Sports Finance Report: Lawsuit Could Result in NCAA Adopting 'Olympic Model'

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Lawsuit Could Result in NCAA Adopting “Olympic Model”, Josh Rosen’s Radical Solution  

U.S. District Judge Claudia Wilken will hear the case of Martin Jenkins (former Clemson football player) v. NCAA in December and determine if the NCAA’s system of capping the value of athletic scholarships promotes competition between schools or stymies the market for student-athlete services (i.e. would the value of a scholarship increase if it could be used as a recruiting tool?). Student-athletes on a whole would benefit most from an “open market” (i.e. schools can offer whatever it takes to land a recruit), but a decision that the NCAA has been in violation of anti-trust laws is far more likely to result in a “less restricted market.” One proposed solution would be for college athletics to adopt the “Olympic model”, a resolution that would allow for student-athletes to be compensated for the use of their name, image and likeness; while maintaining their eligibility. Regardless of the decision Wilken makes, it’s expected that the losing side will appeal the case to the Supreme Court.

Howie Long-Short: Of course limiting scholarships to “tuition, fees, room, board, course-related books and other expenses up to the value of the full cost of attendance” stymies the market for student athlete services; college athletic departments (and the boosters who support them) value winning above all else. They spend on coaches and facilities (which were recently shown to have little to no impact on recruiting decisions), so why wouldn’t they spend on the players too if permitted by NCAA guidelines?

The Olympic model (think: endorsements, commercials for star players) makes a lot of sense, if you believe that academic scholarships are fair compensation for most student-athletes; as I do. Student-athletes in revenue generating sports are awarded scholarships worth +/-$200,000 and can graduate debt free, as their classmates finish their studies with +/-$40,000 in debt. You don’t think a college scholarship is valuable? Tell that to someone making $30,000 and paying +/- 20% (average of $351) of their monthly post-tax income towards repaying student loans.

Fan Marino: Josh Rosen, who studied economics at UCLA, has developed a solution (with 2 partners, here’s the formal presentation) that would allow for student-athletes to pursue revenue generating opportunities while in college and still maintain their amateur status. The concept is built around the use of a “Clearinghouse” that would serve as an intermediary between the players and potential endorsers (eliminating need for agents). The “Clearinghouse” would negotiate all deals and hold player funds pending graduation; players that fail to graduate, are ineligible to compete or commit felonies forfeit any money earned. It’s a radical idea, but I’m for one that incentives student-athletes to graduate. As the saying goes, most of these guys will go pro in something other than sports; the degree will come in handy.

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Howie Long-Short and Fan Marino will be providing their expert opinions on each story. They have slightly different areas of expertise. Fan Marino is a firm believer that the SEC is the premier football conference. Howie Long-Short knows it as the Securities & Exchange Commission. Fan Marino lives and dies with the college selection of 5 star, blue chip recruits. Howie Long-Short spends his days analyzing blue chip stocks. Howie Long-Short knows that Black Monday occurred on October 19th, 1987. Fan Marino swears it happens every January after Week 17. You get the point.