The price of paying college athletes

Summary

Today, Explained: The Price of Paying College Athletes

Host: Sean Rameswaram
Co-Host: Noel King
Guest: JP Acosta (SB Nation)
Special Guest: Pablo Torre (Host of "Pablo Torre Finds Out")
Release Date: December 19, 2024
Network: Vox Media Podcast Network

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Introduction

In the December 19, 2024 episode of Today, Explained, hosts Sean Rameswaram and Noel King delve into the evolving landscape of college sports, particularly focusing on the rising trend of compensating college athletes through Name, Image, and Likeness (NIL) deals. As playoffs commence, the discussion unpacks the financial dynamics reshaping college athletics, the role of boosters, and the potential future of college sports in the shadow of professional leagues.

The Emergence of NIL Deals

Timestamp [00:03 - 02:41]

The episode opens with the hosts highlighting the unprecedented payouts to college athletes. Notable deals include Arch Manning’s $3.1 million NIL contract and an anonymous high school prospect securing an $8 million deal. These figures mark a significant shift from traditional scholarships, signaling the NCAA's acknowledgment of athletes' market value.

Sean Rameswaram: "College athletes are getting paid. At least some of them."

The conversation underscores that while these payments seem substantial, the funds aren't directly sourced from the universities themselves.

Understanding the Financial Flow

Timestamp [02:41 - 06:54]

JP Acosta from SB Nation joins the discussion to elucidate the complexities behind NIL deals. He explains that while NIL allows athletes to monetize their personal brand, the actual money often flows through third-party boosters rather than the universities. For instance, quarterback Bryce Underwood's $10 million deal involved contributions from tech billionaire Larry Ellison, connected to the University of Michigan through personal ties.

JP Acosta: "It's a loophole around the fact that student athletes aren't employees."

The hosts explore how these arrangements enable athletes from affluent programs to receive lucrative offers, further entrenching financial disparities within college sports.

The Role of Boosters and Collectives

Timestamp [05:05 - 08:09]

The episode delves deeper into the influence of boosters—wealthy alumni and donors who channel funds into NIL deals. Examples include the University of Arkansas receiving substantial support from the founder of Tyson's Chicken Nuggets and Jerry Jones, owner of the Dallas Cowboys, offering significant financial incentives to recruits.

JP Acosta: "They can raise $20 million to get an entirely new roster filled with some of the best players."

This backing allows prominent programs to attract and retain top-tier talent, often at the expense of smaller schools struggling to compete financially.

Transparency and Regulatory Challenges

Timestamp [06:22 - 10:13]

Historically, many of these transactions occurred under the table, leading to NCAA sanctions and investigations. With the legalization of NIL, there is a push towards transparency, but without federal regulation, the system remains fragmented with varying state laws.

Sean Rameswaram: "Now that people have figured this out, how do you think it's changing college sports?"

JP Acosta: "There is no federal regulation on it. Each state has their own separate laws."

The lack of standardized rules poses significant challenges, potentially exacerbating the divide between wealthy and less affluent programs.

Impact on College Sports Dynamics

Timestamp [07:21 - 11:40]

The hosts analyze how NIL deals are transforming college sports, making them resemble professional leagues. With no salary caps, top schools can outbid smaller counterparts, leading to a concentration of talent and resources in a handful of elite programs.

Noel King: "It feels like there is no salary cap right now with name, image and likeness."

This shift is compounded by the upcoming implementation of revenue sharing, which mandates that a portion of a school's revenue be allocated to athletes, further intensifying financial inequalities.

Guest Segment with Pablo Torre

Timestamp [15:11 - 25:28]

In the latter half, Today, Explained welcomes Pablo Torre to discuss the broader implications of the current trends. Torre emphasizes the NCAA's struggle to maintain its traditional model amidst growing legal and financial pressures.

Pablo Torre: "The NCAA has realized that they've already lost the philosophical argument that allowed the NCAA to regulate pay."

He critiques the NCAA's attempts to secure an antitrust exemption, suggesting that such measures are a last-ditch effort to preserve their control over college athletics in the face of inevitable capitalist pressures.

Pablo Torre: "If the NCAA gets this Hail Mary to pass, they would be allowed to dictate what amount of their revenue they want to share with athletes."

Torre warns that without regulatory oversight, college sports risk devolving into a system where only the wealthiest institutions thrive, undermining the core educational and community values that have historically defined collegiate athletics.

The Future of College Sports

Timestamp [19:56 - 23:55]

The discussion turns to potential future scenarios. With the NCAA advocating for self-regulation and an antitrust exemption, the path forward remains uncertain. Torre argues that without significant reforms, college sports may increasingly mirror professional leagues, prioritizing financial gain over student-athlete welfare.

Pablo Torre: "If college sports just becomes the minor leagues to a professional version of it, you are going to lose something that makes the product as compelling as it has been for over a century."

He highlights the cultural and ethical dilemmas inherent in balancing commercialization with the educational mission of universities, suggesting that preserving the unique identity of college sports requires thoughtful regulation and equitable financial policies.

Conclusion

Today, Explained concludes by reflecting on the profound changes occurring in college athletics. The hosts and guests agree that while NIL deals offer athletes new opportunities, they also introduce significant challenges that could reshape the fabric of collegiate sports. The episode underscores the need for comprehensive policies and a balanced approach to ensure that the integrity and educational essence of college sports are maintained amidst evolving financial landscapes.

Notable Quotes

• JP Acosta [03:20]: "Main point behind this is that the NCAA and most of their respective universities did not want to call student athletes employees."
• Sean Rameswaram [04:05]: "It's kind of been a loophole around the. Oh, student athletes aren't employees."
• Pablo Torre [17:45]: "If the NCAA gets this Hail Mary to pass, they would be allowed to dictate what amount of their revenue they want to share with athletes."
• Pablo Torre [21:00]: "If college sports just becomes the minor leagues to a professional version of it, you are going to lose something that makes the product as compelling as it has been for over a century."

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Today, Explained offers a comprehensive exploration of the financial transformations in college sports, emphasizing the delicate balance between athlete compensation and the preservation of collegiate athletic integrity. For those unfamiliar with the intricate dynamics of NIL deals and their repercussions, this episode provides an insightful and engaging overview of one of the most pivotal issues in modern sports.

Transcript

[Host 1]

With playoffs kicking off Friday, it's a bigger than usual week for college football, but it's also been a huge year. College athletes have been getting paid.

[Host 2]

Arch Manning, 3.1 mil, I believe there's.

[JP Acosta]

An athlete, currently a high school prospect, unnamed, apparently getting an $8 million nil deal.

[Host 2]

So I gotta talk about Cam ward, man.

[Host 1]

But $2 million deal with Adidas? The biggest deal of the year was a whopping 10 million dol million dollars reportedly paid out to quarterback Bryce Underwood to change his commitment from LSU to Michigan. But what's kind of weird about these deals is that the schools aren't necessarily the ones paying out. Bryce's millions apparently came at least partly from the tech billionaire Larry Ellison, all because his fifth wife went to the University of Michigan. We're gonna figure out what's going on in college sports on Today Explained this.

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[Sponsor 2]

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[JP Acosta]

And now let's hear it for the world's greatest daily news podcast. Today.

[Host 1]

College athletes are getting paid. At least some of them. At least some of them are getting huge paydays. But the money isn't coming directly from their schools. It's a kind of confusing situation and it all boils down to something called Name, Image and Likeness or nil.

[Host 2]

It is a way for college football and college student athletes to make money off of their name, their image, or their likeness. An example of that would be the new video game that came out EA College Football 25. Every player that was in that game that is currently an athlete in College football got $600 because their name, image and likeness was used in the game.

[Host 1]

But some athletes, the really good ones, are able to make way more money because of slush funds that college athletic programs have at their disposal. We reached out to JP Acosta from SB Nation to help us understand, and we started with the ncaa.

[Host 2]

I think at the crux of it all, the main point behind this is that the NCAA and most of their respective universities did not want to call student athletes employees. Calling them employees require them being paid by the university. The idea of athletes being paid, do.

[Host 1]

You think that will ever happen at the NCAA level?

[JP Acosta]

No, it will not happen. Not while I'm president of the ncaa.

[Host 2]

They have spent years fighting the fact that college football and college student athletes are employees, students with access to education.

[JP Acosta]

And we provide them with the cost of tuition, fees, room, board, books and supplies. And there's not even a salary to debate. They're not employees. They're students.

[Host 2]

While they've been fighting this battle in court, name, image, and likeness kind of slipped in through a loophole because it is a third party. So technically, these boosters that provide the name, image, and likeness deals that you see, a lot of that comes from a booster who is not being paid by the university, but is affiliated. Affiliated with the university to help get this player to either go to their university or stay at their university. So it's kind of been a loophole around the. Oh, student athletes aren't employees. We're going to keep fighting this in court. But name, image and likeness allows for a little bit of a side road to get to paying the players.

[Host 1]

Okay, so now I think we have to explain where this money is coming from. This. This $10 million that went to a University of Michigan football player. It didn't come from the University of Michigan.

[Host 2]

No, it technically does not come from the University of Michigan. The biggest example of this I would point to is the University of Arkansas. The University of Arkansas, their biggest donor and their biggest booster is the founder of Tyson's Chicken Nuggets.

[Host 1]

What?

[JP Acosta]

Everybody out there, we need nil money. Okay, let's go. Let's get this on the record. I didn't write a big check for nil.

[Host 2]

That's.

[Sponsor 2]

That's.

[Sponsor 1]

But I did help.

[Host 2]

Like, a lot of families come in.

[JP Acosta]

You put money into the foundation.

[Host 2]

Dyson's Nuggets is an Arkansas alumni. Oh, Jerry Jones, the owner of the Dallas Cowboys, is an Arkansas alumni. Jerry Jones is reportedly offering double whatever.

[Host 1]

Kentucky commits were set to make. Jerry Jones essentially has basically said, if you need money, I'm here to give it.

[Host 2]

I think that he's. Every year, I think Arkansas plays a game in the Dallas Cowboys Stadium because Jerry Jones wants to see his alma mater play in his stadium. They spent a billion dollars on. So what this owner, founder of Tyson can do is with all the money that he has, he can help give a player money to either get him to come to Arkansas, or he can get a player to stay at Arkansas through name, image and likeness. And they will get paid via the collectives.

[Host 1]

Huh. And is it, like, happening above board? Or are these happening, like, in dark, shadowy rooms with, like, you know, low lighting and. And, you know, grime or something?

[Host 2]

It used to be the latter. It was very under the table.

[JP Acosta]

The NCAA investigated, alleging Bush and his family received improper cash and perks like.

[Host 2]

Free housing, eventually leveling harsh sanctions against USC. Well, it's reported that Johnny Manziel signed 5,4000 items and this and that.

[Host 1]

Allegedly.

[Host 2]

Allegedly. Allegedly. Johnny signed 4,000 items for free. And then there's this. Auburn bought Cam Newton. His daddy received this large monetary sum of money. Yeah. So what's going on? How did this come about? Allegedly. Now with NIL being legal, everything is over the table. All the deals that were being made under the table can now be made over.

[Host 1]

Now that people have figured this out, how do you think it's changing college sports? Or is it.

[Host 2]

I think it's definitely changing college sports in multiple ways, both good and bad. I think NIL has worked with the transfer portal, which allows players to go to whatever school they would like as they please. Of course, the big schools with the most money are still going to be able to pay more players, but you're more likely to keep a good player around at your program. If you have a good booster program, if you have a good NIL collective, A big example of that would be Ash and Jonti. Boise State's running back won the Doak Walker Award. Ashton Genty breaks break.

[Host 1]

Here's Genty.

[JP Acosta]

Patient running, breaks the tackle, picks up the first down, and he's in for the touchdown.

[Host 2]

He had an option after his sophomore year to go to a bigger school and get more money from other big schools. But because Boise State's NIL was able to get him compensated well, he's able to stay. You know, this is exactly why I stayed at Boise State, because I knew everything that I wanted to accomplish, it would be possible at Boise. And Boise State's in the College Football Playoff for the first time. So it's kind of those things where NIL has helped create a little bit of parity at the college level. And I think that is a very good thing. Now, the problem with NIL is there is no federal regulation on it. There is no NCAA laws on nil. Every state has their own separate laws. So what might work in Florida won't work in Arizona, won't work in California. And what's happening is with nil, all these boosters and collectives, they can fundraise major amounts of money. If you have a strong enough and a big enough booster fan base, you can raise $20 million to go get yourself an entirely new roster filled with some of the best players. All these big schools with these big powerful alumni can use that money to pay for players to come to their school. And it kind of leaves the smaller schools to dry a little bit. We talked about Ashton John 2 of Boise State. That is the good example. The bad example is every other group of five, every other small school that doesn't have that big of an alumni base, that doesn't have a lot of money, are losing their good players to the portal every year.

[Host 1]

Which makes, I guess college sports feel a little bit more like pro sports, where the biggest teams like the New York Mets or the Yankees or the Dodgers get to buy up the best players.

[Host 2]

Yes, exactly. It feels like there is no salary cap right now with name, image and likeness, which is what baseball sees with the Mets and the Yankees and the Dodgers. Because they can give out that money compared to a team that's a little smaller. They really can't. Because while Alabama might have 20, $30 million to hand out to a recruit, a school like my alma mater, FAU, might only have $20 million, even less than that to give out to the entire team. So you see kind of the, the economic imbalances that we see between the big schools and the small schools. But where we're also seeing a change is this is an added level to what's happening with NIL is in 2025, college sports will begin revenue sharing, which means up to 20% of what a school brings in in revenue has to be saved for players. And it feels like the bigger schools are just going to keep getting more top heavy and being able to pay players a whole lot more. So you just naturally get all the talent funneling into like 10 schools tops.

[Host 1]

JP Acosta spnation.com When Today explained returns, we're going to find out why we're letting college sports turn into something that looks a lot like professional sports.

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[Host 1]

All right, it's time for the second half. Let's hear it for Today. Explain. Today Explain is back.

[JP Acosta]

And we're joined by Pablo Torre, the host of Pablo Torre Finds Out a show that is technically a sports show where I use journalism to solve mysteries.

[Host 1]

Arguably, Pablo's covered name, image and likeness about a half dozen times on his show. So we asked him over to ours to help us understand how college sports ended up looking so much like pro sports this year.

[JP Acosta]

The ncaa, I think, has realized that they've already lost the philosophical argument that allowed the NCAA to regulate pay, which is to say restrict pay. And the argument that has been made literally at the highest court in the land successfully, by people who sued the NCAA could not have been clearer.

[Host 2]

Thank you, counsel.

[Host 1]

The case is submitted.

[JP Acosta]

Sean, there just aren't many things that both sides of the political aisle agree on anymore. Maybe you hadn't heard, America is a divided place, but you have at that supr in a 9.0 decision in the Alston verdict, as well as in every hearing you can check in on, you have Republicans and Democrats both wondering, the ncaa, what do you do here and why do you need to be here anymore?

[Sponsor 1]

What is it precisely that you are complaining about in this court?

[JP Acosta]

And so when it comes to what the NCAA is allowing, they're really fighting for a purpose that doesn't really exist. So when you say, okay, but now the NCAA is allowing Larry Ellison, the billionaire Michigan booster, to be a billionaire Michigan booster on the books this time and fund these $10 million quarterback contracts, what they're really doing is saying, okay, I guess we can't stop this. And now we gotta be the person who is basically signing off on it, because that is the closest thing to regulation that they can be is basically rubber stamping, as opposed to being sheriffs who are throwing people into the equivalent of college sports jail.

[Host 1]

Do they have any other play here or is it just sort of rubber stamping? Are they quietly trying to fight this change in college sports?

[JP Acosta]

Well, the fight that they really are waging is in Washington, D.C. the president of the NCAA now is a guy named Charlie Baker, who used to be himself a politician, and he was chosen because he was seen to be better at the art of retail politics. Let's call it Glad Hand senators going to Congress and making an argument that actually what the NCAA needs to save college sports as you love them is an antitrust exemption.

[Host 2]

Congresswoman Dingell talked about the fact that at the end of the day here, whatever we do needs to work for all of college sports. I agree with that. I don't think employment works for all of college sports. And I think the math in this particular case is pretty clear.

[JP Acosta]

That is the Hail Mary. And I use that knowing all of the, what that means in the sports context. But in case you don't, it means you're fucked and you have one last hope. And that last hope is allow college sports to regulate itself free from the regulations of government. You know, we don't need to act. What they're arguing is we should be treated as special, not as a normal business, but as a civic institution with priorities and principles that are so important that we should be able to operate effectively as a monopoly.

[Host 2]

College sports is uniquely American and one of the most powerful human potential development programs anywhere in the world, which is.

[JP Acosta]

Of course a funny thing to have to admit, finally. But they realize that that's the only hope left to prevent what is coming to them, which is capitalism tearing apart the principles and practices that they always claimed were sacred.

[Host 1]

So tell us what that would mean, just in practical terms, for college sports. If they had an antitrust exemption, if they were allowed to be a monopoly.

[JP Acosta]

Yeah, if the NCAA gets this Hail Mary to pass, which is the antitrust exemption, they would be allowed to dictate what amount of their revenue they want to share with athletes. They would be allowed to have these players still be called student athletes, which means, by the way, they wouldn't be employees, which means, by the way, that they wouldn't have the rights that workers in America would otherwise get. And you know, beyond that, I think they're still figuring it out, but they're really trying to say allow us to dictate the terms of our own existence at a time when their existence is obviously in peril.

[Host 1]

So what impact would this monopolistic exception have on, on name, image and likeness rights on these $10 million deals?

[JP Acosta]

So I don't think it would be rolled back because we've gone too far and because the NCAA has already said that part of what they're willing to cooperate with is the notion of these deals being marketing deals. But marketing, Sean, is a half measure, right? It's a radical half measure because money was not allowed to go into players pockets for the reasons that the NCAA has long argued about them being students and not, not employees. But the next step, the step that is really the existential crisis, is what they call pay to play, which means we are paying you because you are a person. We want on our team, an employee. We want on our team. And you are not paid for your image, you're paid for your performance. And that's the bridge they're trying not to cross. And so nil could coexist in theory if this antitrust exemption is granted, but. But it's the bigger threat of pay to play that they're really trying to stave off.

[Host 1]

Okay. And do you think they'll be able to win over Congress? Is there bipartisan support for this antitrust exemption?

[JP Acosta]

There is no indication so far that there would be support for this. Again, Congress seems pretty busy these days. I don't know if there is energy politically for it because the NCAA is so universally or near universally disliked that I don't see this having the juice. If you're a politician among any given constituency, everybody, whether it's Alabama, whether it's Ohio, whether it's California, whether it's Florida, everybody. If you ask a college football fan, a college sports fan has a tale of how the NCAA did them wrong, they don't poll well. And so when you see, by the way, conservative justices at the Supreme Court like Brett Kavanaugh really pillory the NCAA in the way that you'd imagine the most left leaning judge would, it's incredibly revealing. There is bipartisan resentment of what the NCAA currently is.

[Host 1]

It does seem the schools are conspiring.

[Sponsor 1]

With competitors, agreeing with competitors to pay.

[Host 1]

No salaries to the workers who are.

[JP Acosta]

Making the schools billions of dollars.

[Host 1]

It's funny, you know, it sounds these arguments that we're having over college sports end up replic. We have politically, you know, more broadly in the United States these arguments between, you know, free market and regulation and. But what's interesting about the college sports version is that it sort of transcends the traditional political divide.

[Host 2]

Right.

[Host 1]

You've got like conservatives and progressives arguing the opposite positions in some cases. Isn't that right?

[JP Acosta]

Yeah. I mean, look, if you're a fan of college sports and you can be a left leaning fan of the University of Alabama, there are lots of them out there. What you are realizing is as much as you believe in your principles of, okay, these kids are employees creating billion dollar products should be paid as such, it is in fact criminal that they haven't been paid as such for decades now, over a century now. You're also bummed that, okay, I'm not gonna get the sport that I fell in love with, you know, entertainment is not the same as equity. That is something that we're gonna have to reckon with. If you love college sports and meanwhile you look across at, you know, who's on the other side of the aisle here and realize, wait a minute, why is it that I'm in agreement with people that disagree with me on pretty much everything else?

[Host 1]

Yeah.

[JP Acosta]

And so that's, that's also something that people are gonna have to get familiar with.

[Host 1]

Do we know ultimately which version of the future of college sports better protects college athletes? Is it just letting the free market reign or is it NCAA there to step in when something goes too far?

[JP Acosta]

If you have the ability to take the long view of this, a longitudinal view of the evolution of college sports from the athlete perspective, you should be concerned. I would argue that if college sports just becomes the minor leagues to a professional version of it, you are going to lose something that makes the product as compelling as it has been for over a century. There is something about the sales pitch of these Are college students involved in an ancient tribal warfare against a community that also involves the weird, you know, fiction writing professor you had once. Yeah. And the drunk guy doing a keg stand and all of that. Right. You're at a college that is so central to why this has been popular. But at the same time, obviously the economy of all of this has been yearning to be made free. And so yes, it is a good thing that you are trending towards college athletes being paid more and more what they are due. But there is a point at which when your worth is also dictated by the demands of an audience, of a fan base that wants you to be a certain thing and not another, and that certain thing happens to be a fictionalized version of what the job of college athlete has always been, you're gonna have to reckon with a bunch of people saying this isn't the TV show. I fell in love with.

[Host 1]

Pablo Torre. He's got a podcast. I've heard it. It's pretty dang good. It's called Pablo Torre Finds out. Listen wherever you listen. How do you Mwagdi produced today's episode of Today Explained. Amina Al Saadi edited, Patrick Boyd and Rob Byers mixed, and Laura Bullard is pretty sure Larry Ellison has been married five and not six times like it says on Wikipedia. But holler at us if you've got any information to the contrary. The rest of the team includes Halima Shah, Amanda Llewellyn, Abishai, Arzi Miles Bryan, Andrea Christensdottir, Victoria Chamberlain and Peter Balanon Rosen. Matthew Collette is supervising editor, Miranda Kennedy's executive producer. Breakmaster Cylinder has music. Noel, Noel, Noel, Noel, Noel. Today Explained is distributed by wnyc. The show is a part of vox. You can support our journalism by joining our membership program today. Go to Vox.com members to sign up and it's the season of Giving. You can also give us an enthusiastic review or tell a friend about the show. Give a friend a recommendation. Say hey. Today Explained.

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Hey, it's Liam from Decoder with Neelai Patel. We spent a lot of time talking about some of the most important people in tech and business, about what they're putting resources to and why they think it's so critical for the future. That's why we're doing this special series diving into some of the most unique ways companies are spending money today. For instance, what does it mean to start buying and using AI at work? How much is that costing companies? What products are they buying, and most importantly, what are they doing with it? And of course, podcasts. Yes, the thing you're listening to right now? Well, it's increasingly being produced directly by companies like venture capital firms, investment funds, and a new crop of creators who one day want to be investors themselves. And what is actually going on with these acquisitions this year, especially in the AI space? Why are so many big players in tech deciding not to acquire and instead license tech and hire away co founders? The answer, it turns out, is a lot more complicated than it seems. You'll hear all that and more this month on Decoder with Nilai Patel, presented by Stripe. You can listen to Decoder wherever you get your podcasts.

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