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Student Athletes Seek Their Share

My firm is not large, but we usually have at least a couple of college students on our payroll. Some are interns, some are office assistants, and sometimes they just help me get my work done — like Laurie, the summer aide who helped create this blog.

A few glamorous industries, like television, get students to work for them for free. Financial planning is not exactly glamorous, though it is extremely interesting if you do it right, and college is expensive. Our student employees need and expect to get paid.

I suppose I could get together with my fellow financial planners, and we could collectively decide that it is unethical for us to offer money to student workers, and that it is improper for them to accept it. Students who break the rules by accepting remuneration could be blackballed. But there would be antitrust problems, big time, if we tried.

So I just have one question: If my fellow financial planners and I can’t collude to deprive our student workers of compensation, how does the NCAA get away with it?

Colleges make a fortune from the efforts of student athletes. And yet those athletes are allowed to be compensated in only one way: by getting scholarships that cost their schools next to nothing (College administrators who want to argue otherwise should consult someone in their business schools about the term “marginal cost.”). Any other reward for the effort, the physical risk, the bruises and injuries, and the sheer grace and excitement of the performance is forbidden on pain of athletic and academic excommunication. College sports is undeniably a business, one in which anticompetitive collusion at the expense of labor is accepted.

President Obama’s Justice Department promises more aggressive antitrust enforcement. Any chance it will stand up for student athletes? Maybe, but I doubt it is a high priority. Big Business, not big-time athletics, is the administration’s usual whipping boy. Yay team!

So it is nice to see student athletes standing up for themselves as best they can. Kudos to former Arizona State quarterback Sam Keller, who filed a class-action suit over the unauthorized, uncompensated use of college athletes’ identifiable likenesses (though not their names) in two video games: NCAA Football and NCAA Basketball. Software maker Electronic Arts pays a lot of money to the NCAA, though The New York Times reported that the NCAA refused to say how much. The NCAA shares the money with participating schools that, per NCAA rules, are not allowed to give a nickel to the athletes depicted.

Colleges seem to think that their educational mission and their nonprofit status give them economic license that other enterprises lack. Athletics is not the only area in which it is fair to raise antitrust questions. The fact that so many private colleges perpetually set tuition and other charges within a few dollars of one another, regardless of geography, academic rigor and school size, is another big red flag.

However, while any college collusion on tuition goes on behind closed doors, the anticompetitive labor market in athletics is out in the open for all to see. Good luck to the students who want to fight it. It will be interesting to see whether the new administration’s Justice Department gets off the sidelines.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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One Response to "Student Athletes Seek Their Share"

  • ReKeithen Miller
    July 14, 2009 - 9:24 am

    A recent CNBC article (http://www.cnbc.com/id/31889293/site/14081545) discusses the lawsuit you mention. For years companies have profited off of the likenesses of NCAA athletes, and I agree that it is about time that the athletes receive their just compensation. I have played the games from Electronic Arts (EA) and other companies, and not for one second did I think that the players on the field were different than the ones that actually suit up for their universities. Hopefully the courts will find it as blatantly obvious as I do.