33,120, less than 1% of what he was offered by the Sonics.

Football is the other major revenue-generating sport. In 2006, Heisman Trophy winner Reggie Bush skipped his senior year at USC and entered the NFL draft. Selected by the New Orleans Saints, he agreed to a six-year contract guaranteeing $26.3 million with the possibility of huge performance bonuses. The compensation package of about $44,000 offered by USC paled in comparison to Mr. Bush’s true market value.

Top-level college sports is a big-money business, but very little of this money flows to the student-athletes. Ohio State, for example, receives about $110 million in revenue each year from ticket sales, television rights, concessions, parking, logo sales, etc.—over one-fifth of what it receives in tuition revenue from its more than 50,000 students. And its basketball players are compensated about $29,500 each.

In a competitive market, companies cannot exploit workers in this way for long, as rival firms will hire them away at higher salaries. In basketball, however, the NCAA prevents that, dictating limits on pay (essentially college costs) and even penalizing transfers to other schools. Strict rules also prevent college athletes from signing lucrative endorsement deals or accepting gifts beyond a certain amount.

If all of that money from ticket sales and television rights isn’t going to student-athletes, where does it end up?

In 2006, salaries for coaches and administrators accounted for nearly 32% of total athletic-department expenses. Many head football coaches at top universities earn five times the salary of their university president. At a time when most schools were tightening their belts with salary freezes, staff layoffs and the like, the University of Tennessee announced that it was going to start paying two assistant football coaches $650,000 or more each (the head coach makes $2 million). Jim Calhoun, head coach of the University of Connecticut men’s basketball team, recently made headlines when he criticized a blogger who questioned his $1.6 million annual compensation. Those high salaries are financed from the talents of unpaid student-athletes. So not only are the young being exploited, but the exploitation is being committed by their adult mentors.

Of course, for the students who go on to the pros, putting off their financial bonanza won’t be a big deal. But most college athletes do not make the pros. They may not even end up with the basic skills necessary to succeed in other workplaces, since only a minority of student-athletes in major sports even graduate (25% in UConn’s men’s basketball, for example). Long practices and missed classes make it difficult to succeed academically.

Usually when workers think they are getting a raw deal, they form a labor union. So why haven’t players done this?

First, the “workers” are around for only three or at most four playing seasons, making it hard to build up much of a movement. Second, coaches control playing time and enormously influence career success, so college kids don’t want to risk incurring the coach’s wrath by forming any kind of insurrection.

Mr. Vedder directs the Center for College Affordability and Productivity, where Matthew Denhart, a student at Ohio University, serves as a research associate.