Finance Uncategorized

Louisville players could be worth $1.5 million

Business Insider provided a fair market value for college basketball players and Louisville is at the top.

Indiana v Louisville

Lately, the NCAA can’t seem to escape the spotlight. Negative spotlight that is. It seems that for every positive moment (finally implementing bowl championship playoff), there’s at least 3 negatives (Jameis Winston, Beach Bowl Brawl, Chad Kelly).

That’s just college football. College basketball just had a Cinderella feel-good story (Unranked Temple demolishing Top 10 ranked and perennial powerhouse Kansas) marred by suspensions (Wake Forest’s Wilbekin, Louisville’s Harrell), extra-benefit violations (Oklahoma support staff fired) and student athlete dismissals from their team (Dayton players trespass and steal).

Add this to the other headline grabbing stories throughout the year, (UNC Academic Scandal and O’Bannon vs. NCAA immediately come to mind) and it’s safe to say the NCAA couldn’t wait to ring in the New Year. The recent article released by Business Insider (Louisville Basketball Player Worth $1.5MM Per Year) only adds fuel to the already red-hot burning O’Bannon vs. NCAA fire.

A whole separate write-up can be dedicated to this matter and still not do it justice in covering all the complexities and implications. The Business Insider article does however bring one of O’Bannon vs. NCAA rulings (or lack thereof) to the forefront. According to the ruling, FBS and Div 1 College Basketball student athletes must be paid a minimum of $5000 for every year of academic eligibility.

More questions/issues seem to surface with this open-ended, ambiguous ruling. Is $5000 enough?  How will amount be determined? The following chart, provided by the independent firm Refuel Agency, shows average “incidental” expenses for college students per year at $7,597, over $2000 more than the mandated minimum.

Alalay3

Conversely, the following chart provided by Business Insider shows the fair market value of certain college basketball programs and their respective players. Louisville tops the chart at over $1.5MM per player.  Even Northwestern University, which some would say is more known for its academics then it’s basketball program, generated over $500M per player.

Alalay

It’s safe to say there is some disconnect. There have been several suggestions as to how the compensation amount for college student athletes should be determined, with revenue sharing as one of them. That suggestion however, has about the same percentage of being approved as what a Louisville college basketball player is to be compensated vs. their respective fair market value, 0.3% ($5000/$1,529,271).

We are in, what will surely be determined in the future as a turning point in college athletics. Questions surrounding academic integrity, equality and the end of college amateurism threaten every NCAA Core Value. 2014 proved to be a historic and groundbreaking year for college athletics and the NCAA, but that is just 0.3% (the tip) of the iceberg.

It will be interesting to see what 2015 holds.

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