The NCAA vs. Student Athletes: The End of the 'the Best Business Model in the World'?

College sports is a multi-billion-dollar business. Do its workers deserve to be paid?

It's a simple question taking a convoluted journey through our legal system. But student-athletes are closer to getting their day in court, since a judge ruled yesterday that NCAA athletes can legally pursue a cut of the billions of dollars flowing to college sports through TV deals.

In 2011, civil-rights historian Taylor Branch made a monster case for paying college athletes in The Atlantic. He predicted that law suits like this could could destroy the business model of the NCAA. To dig into the economics of paying college athletes, I called up Dave Berri, a sports economist with Southern Utah University and the author of The Wages of Wins, who cheekily called the NCAA's rule against paying its own athletes "the best business model in the world." A lightly edited transcript of our conversation follows:

THOMPSON: A judge has have given the green light to a class-action lawsuit brought by former college players to compel the NCAA to pay student athletes out of its TV revenue. Big deal? Or no big deal?BERRI: It definitely means something. The NCAA has been opposed to the idea of sharing its revenue with its players for about 100 years.

Make the economic case for why college athletes ought to be paid.

The players are the workers who generate the money.

The NCAA is producing an enormous amount of revenue. The players are producing that revenue. It's ridiculous that we're not paying them. It's ridiculous what the NCAA does with respect to its players. They were selling [former Auburn quarterback and current NFL star] Cam Newton jerseys and Newton didn't get any money. At Michigan [basketball], the Fab Five used to say, 'We're walking down the street with no money, and you're selling our jerseys for profit.'

Okay, make the economic case for why the NCAA is right to not pay its athletes.

I don't have one, besides: They would like more money. And they don't want to share.

Right now, the big money is going to the coaches. What might happen if they have to pay the players is that the coaches and athletic directors will have to earn less, and you would stop investing in state-of-the-art facilities. Most schools really don't need an indoor practice facility.

What's preventing one renegade school from saying, 'These kids are working, they are producing real money, they deserve a cut of the revenue'?

NCAA teams are not allowed to pay the players. They passed a rule saying: We can't pay you. It's the best business model in the world. "I'm working hard, can I have some money?" "Sorry, I can't pay you, I don't want to break the rule."

The NCAA says we need these rules for balance. But there is no competitive balance. Alabama wins [the college football championship] every year. If they pay their players ... they'll still win every year!

Why are the players going after the TV money as opposed to revenue at the gate of each stadium?

Broadcast revenue is just the biggest pot of money. You would think the players would want a cut of all of the revenue. But it's the NCAA that negotiates the broadcast contracts, so if you're bringing a class action lawsuit, you sue the NCAA. You'd have to sue every team individually for gate revenue.

Okay, so let's say the players win. They get a cut of the TV money. Then what? 

If the court rules in the players favor, it's going to be difficult to figure out damages. I don't know how you decide that. I study wins and wages at the NBA level. The question we've asked is: How many wins does a player produce, and then we link that up to revenues. Once you know how many wins a player produces, you can say how much the wins are worth. But broadcast revenue is shared. It's not tied to players. So how will the courts decide who deserves how much money? And the answer is I don't know. Clearly the number is greater than zero.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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