PF Dec 2017 - NCAA Athletes As Employees - Pro Position

Resolved: NCAA student athletes ought to be recognized as employees under the Fair Labor Standards Act.

Pro Position

The introduction to this topic, presents some background. It explains that the NCAA is a non-profit organization which establishes the framework, rules and requirements for its member schools to compete with other member schools in athletic competitions. The NCAA has created various divisions and includes nearly all categories of collegiate athletics. But let's be real. The majority of the focus of the NCAA, the member schools, and the general public has long been the Division I championships in college football and college basketball. The college basketball "March Madness" playoff series is practically a rite of spring and the Division I college football bowl games dominate the television ratings, season after season. Sports fans feed on the frenzy and TV advertisers, merchandise manufacturers, ticket sales, and so many other commercial enterprises have found ways to exploit the excitement to the tune of billion of dollars per year. And yet despite this cascade of money into the network of the NCAA and its membership, the entire organization insists its not about the money. Its about providing these students, who also happen to be athletically inclined, a good, post-secondary education.

The resolution states, student athletes ought to be recognized as employees. Indeed, no one would dispute the employee status of NBA or NFL athletes, who like NCAA athletes work very hard to compete in contests which attract lots of money. The difference is, the NBA and NFL players are financially compensated, while collegiate athletes are forbidden to receive compensation outside of their tax-exempt scholarships. They are called amateur athletes and therefore they are not entitled to additional compensation. The Pro will flip that and claim the only reason they are labeled amateur is because the organization they work for does not pay them.

The Money Magnet

The NCAA claims it formed during the presidency of Theodore Roosevelt in the very early 1900's and within twenty years they were organizing the first national championships in Track and Field and Basketball. The number of championships quickly expanded to include football soon afterward. Through the decades, and especially as the popularity of television grew as a communication and entertainment medium, the popularity of college sports exploded. NCAA has now matured into a multi-billion dollar enterprise.

Edelman 2017:

The college sports industry represents a more than eleven billion dollar U.S. enterprise. At present, over fifty U.S. colleges generate upwards of seventy million dollars per year in athletic revenues. Meanwhile, twenty-eight colleges generate annual athletic revenues that exceed $100 million. Most colleges with big-time sports programs focus their efforts on generating revenues in two sports: football and men’s basketball. In these sports, the star athletes devote upwards of forty hours per week to team travel, play, and practice. [1141]

In 1953, well-before the NCAA became a multi-billion dollar enterprise, the organization was sued in a claim alleging that college players were employees entitled to workers-compensation and the court, operating under the current rules and definitions of the NCAA, agreed. At that time, the NCAA began to rewrite its rules. A key change was the invention of the term, student-athlete, fabricated in order to avoid the the debate we are now advocating in this Pro position.

McLeran 2017:

The NCAA created the term student-athlete to further its concept of amateurism. Former NCAA executive director Walter Byers said he constructed the term student-athlete to be deliberately ambiguous; his goal was for the NCAA not to be required to provide students workers’ compensation benefits, as they were not employees, or to pay them directly as athletes because they were not professionals. After the careful creation of the term student-athlete, the NCAA fashioned its own definition of amateurism. The historic definition of “amateurism” is “[a]ny gentleman who has never competed in an open competition nor for public payment nor admission money . . . .” Evidently, when the NCAA decided to allow student-athletes to receive athletic scholarships based on their athletic abilities, it contradicted the historic meaning of amateurism. The NCAA manipulated “amateurism” to mean a student-athlete who does not receive compensation in excess of an athletic scholarship. If a student-athlete violates the NCAA’s definition of amateurism, he or she will be deemed ineligible to participate in NCAA collegiate athletic events. Thus, the formation of amateurism was designed to protect the NCAA’s profits generated from its student-athletes.[258-259]

In 2014, a UCLA basketball player, Ed O'Bannon sued the NCAA claiming it should financially compensate athletes for the use of their image or likeness in a lucrative licensing deal between the NCAA and Electronic Arts, a maker of sports-themed video games. The NCAA argued its rules prohibited compensation in perpetuity, in order to maintain the players status as amateurs. The court found that those rules were an unreasonable constraint on trade which violated U.S. Antitrust law. This case cracked the shell erected by the NCAA on the strength of its definition of student-athlete.

The Education Mission

For their part, the schools have always claimed their objective is all about the education. Sports is a secondary consideration. However, despite those claims, administrators at the institutes of high-learning expend a great deal of time and effort to attracting more money to their institutions and at many schools, the greatness of an athletic program is measured in dollars and cents. Today, it is common knowledge that many university administrators and collegiate coaches are extremely well compensated for their work often enjoying seven-figure salaries. If the NCAA is passing the billions of dollars gleaned from sports down to member schools, one would think the schools could support the mission of education by awarding more scholarships.

Wolohan 2017:

The counterargument to this, however, is that, as the district court in O’Bannon I pointed out, there is no evidence that colleges and universities are using the money they save from not compensating their athletes to fund additional teams or scholarships. As the NCAA’s own 2004–14 NCAA Revenues and Expenses of Division I Intercollegiate Athletics Programs Report states, two of the three line items that made up almost two-thirds of total expenses for the FBS subdivision are coaches’ salaries and benefits at about thirty-four percent, and facilities at approximately fourteen percent of total expenses. [547]

We argue that the courts' early defense of the NCAA mission to promote the educational mission of college and university member schools is now completely swamped by the overwhelming flow money, used for everything except education.

McLeran 2017:

In 1984—in NCAA v. Board of Regents of the University of Oklahoma—the U.S. Supreme Court upheld the NCAA’s compensation restraints to preserve the NCAA’s definition of amateurism and to protect student-athletes from commercial exploitation. However, the industry of college athletics has substantially changed in the past 30 years. The NCAA has increased Division I membership to include approximately 350 universities and has a yearly revenue just shy of $1 billion. Universities generate $8 billion per year from their athletic programs. Forty-nine million fans attend NCAA athletic events every year, and three-quarters of a billion more watch on television from the comforts of their own homes. These same fans show their support by purchasing collegiate merchandise, which has resulted in the college licensing market growing into a $4.6 billion industry. Today it seems everyone involved in college sports is able to profit from college athletics except the student-athlete. “[T]he NCAA [has] erected a ‘nationwide money-laundering scheme’ that enriches conferences, schools, coaches and TV networks on the backs of unpaid athletes.” When the NCAA enacted its rules, the “economic disparity between the value of a [year-to-year] scholarship and the amount of money generated by student-athletes did not exist.” Although the NCAA argues its amateurism principles have not been hurt, college sports’ growth into a multi-billion dollar industry indicates otherwise. The NCAA was designed to be an educational nonprofit organization, not a commercially driven enterprise. When Board of Regents was decided, amateurism was a reality; however, today it is nothing more than an ideal. The NCAA should no longer be able to continue to oppress student-athlete compensation for its own benefit; therefore, a change to the current system is necessary.[260-261]

Nearly every minute of the Division I college athlete's life is managed and controlled. Training schedules, travel time, competition preparation and recovery all contribute to a poor educational experience for the participants often denying them access to a productive and meaningful education.

McLeran 2017:

The time requirements of college athletics also play a role in the student-athletes’ less-than-impressive graduation rates. A student-athlete’s workload consists of a four to five month season, traveling, and training year-round. NCAA football players dedicate an average of 43.3 hours per week to their sport. Shane Battier, a former Duke University basketball player, told a congressional committee his college athletic schedule was more demanding than his schedule as a professional basketball player in the NBA. Therefore, “[w]hat athletes really receive in exchange for their efforts is merely the cost of tuition, not the value of an education.” Student-athletes are brought to universities “more as performers than aspiring undergraduates,” and it is fair to ask “whether the letters B.A. stand more for Bachelor of Arts or Bachelor of Athletics.”[285]

Most college athletes are offered one-year scholarships limited to their participation in the sport they are being recruited to play.  In many instances, the scholarships are revoked or not extended if the student receives injuries or encounters circumstances which prevent them from playing. Perhaps, some this makes sense in the context that a scholarship is compensation for they work they do as athletes but this is counter to the educational mission touted by the NCAA and member schools. If schools really want to promote education, why not offer multi-year scholarships?

McLeran 2017:

Critics contend a year-to-year scholarship is fair compensation, but the emphasis universities have placed on athletics—while simultaneously dismissing academics—contradicts this argument. Multi-year scholarships would not cost universities a greater amount than they are already spending on scholarships, unless they decide to buy out an injured student-athlete’s scholarship. Moreover, multi-year scholarships would not negatively affect consumer demand, as the student-athletes would maintain their amateur status. The integration of academics and athletics would also be furthered because a greater emphasis would be placed on education. Having a guaranteed multi-year scholarship would increase graduation rates as student-athletes would no longer be dismissed for not performing athletically and would be encouraged to stay in school. The NCAA manual states its purpose “is to maintain intercollegiate athletics as an integral part of the educational program . . . .” Therefore, it is time for the actions of the NCAA to start reflecting this alleged commitment. [286-287]

The schools claim, their sports operations are not profitable and admittedly many lower division sports programs do operate in the 'red'. As we have stated, the money they do pull in goes to expenses such as travel, salaries for coaches and staff, stadium upkeep and, of course, those scholarships. However, there is another factor which diminishes the effectiveness of the educational mission. The truth is, many Division I athletes themselves are not in it for the education. The college recruiters let it be known that lucrative NBA or NFL contracts are available to the top performers and producers.

Wolohan 2017:

Are FBS football players and Division I basketball players being exploited? The easy answer is yes. The athletes in these sports, especially in the Power Five Conferences, generate tens of millions of dollars for their schools and receive a free education in return for their labor. That is assuming, of course, that the athletes actually get an education. Most athletes at that level are so concerned with playing in the NFL or the NBA that they do not have time to even go to class. In addition, in no other market would an athlete or employee be asked to take a salary below market value just so the owner could run an unprofitable venture. For example, the NBA is not asking Lebron James to take less money so the league and its owners can put more money onto the WNBA. Yet, that is exactly what we are asking FBS football players and Division I basketball players to do. [548]

The Tax Liability

Since we have previously addressed the argument of scholarships as an instrument for promoting education it would behoove us to address the topic of taxes. Con can claim that if players are classified as employees, the loss of amateur status will undermine the value of their scholarships since they will be considered taxable compensation under IRS rules. Indeed, even the NCAA and membership use this line of reasoning to support their current player relationships. However, the argument that "pay to play" would result in scholarships being taxable is not sustainable.

Edelman 2017:

Nevertheless, any attempts to use purported tax liability as the reason to avoid the “pay for play” model either misconstrues the plain meaning of the U.S. tax code or is simply disingenuous. Even if college sports were to move to a “pay for play” model, with careful tax planning, colleges could likely continue to provide their athletes with “qualified scholarships” under § 117 of the U.S. tax code. In addition, colleges most likely could continue to offer their athletes tax savings through a formal “education assistance program” or by providing education as a “working condition fringe” or “noadditional-cost service.” Based on the foregoing, there is reasonable uncertainty as to whether colleges that hire “pay for play” athletes would ever need to treat their athletes’ free education as taxable. Thus, the argument that a “pay for play” model of college sports would transform all college athletic scholarships into taxable gains is far weaker than “pay for play” opponents would have people to believe. Although there may indeed be good faith reasons for the concern over shifting college sports to a “pay for play” model, claims that “pay for play” would impose colossal tax liability on college athletes are simply dubious. [1168]

College Athletes are Employees

In 2014 Northwestern University "grant-in-aid" scholarship players filed a petition with the National Labor Relations Board (NLRB) seeking to be represented by the College Athletes Players Association (CAPA). In other words, they were seeking to unionize and enter into a collective bargaining agreement with the university in order to protect their worker-rights. The NLRB ultimately issued the following statement.

August 17, 2015
Washington, D.C. - - In a unanimous decision, the National Labor Relations Board declined to assert jurisdiction in the case involving Northwestern University football players who receive grant-in-aid scholarships. The Board did not determine if the players were statutory employees under the National Labor Relations Act (NLRA).  Instead, the Board exercised its discretion not to assert jurisdiction and dismissed the representation petition filed by the union.
In the decision, the Board held that asserting jurisdiction would not promote labor stability due to the nature and structure of NCAA Division I Football Bowl Subdivision (FBS). By statute the Board does not have jurisdiction over state-run colleges and universities, which constitute 108 of the roughly 125 FBS teams. In addition, every school in the Big Ten, except Northwestern, is a state-run institution.  As the NCAA and conference maintain substantial control over individual teams, the Board held that asserting jurisdiction over a single team would not promote stability in labor relations across the league.
This decision is narrowly focused to apply only to the players in this case and does not preclude reconsideration of this issue in the future.

Despite NCAA attempts to obfuscate the employer-employee relationship in collegiate sports, even the NLRB saw through the clutter and though it did not take up the question of whether Division I athletes are employees in the Northwestern case, a subsequent statement by the NRLB counsel, clarifies.

NYTimes 2017:

Top-level college football players at private universities are employees entitled to request improved working conditions and even to seek pay for their efforts, according to a memorandum issued by the general counsel for the National Labor Relations Board and made public on Tuesday.
The determination, which was included in a letter from the counsel, Robert F. Griffin, and addressed to regional board directors nationwide, found that scholarship football players at private colleges like Northwestern, Stanford and Notre Dame have employment rights and are protected by law should they seek to bargain for a safer work environment, or request pay.
The memo was revealed more than a year and a half after the N.L.R.B. in Washington declined to exert jurisdiction over the Northwestern football team’s union petition, which effectively denied players the right to unionize and collectively bargain. Griffin’s memo does not affect that ruling. It does not give players at private universities the right to collectively bargain, nor does it carry the force of law like a full board finding, muting its impact. Supporters of athletes’ rights called it a clear signal that the question of whether college football players are employees remains unsettled.

Of course the fact that it remains unsettled is the reason for this debate and some legal experts see it as a foregone conclusion.

Heintzelman 2017:

The NCAA believes it is differentiated from professional sports organizations, which do enter into an employer-employee relationship with its athletes. However, many student athletes assert that an employer-employee relationship is created when student athletes sign an official letter of intent with the NCAA and its respective universities. The NCAA is responsible for enforcing rules to govern intercollegiate sports for these universities, effectively acting as an employer of thousands of student athletes. This argument has been validated by the latest National Labor Relations Board (NLRB) decision for the trustees of Columbia University in the City of New York and Graduate Workers of Columbia–GWC, UAW; the term “employee” is defined as “a person who performs services for another under a contract of hire, subject to the other’s control or right, and in return for payment.” The NLRB held that undergraduate and graduate student teaching assistants are employees under the National Labor Relations Act. The ruling creates an employer-employee relationship between students and universities. [47]

It's time to dispense with the idea, that Division I sports is not professional athletics.

McCormick & McCormick 2006:

Why, a half century after adopting this term, should the NCAA unceasingly intone to millions of viewers that these young men and women are “student-athletes”? The NCAA’s purpose in this message is to shore up a crumbling façade, a myth in America, that these young athletes in NCAA-member sports programs are properly characterized only as “student-athletes.” This characterization—that athletes at NCAA-member schools are student-athletes—is essential to the NCAA because it obscures the legal reality that some of these athletes, in fact, are also employees.
By creating and fostering the myth that football and men’s basketball players at Division I universities are something other than employees, the NCAA and its member institutions obtain the astonishing pecuniary gain and related benefits of the athletes’ talents, time, and energy—that is, their labor—while severely curtailing the costs associated with such labor. The advantages to these institutions from fixing and suppressing labor costs in this manner have enabled them to reap a fantastic surfeit of riches.
The NCAA’s characterization of these athletes as student-athletes, and not employees, lies at the core of another, broader, fallacy: that NCAA Division I football and men’s basketball are, in fact, amateur. On the contrary, these sports are not amateur except in the pernicious sense that the “employee-athletes” who produce the product receive no market wage. In fact, these major college sports have not been truly amateur for many years, if ever.[74-75]

The Pro side of this debate maintains that so-called student athletes ought to be recognized as employees under the NLRA. In fact, we could argue there is a moral imperative to compensate the laborers for the work they do and avoid any identification with past unfair labor practices in the U.S.

McCormick & McCormick 2006:

NCAA athletes in Division I revenue-generating sports are employees under the NLRA. They meet both the common law and statutory standards for that classification. They are common law employees because they are compensated for their services with athletic scholarships that are unquestionably a quid pro quo for athletic services rendered, and they are subject to a pervasive level of control by their employers on which they are also economically dependent. They are also statutory employees under Brown because their relationships with their universities are not primarily academic; they are overwhelmingly commercial. In fact, intercollegiate athletics has become a dazzlingly commercial activity. It is managed and generates revenue like a highly successful business and has become a professional enterprise, abandoning amateurism in all respects save one: the treatment of its players. Bobby Bowden, the most successful coach in the history of college football, has candidly conceded: “The boys go out and earn millions for their university. Everyone benefits except the players.” [155-156]

For all these reasons an more, we urge a Pro ballot.

For more about this topic or Public Forum debate in general, click the Public Forum page tab for links to more topics and discussion.

Sources:

Edelman, M (2017) FROM STUDENT-ATHLETES TO EMPLOYEE-ATHLETES: WHY A “PAY FOR PLAY” MODEL OF COLLEGE SPORTS WOULD NOT NECESSARILY MAKE EDUCATIONAL SCHOLARSHIPS TAXABLE, Tax Implications of Student-Athletes as Employees, Boston College Law Review, 2017, http://bclawreview.org/files/2017/09/02_edelman.pdf

Heintzelman, EM (2017) #NCAA vs. Student Athletes: An Empirical Analysis of NCAA Social Media Policies, 39 Hastings Comm. & Ent.L.J. 43 (2017). https://repository.uchastings.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1001&context=hastings_comm_ent_law_journal

McCormick, RA & McCormick, AC (2006) THE MYTH OF THE STUDENT-ATHLETE: THE COLLEGE ATHLETE AS EMPLOYEE by Washington Law Review Association, Vol. 81:71, 2006. https://digital.law.washington.edu/dspace-law/bitstream/handle/1773.1/262/81washlrev71.pdf

McLeran, MS (2017), PLAYING FOR PEANUTS: DETERMINING FAIR COMPENSATION FOR NCAA STUDENT-ATHLETES, Drake Law Review, Vol 65, 2017. https://lawreviewdrake.files.wordpress.com/2017/03/mcleran-final.pdf

Wolohan, JT (2017) WHAT IS REASONABLE: ARE THE NCAA’S RESTRAINTS ON ATHLETE COMPENSATION REASONABLE?, Syracuse law Review, Vol 67:515, 2017, http://lawreview.syr.edu/wp-content/uploads/2017/03/Vol-67.2_Wolohan.pdf