Cleat Geeks

The Champion of A Corrupt Industry

Please note that this might be the longest sports article you may ever read. It also talks about topics that are, for lack of a better term, boring; however, this has gone unnoticed and unpunished for far too long and it’s time we begin the conversation and demand change in one of the most corrupt and morally-unacceptable industries in the world.

While financial equality is rapidly becoming one of the most hotly-debated topics in the United States, there is one industry that has made itself immune to this debate: this industry is intercollegiate athletics, and its champion is the NCAA.

NCAA-moneyThe NCAA is one of the most financially successful sports organizations in the world, generating billions of dollars annually through world-class sporting events such as March Madness, the College World Series, and nearly 90 other Championship events over which the NCAA governs and profits off of; but, that itself is not wrong – there is nothing inherently wrong with a business making absurd amounts of money.

However, there is something wrong with an organization whose business model not only encourages, but requires commercial exploitation of young adults for the financial gain of colleges, universities, and organizations, most of whom already have millions, if not billions of dollars in the bank.

Let’s start off with the NCAA, the humble non-profit that somehow managed to claim over $920 million in assets in 2014.

The NCAA is a registered non-profit organization (NPO). This means that the NCAA’s assets (income) cannot exceed its liabilities and net assets (expenses); however, the NCAA has come up with a lot of expenses to maintain non-profit status while generating as much tax-exempt income as possible. These expenses include nearly $160 million in “association-wide programs”, nearly $100 million in “Division I championships, programs, and NIT tournaments” and $41 million in “management & general” expenses.

These one-line titles are not very descriptive, so let’s dive further into this issue.

According to the NCAA’s Annual Consolidated Financial Statement and Independent Auditors’ Report (don’t fall asleep on me just yet), association-wide programs are said to encompass “costs for student-athlete programs and services, membership educational and promotional programs and services, legal services, and governance committee expenses.”

$160 million dedicated to, among other things, student-athlete programs and services and membership educational and promotional programs and services would lead a rational individual to believe that these student-athletes are some of the most well-educated students at their respective universities.

And that is the argument many supporters of collegiate athletics in its current form use when debating the topic with its opponents: athletics allow students to further their education by attending some of the most prestigious and respected institutions in the world; however, one has to question the quality of that education when you hear of countless academic dishonesty violations committed by student-athletes and universities alike.

north basketball college logos carolina ncaa 1365x1024 wallpaper_www.wallpaperhi.com_32One prime example of this is the North Carolina academic scandal of 2012, when a number of whistleblowers, including former professors and student-athletes, called out UNC on the grounds that, among many other things, the curriculum and course load given to student-athletes were of far less rigor and contained much less substance than the course load given to a regular student. These so-called “paper classes” would be created for the sole purpose of keeping an athlete’s GPA high enough to prevent them from becoming academically ineligible.

While the academic experiences of some student-athletes do provide individuals with a quality education and the opportunity to play the sport they love, the fact that many athletes are not receiving that same education is a major disservice to those athletes who are not receiving the quality education promised to them, and an even greater disservice to professors, who are routinely incentivized, or even forced, to give star athletes better grades while being contractually obligated to maintain a strict level of academic integrity.

With that said, it’s safe to say that the nearly $160 million allocated to universities with the intention of enhancing the student-athlete’s educational experience is just an additional revenue stream for colleges, universities, and the NCAA – as if the nearly $550 million dispersed evenly amongst all Division I institutions isn’t enough.

marchmadnessThe second section of those expenses were described as “Division I championships, programs, and NIT tournaments”, which was allocated just under $100 million.

There are a number of issues with allocating nearly $100 million to providing intimate settings for collegiate athletic events, but we will just focus on the one major issue for right now.

There are only five NCAA-sanctioned Division I championships that generate a significant amount of revenue for the NCAA: FCS football, men’s basketball, women’s basketball, baseball, and men’s lacrosse. However, these championships are not contested in a setting that requires $98 million to rent out: the FCS National Championship is played at a stadium that seats less than 8,200 people, so that would not cost much to rent out for a single game; the College World Series is contested over just ten days in a stadium built specifically for the event, so reserving that stadium wouldn’t break the bank either; men’s lacrosse is a one-day event and is rarely marketed anywhere outside of the host city and a few promotional advertisements, negating any significant expenses there; women’s basketball is held at school-owned arenas until the Final Four, when the tournament shifts to a less-than-prestigious neutral location (which might constitute a Title IX violation since equal funds are not being allocated to both men’s and women’s sports since more money is spent reserving sites for the Men’s Tournament than the Women’s Tournament); and, men’s basketball, which encompasses both the National Championship Tournament and the NIT, the only two events in this list, and therefore the entire NCAA, that deserves a sizable piece of the NCAA’s near-$100 million dollar pie. Plus, the NCAA does not sanction the College Football Playoff or any postseason element of FBS football, so the costs associated with those events are not accounted for in this $100 million allocation.

But what do all those numbers and statements mean?

All those statistics mean that there is no logical reason as to why the NCAA is allocating nearly $100 million towards funding championships, most of which don’t generate any amount above $1 million and most not costing anything more than $2 million.

The last section of that financial report was “management and general expenses”, a category so vague in name, even the NCAA doesn’t describe it; however, we dug deep in the report which we read cover-to-cover and found a small description as to what is categorized under that category. In 2013, a business called Collegiate Properties, LLC was stated as an organization that “advanced youth-based initiatives”. This organization dissolved in 2014 and the NCAA recorded an impairment charge for its entire equity method investment in the joint venture. To put it simply, the “management and general expenses” category encompasses everything from employee salaries to failed investments and everything else that does not fit in any other category. This affords the NCAA a little too much freedom to be ambiguous in how they can describe their expenses.

This, however, is just the tip of the iceberg in the wide world of intercollegiate athletics. Another key player in this corrupt industry are the universities themselves, who are widely in favor of keeping the current system exactly the same for what can only be described as “financial reasons.”

ncaaf-bettingIn 2014, the Wall Street Journal, in conjunction with world-renowned economics professors, valued the Ohio State Buckeyes football team at over $1 billion; however, while this valuation is due, in large part, to the incredible skill and talent that the Buckeyes possess, they were rewarded with nothing more than going to class the following Monday.

Another argument many people will use is: “But you can’t pay them. Doing that would treat the athlete as if he were at a higher level than other students and would directly contradict the very principles of intercollegiate athletics,” some college sports defenders might argue.

There are two main problems with that argument: first, most other students don’t generate millions of dollars for their school, which sets the student apart from his or her counterparts in that regard; second, colleges don’t need to pay their student-athletes in order for them to receive the compensation they rightfully deserve.

To elaborate on that first counterpoint, treating all students equally would be acceptable if no student brought any different value to the university; however, student-athletes bring in millions of dollars annually and are not allowed to not reap the benefits of their own labor. Sure, student-athletes benefit from hydrotherapy areas, state-of-the-art strength training facilities, free food hand-crafted by world-renowned dietitians, nutritionists, and chefs, world-class medical care, along with free academic assistance and tutoring. But isn’t that the same problem as paying student-athletes, just in reverse? Other students are not given access to these facilities, but student-athletes are – that is placing student-athletes above the rest of the student body, many of whom are unable to afford nutritious food, or worse, food at all.NCAA-LACROSSE-LOGO

The second counterpoint was that colleges do not have to directly pay their student-athletes in order for them to receive the compensation they deserve; as a possible alternative, the NCAA should allow student-athletes to profit off of their own work through endorsements, merchandise and memorabilia sales, and other revenue-generating opportunities of that nature – this would ensure collegiate athletics remain profitable while also guaranteeing financial security for student-athletes.

If the NCAA cared about their student-athletes as much as they claim to, why wouldn’t they be looking out for their financial well-being as well as their physical and mental well-being?

Well first, the NCAA doesn’t care about their students’ well-being. If they did, they wouldn’t hand down harsher penalties for recruiting violations than for academic violations, which is exactly what they did when, among other things, stripped USC of their BCS National Championship. But with North Carolina, all they did was take away less than a quarter of North Carolina’s 85 scholarships and barred them from a bowl game…that’s it!ncaaBasketball

This type of inconsistency is unacceptable for an organization that prides itself on valuing the whole individual in mind and body.

College athletics is becoming more profitable each and every year, but the NCAA, its primary governing body, has not changed its business model to accommodate this rapid growth in the financial element of intercollegiate athletics.

But why would they?

As the old saying goes, “If it ain’t broke, don’t fix it.”

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