Million$ of Rea$on$ for the NCAA to Change Its Current Amateur Sports Organization Model : The 2010 UNC Football Scandal

Imagine being a highly-touted college football player and receiving offers of all-expenses paid trips to South Beach and keys to a Bentley?  You know it is illegal to accept the offers, but let’s think about what happens to you if you accept an offer like this from a sports agent or some other booster.  One scenario is that nobody finds out.  You dominate in your college career while living like a king, and then you go on to have a professional career and become a 22-year old millionaire.  This seems to be the perfect life, but someone will probably find out, right?  Well, even if they do, you will get kicked off the team and have your character questioned by NFL general managers.  Then, after sitting out for a year and just having to stay in shape for the NFL draft, these same GMs offer you your first payday worth more money than you could have ever dreamed about receiving.  Deciding whether or not to accept these gifts then seems to be the best ever “win-win” situation for the athlete—take the gifts!  If you do not believe this is reality, look no further than the 2010 University of North Carolina football agent scandal.

This is a case of three players receiving significant amounts of gifts from sports agents while still students at North Carolina in 2010.  Marvin Austin, Robert Quinn, and Greg Little gave every Chapel Hill resident reasons to believe in the UNC football team, until they took the gifts, and consequently took away this same hope.  The three players were found to have accepted items including, but not limited to, rent payments, travel expenses, thousands of dollars in accessories, leased Bentleys, and all expenses paid trips to South Beach.  All three players were dismissed from the team, and the University of North Carolina took a huge hit to their reputation.  The school also suffered direct and measurable penalties with fines, vacated wins, and loss of future scholarships.  However, all three players are currently on NFL rosters—Austin signed for totals of 4 years and $3,675,000, Quinn for 4 years and $9,436,053, and Little for 4 years and $3,327,500 (Fox Sports).  Clearly, there is some sort of problem with the system if a player can take these gifts and be “punished” with angry college alumni and the loss of a year of college eligibility before becoming multi-millionaires.

While it seems the players made out just fine in the long run, it is clear that the NCAA needs to reevaluate its current business model when you consider that the situation experienced by these three student-athletes was not unique.  Under the current system, NCAA rules prohibit student-athletes from accepting any compensation for their athletic prowess from people not associated with the student-athlete’s school.  This is because the NCAA maintains that the school athletic programs are “an integral part of the educational program” since student-athletes are a crucial part of the student body, therefore, creating an amateur model where the student-athletes can not be considered professionals.  Moreover, the NCAA is unlikely to ever forego their status as an amateur sports organization due to the tax breaks on the billions of dollars it generates through college athletics.  Section 501 (c) (3) of the Internal Revenue Code provides a federal tax exemption for any entity that is created to exclusively operate for “religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition.”  Therefore, the NCAA just does not care if, in this case, the North Carolina football program takes a hit to their reputation and a few student-athletes are put in a difficult spot, so long as the NCAA officials and universities are financially better off.

In order to put this in perspective, it is important to realize the magnitude of the money that is on the table for all of the different characters who are involved.  The NCAA enjoys approximately $650 million in revenue per year just from television and marketing fees, championship games, and investment fees and services.  Individual universities and colleges also make significant amounts of money from their athletic programs.  In the 2010 season alone, seven college football teams generated net revenue over $38 million, with only 4 out of 124 programs losing money.  In addition, reports estimate that alumni donations increase significantly as a result of successful sports programs.  On average, each team that makes the NCAA basketball tournament field of 68 teams receives an increase in alumni donations of $450,000, but this number can be much greater.  After winning back-to-back NCAA basketball championships and a NCAA football championship from 2006-2007, the University of Florida’s athletic department received an increase in alumni donations of $38 million.  Schools can benefit from athletic success in other ways, as well.  Universities that win a national football championship have experienced, on average, an 8% increase in enrollment for the following school year, creating yet another reason for school administrators to deeply care about their sports programs.  This conversation would not be complete without considering the significant benefits received by NCAA officials and coaches, as well.  Myles Brand, former President of the NCAA, made $895,000 in his last year, which is even less than contracts worth over $1 million that are signed by several athletic directors and coaches throughout the country.  Last but not least, we have the players.  These young men and women are the ones responsible for the money made by the previously mentioned entities; however, they are not compensated for doing so.  While many of these student-athletes receive scholarships to attend their respective universities, this is barely a fraction of the money they are generating for the groups of people who are preaching the ideals of amateurism and getting rich at the expense of their student-athletes (Corgan).

After laying out these facts, many different schools of ethics, including deontology, virtue ethics, and consequentialism, can be used to better understand and evaluate the actions of the many different characters in the UNC football case.  The situation for the players and agents was very similar.  Both groups of people had a duty to follow the rules and codes prohibiting the exchange of benefits between agents and students-athletes that are outlined in the NCAA bylaws, as well as the Uniform Athletes Agents Act (UAAA) and the Sports Agents and Responsibility Trust Act (SPARTA) (Heitner).  From a deontological perspective, these agents and student-athletes would be expected to carry out their duties and follow the rules.  However, the student-athletes, especially those from a disadvantaged childhood, can hardly be blamed for being swayed by the gifts and attention that agents offer.  From a consequentialist perspective, these football players knew that their most severe “punishment” would be a suspension, without having any impact on the millions of dollars coming their way in professional contracts the following year.  Similar reasoning can help explain why agents, who are in a bloodbath competition to sign the most promising future professionals, continue to offer gifts to student-athletes.  With some star athletes earning lifetime salaries of over $300 million dollars, an agent’s 3% take of that is $9 million.  Therefore, agents could risk a few tens of thousands of dollars in gifts and penalties to sway a player to sign with him and earn him 500 million times his investment throughout the player’s career.  With millions of dollars in potential earnings up for grabs, a few years of suspension or fines from violating the UAAA or SPARTA, if they are even caught, is often times not enough to deter illegal behavior by the agents.  While virtue ethics considers the character and intentions of both the players and agents, it is hard to hold them at fault when you consider the potential consequences for their actions in the NCAA’s current system.

The NCAA shares a large portion of the blame for this and many other occurrences of illegal behavior between agents and student-athletes.  Essentially, the NCAA has created a shareholder-focused business model, where its executives and highest ranked administrators are the “owners” and main beneficiaries.  While holding collegiate sports to amateur status has allowed the National Collegiate Athletic Association to receive millions of dollars in tax exemptions, it has consciously ignored the most important stakeholders— the 170,000 Division I student-athletes who make this all possible (NCAA.org).  The NCAA should be blamed for maintaining its outdated system in an age where media sponsorships and the millions of dollars generated from the commercialization of NCAA sports have taken the association to record-high profits.  It seems as if the NCAA, with a focus on profits, has taken a consequentialist approach to this situation.  Apparently, the association feels that the money that would be saved from reducing scandals and the ensuing backlash to universities compared to the money saved through tax exemptions under the current system would not be enough to warrant changes to the current amateur sports organization model.

This relationship between the NCAA and its student-athletes can be closely paralleled with that of large corporations and its employees.  Many of the largest companies have received increasing criticism in recent years for seeking increased profits at the expense of treating its employees unfairly and subjecting them to extremely low wages.  The same case needs to be made for the NCAA.  It only makes sense, as a number of recently-published scholars have proposed, to lift amateur status and allow student-athletes to either receive money through sponsorships or a basic revenue-sharing system.  However, this would cause the NCAA to give up their tax exempt status and millions of dollars in tax savings.  A virtue ethicist would look at the character and intentions of the NCAA and see a group of people who are motivated by profits and financial growth with far less concern for its student-athletes.

There is no reason why the NCAA would not be able to lift amateur status from its student-athletes and still thrive in a rapidly growing industry.  In an “About the NCAA” section on its website, the NCAA claims that it was “founded more than one hundred years ago as a way to protect student-athletes (and) the NCAA continues to implement that principle with increased emphasis on both athletics and academic excellence” (NCAA.org).  In reality, the NCAA is doing the exact opposite of protecting its student-athletes, and therefore, it is time for a change.  While the agents and players in the 2010 UNC football scandal clearly broke the rules, the system was set-up for this to happen.

Student-athletes generate hundreds of millions of dollars while playing in college and some go on to earn hundreds of millions more as professionals in the years immediately following college.  If the NCAA wants to protect its student-athletes, it is time to take a look in the mirror and reconsider if “stealing” the profits from the student-athletes is the best way to protect them.  Many proposals have been made and rejected, but now is the time to get all hands on deck and devise a solution before any more scandals take place.  The UNC scandal was probably not even the only case of illegal behavior during that season, but it was the only one that got caught.  We live in a world where unethical behavior can sometimes be overlooked until it is noticed, and consequently, causes media uproar resulting in serious repercussions.  However, the NCAA has now been caught by many people for their unethical business practices without any repercussions or changes.  Maybe punishment is not necessary for the NCAA, but it certainly is time to stop punishing its student-athletes.