Athletes today may well get compensated fairly, but perhaps at the cost of accelerating contraction in higher education.
Athletes today may well get compensated fairly, but perhaps at the cost of accelerating contraction in higher education.
T he age of amateurism ended with a whimper. The National Collegiate Athletic Association (NCAA) has agreed to a $2.8 billion settlement that will forever change college sports, allowing athletes to get paid directly by their schools in addition to receiving scholarship monies and external sponsorships.
Following the Supreme Court’s 2021 ruling in NCAA v. Alston, the NCAA permitted athletes to be compensated for the use of their name, image, and likeness (NIL), opening up a new frontier for commercialization. Most student athletes aren’t big stars like Joe Burrow and couldn’t raise much money (if any) through independent partnerships. Instead, “collectives” formed, outside organizations funded by fans and other donors pooling together resources to support athletes financially. Boosters couldn’t directly coordinate with athletics departments or pay students for their on-field performance but could pay athletes for other activities, such as promoting a booster’s companies.
The emerging settlement mandates that athletics programs directly pay their athletes, who may in addition profit from their NIL. Moreover, the settlement involves back pay for past student athletes, ensuring that they receive some form of recompense for participating in collegiate athletics without pay. Fortunately for struggling colleges, the burden of this new line item will be partially shouldered by the NCAA itself and better-off schools and conferences. But a not insignificant portion of these funds will still be paid for by less well-off institutions.
Most of the conversation surrounding this news has understandably centered on whether these changes will alter the nature of college sports. They surely will. As the NCAA has argued, amateurism cannot exist when college athletics increasingly look like professional sports, replete with million-dollar sponsorships and directly paid athletes. But the economic consequences of this news have been underemphasized, particularly in the context of American higher education’s looming crunch.
As many higher-education experts have warned, declines in the U.S. birth rate will soon lead to a demographic cliff. “In four years, the number of students graduating from high schools across the country will begin a sudden and precipitous decline, due to a rolling demographic aftershock of the Great Recession,” says Kevin Carey, the vice president for education policy and knowledge management at New America, a think tank. Fewer students means declining tuition revenues.
Moreover, Americans are more skeptical of higher education than ever. In 2023, only 36 percent of Americans had a “great deal” or “quite a lot” of confidence in higher education — and this was before student activists set up encampments and intimidated Jewish students on campus. That number was 57 percent as recently as 2015. Many parents and prospective students no longer believe that college is worth all the hype. This goes without mentioning the Biden administration’s botched rollout of the new federal financial-aid form, which researchers at the Brookings Institution estimate caused “a 10% decrease in first-time, undergraduate enrollment” this year.
Coupled with ballooning athletics budgets, these downward pressures on college enrollment will exert remarkable strain on smaller and regional institutions, provoking many to significantly downsize if not eliminate large chunks of their current athletics programs. Title IX regulations will likely make it so that male and female athletes are compensated comparably for their athletic participation, and athletes participating in low-to-negative-revenue sports will also likely need to be paid comparably to their football-playing peers.
<p”>For some schools, this will be a nightmare: A modest but well-managed athletics program is a boon for recruitment, not only for high-school athletes looking to play in college but also for students and parents looking for a well-rounded college experience. Research indicates that a college’s enrollment rates can vary from year to year depending on the performance of its football team; imagine the damage that the elimination or downscaling of an entire athletics department could do.
Even large schools with expansive athletics departments and deep pockets will struggle to faithfully implement the details of the new agreement, navigating potential Title IX lawsuits and internecine strife between various sports programs gunning for fair pay. This goes without mentioning that revenue-generating athletics departments are already the exception, not the rule. It’s a brave new world for universities — and an open house for legal entrepreneurs.
In this emerging marketplace, schools will need to make creative pitches to students and parents who are more skeptical of higher education than ever. Larger schools will eke it out — the Crimson Tide doesn’t show any signs of cresting — but smaller institutions already strapped for cash will have to think outside the box. If they can’t maintain athletics programs, they will need to imagine a new role for sports clubs or develop a corporate image that scuttles any association with athletics. In some cases, the new NCAA settlement may be the excuse that institutions need to reduce their athletic budgets and free dollars that can be spent on other priorities, including debt reduction, facilities, and academics.
College presidents and administrators have some tough decisions to make in the coming decades. If collegiate athletics continues to run the route it seems destined to take, athletes today may well get compensated fairly, but perhaps at the expense of accelerating higher education’s coming contraction.