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O'Bannon Vs. The NCAA: Will Victory Mean Defeat For Non-Revenue Sports?

Unfortunately, the O'Bannon lawsuit is likely to make losers of the good guys.

If this is your bad guy, he won't lose a thing if O'Bannon wins.
If this is your bad guy, he won't lose a thing if O'Bannon wins.
Jamie Squire

The O'Bannon lawsuit is nearing the end game, and the end could be really bloody for a lot of reasons. I know a lot of people are cheering for the NCAA to lose, but I wonder if they have even bothered to consider the potential consequences. There is really only one potential consequence that matters to me. But we'll get to that.

Here are most of the things you need to know about the O'Bannon lawsuit. This is written a bit from the perspective of the plaintiffs, but I think it does a good job of running down most of the issues fairly. Consider this:

As far as the effects on college sports, there are wildly different perspectives. Some have said college sports would disappear, though that certainly won't happen, because successful industries don't just disappear. More likely, there would be changes to how non-revenue sports operate and a more open market for players.

"Changes to how some non-revenue sports operate..." How quaint. You know that softball and baseball tournament we just got done watching? It's not impossible that they were some of the last ever to happen. Not at all schools, mind you, but that Louisiana-Lafayette or Kent St. team that played UK softball and baseball respectively? Don't get used to seeing them anymore. Consider Pac-12 commissioner Pat Haden's remarks on the matter last year:

"The context of the lawsuit has changed. What do we do if we lost?" Haden said of the NCAA's side. "All of a sudden your television revenue -- let's say it's $20 million a year [for a school]. Now if they win, it's $10 million a year. How do you make your 21 sports work on half the revenue?"

Now, there's no sure bet that it will be a 50/50 split. In fact, I think that very unlikely. But let's work from that presumption, because that's what O'Bannon is asking for. It means that schools like Kentucky, which is one of the few schools that operate on a self-sufficient athletics budget might suddenly be operating in the red. Mr. SEC evaluated this back last year for us and concludes thus:

For those of you who support O’Bannon’s suit because it would hurt the NCAA — and the number of fellow media members championing his cause is mindboggling — you might want to think twice before you throw another coin in the wishing well. If O’Bannon wins, smaller programs will cease to compete at the top level of collegiate athletics, larger programs will have to radically change the way they do business, and many smaller sports programs at bigger schools will go away entirely. For those who care only about football and basketball, congrats, those might be the last two sports to survive on the men’s side of the ledger. Thanks to Title IX you would still have enough women’s sports to equal the 98 scholarships of football and men’s hoops.

If that sounds over the top to you, it shouldn’t. It’s a real possibility depending on the size of the school. In the SEC, schools like Alabama, Florida, LSU, Auburn, Tennessee, Arkansas and Georgia — which all brought in more than $90 million in athletic revenue in 2011-12 — would tighten their belts and somehow manage to move forward with fewer sports.

But what about schools like Missouri ($61 million), Vanderbilt ($55 million), Mississippi State ($54 million), and Ole Miss ($42 million)? There are only so many sports you can cut. And if you think just dropping coaching salaries would fix the issue, think again. The SEC’s Mississippi schools aren’t exactly handing out Bama-sized contracts as it is.

Look at it this way: The NCAA model, as currently arranged, is asking football and basketball players to come to college, raise their name recognition to the level that they might be drafted by the pros, and instead of taking the money they've earned for themselves, allow it to fund scholarships for the education of other athletes who have little or no professional athletics prospects. If you think about it, that's a noble, worthwhile endeavor, and it's essentially what the athletes agree to when they sign up for an NCAA grant-in-aid. They get no more (and no less) than other full-ride scholarships.

So consider this: How favorably would the public look at the basketball and football athletes enriching themselves (call it getting their due if you must) at the cost of eliminating thousands of athletics scholarships? That means thousands of student athletes, almost all of whom are the archetype of that NCAA abstraction, are suddenly forced to either pony up their own tuition, attend on academic rides (of which there would theoretically be no more than are currently available), or simply give up organized athletics after high school and take a job.

To me, this whole thing stinks, and I expect once the damage is done, those same sportswriters and fans who cheered for the NCAA to lose will suddenly be undergoing a crisis of conscience. They may win, but many of the real student-athletes — you know, the ones without professional prospects — will lose. And oh, yeah — those early-entry guys will still be free to leave school early, taking their bank (and a few lost college degrees) with them. That just makes me feel all warm and fuzzy. < / sarcasm >

The needs of the few outweigh the needs of the many? I guess so, if its filthy lucre and not a degree. While it may seem strange for a free marketeer like me to take this position, I don't agree with the idea of installing free-market economics at every level of human endeavor. Sometimes, especially when it comes to things like education, a group effort can produce a more desirable outcome. Athletes foregoing their massive paydays until after their college years does not seem a tragedy to me, especially given the freedom with which they can move to the pros. Players who rarely play reaping financial benefits from merely being on the team at the expense of the education of other less "valuable" athletes hardly seems fair, but that's what O'Bannon's suit would produce.

Johnathan Chait has among the more coherent arguments on this subject:

Since the market cynics are arguing for an alternative, they rarely have to defend their own model. Their conception of college athletes as mere unpaid (or at least underpaid) workers, cruelly exploited by the system, is spared the work of answering for its own imperfections, all the ways in which messy reality fails to line up with the neat theory. But the market-cynic analysis turns out to be a much, much worse way to think about college athletes.

Begin with the premise: College athletes, or at least the ones in high level football and men’s basketball, are essentially unpaid factory workers. How does this model explain the existence of walk-on players, who line up at student body try-outs for a chance to play on the team without even a scholarship? How does it explain the fact that some players who are already locks for the top of the first round of the draft decide to stay for a final year in college, knowing it will cost them money? How does it explain alumni who donate money to their alma mater? (The examples I’ve linked above come from the University of Michigan, which I know about because I follow it closely, but these things all happen elsewhere, too.) You really don’t see refugees from exploitative factories coming back to cheer for and donate money to their former masters.

What’s more, the casual association of college athletes with workers hides a fundamental economic incoherence. College athletic programs, unlike professional franchises, have no owners or profits. Sports that make money, usually football and men’s basketball, subsidize money-losing sports.

Indeed. The argument being defended by proponents would be a lot different if the NCAA were taking all the money and enriching a select few administrators, or even college administrators. But that isn't what's happening. So how will the system defenders feel after they see thousands of former scholarships go away? Will they cheer it as a good thing?

At the moment, we'll just have to hope that the worst possible outcome isn't what happens. There could be middle-of-the-road positions that everybody could live with. Unfortunately, O'Bannon will not be the last word, and as long as the NCAA handles billions, regardless of how noble the disposition, there will be those who try to get as much of it as possible.