How Capitalism Is Taking Over College Sports

Good Organizing Turned on its Head

by Bill Silver and C. James

Did you wake up and find out that your favorite college football or basketball player suddenly left for another school? Don’t be surprised. It’s all part of the drastically changing landscape of college sports.

Case in point: Back in 2005, University of Southern California football star Reggie Bush was awarded the Heisman Trophy as the best college football player in the country. In 2010, the National Collegiate Athletic Association (NCAA) took back the award because Bush received rental housing assistance from a school booster. This violated then strict NCAA rules which labelled players as amateur student-athletes who could receive no outside compensation of any kind.

Now jump to 15 years later. Major college athletic programs are in an arms race to see who can pay the top dollar to high school athletes, especially in men’s football and basketball. The top-rated high school football player was recently offered an estimated $10.5 million by the University of Michigan to play football. The Big Ten football conference is currently negotiating a two billion dollar private capital infusion payment to pay star recruits and to build bigger, more luxurious practice and playing facilities. Last year, the NCAA even reinstated Reggie Bush’s Heisman award.

Why did this all happen? And where is it leading?

For years, the NCAA built an $870 million empire by signing lucrative marketing and TV deals. This occurred in large part because college athletes were treated as feudal serfs; they could not receive any compensation or benefits, could not work any outside employment, and for many, were only given partial or short-term scholarships. College athletes often spent 40 hours per week practicing, training, studying film, and attending meetings. Many would leave college with significant injuries or lifelong chronic conditions, and too often, without a degree.

In the last decade, college athletes began asserting their rights to be compensated for their work and the use of their names and images in social media. In 2014 the Northwestern University football team shocked the ivory towers when they organized into a union to demand compensation and for help to pay for their healthcare after college. Players scored a victory when the NLRB Regional Director (RD) ruled they were employees. Several other schools, including Dartmouth College and USC, also soon after began to organize. However, following Northwestern’s appeal, the full NLRB Board in D.C. dismissed the union petition, claiming that a union would upset the “competitive balance” between public and private and richer and poorer schools. The irony of the D.C. Board ruling would soon strike back with a vengeance.

Growing pressure from players mounted, and numerous lawsuits were filed. Players continued to demand compensation for their work and control over the use of their names, images, and likeness (NIL). Until then, revenues from athletes’ endorsements were exploited by private companies and the NCAA solely for their own profits

In 2021, a groundbreaking ruling by Judge Claudia Wilken forever changed the landscape of college sports. The judge ruled that the NCAA was illegally limiting the earning power of college athletes. Schools were now free to begin paying their athletes directly, marking the dawn of a new era in college sports brought about by a multibillion-dollar legal settlement. In response, the NCAA and college administrators threatened to cut rosters of thousands of college athletes. Wilken refused to approve this.

That same year, the U.S. Supreme Court also ruled against the NCAA, finding that college sports were less of an education-based endeavor than a lucrative entertainment industry. Athletes would now be able to be paid under NIL by outside third party boosters. The NCAA had to shell out nearly $2.8 billion in back damages over the upcoming 10 years to college athletes from 2016 through the present day who had NIL-related claims.

The core principle of the NIL ruling—that athletes deserve compensation for the use of their name, image, and likeness—remains valid and important. Student-athletes absolutely deserve to get paid and to be able to work outside jobs. What might be called “free agency’’ now gives many college athletes the opportunity to use colleges’ bidding wars to their own advantage. They also can benefit financially by transferring to a new school without the previous requirement of having to sit out a year. Tobe Lenteborg, a potential first round pick in the NBA draft, decided he’d be better off staying in college where Michigan was paying him $3 million.

Yet here again is the irony of the 2014 NLRB ruling against unionization. College administrators who argued most schools would not be able to fund their teams if players unionized are now caught in a spiral of horrific bidding wars for star players. While salary caps and free agency restrictions are legal in some professional sports because they have been collectively bargained with unions, there are no such limits on colleges without unions.

Major colleges now are forced to raise tens of millions of dollars to compete for top talent and to build ever spacious and more luxurious facilities (mostly for their football and basketball teams). While the 2021 lawsuit settlement limited school spending to $20.5 million in salaries per year, subsequent decisions now allow outside collectives and consortiums (aka boosters) to enter the compensation frenzy.

These collectives have emerged as a powerful force in the recruiting process because of their ability to offer players money. No cap exists on the amount that donors and boosters can contribute, so the universities with the wealthiest and most active boosters can pool together the largest NIL funds and have greater chances of landing more high-profile recruits and coaches. How far has win-at-all-costs gone? Despite owing their football coach his $49 million salary, Penn State fired coach Franklin last month due to the team’s lackluster performance.

The chaos of raw and dog-eat-dog capitalism has come to college sports. Private equity firms are lining up and licking their chops over new investment opportunities for schools desperate to “stay in the race.” As mentioned, a $10 billion capital investment in Big Ten schools is currently being considered and more private investors in other major conferences are sure to come.

The impact of these market changes will be far reaching:

• A 2024 analysis found that 95% of collectives’ contributions end up going to male athletes, leaving most women athletes shut out of this compensation.

• Most of the deals for athletes who are not highly recruited are quite small. An analysis of NCAA data found that while the top stars brought up the average pay, the median value for all athletes’ compensation last year was a mere $480.

• While a few stars in non-revenue sports will be paid very well (woman gymnast Livvy Dunne will get an estimated $4.1 million from LSU in 2025), sports outside of football and basketball will struggle even more for financial support.

• Students at many major college athletic programs in Division 1 schools who already pay $1,000 additional tuition to subsidize athletic departments will likely see bigger tuition increases in the future.

• Smaller, non-major conference schools will have a greater difficulty recruiting top tier athletes due to the widening disparity in revenue, along with the relentless poaching from richest schools feeding off smaller schools.

• Academically, graduation rates will likely worsen given that roughly 40 to 70% of athletes’ credits often do not transfer to the new school.

While this all may seem crazy and illogical, it’s not really surprising. Until the NIL decisions in 2021, major college sports were a highly regulated, almost neo-feudal system of chattel labor.

While college athletes have been “freed’’ from those constraints, so have regulations— many of which were designed to level the playing field between wealthy and poorer schools, revenue and non-revenue sports.

The free market has been unleashed, and college sports like most everything else exists in a world dominated by the logic of capital accumulation and cutthroat competition.

While some attempts at regulation will surely come, Big Money will dominate more and more. The best players at mid-level college teams will be poached by Big Money at the wealthiest donor schools. Many fans will complain that the good old days are gone and that college sports have been wrecked by NIL free agency. That is wrong and it misses the point. Athletes have successfully and rightfully won the right to be compensated, but unfortunately in response, Big Money is plotting its own big massive payday which will forever change the world of college sports.

Bill Silver is a community activist who recently retired after 40 years as a union member and staff organizer. Bill traces his early socialist beginnings to a high school walkout following the killings at Kent and Jackson State. He is an avid athlete and sports fan who has currently found a new home on the pickleball courts.

C. James was a Division 1 basketball player in early 70s till his involvement in the new communist movement. He recently retired from teaching at the University of Illinois.