I know there are some on this board that thinks the scholarship they "voluntarily" take is compensation enough for student athletes and if they don't like it, they can go play football in Canada or something...but the simple truth is that if the document these kids were signing said we are going to pay you $50k per year in benefits and we are going to generate roughly $300k from your efforts on average, and if you are a star player, more like $3 million that these kids might not be so inclined to sign their rights away.
This is how employment works at every job in a capitalist systems. Employees are paid a salary and that salary is expected to generate a return for their employer. For example, if you obtain employment in Fiber Optics at 3M and develop a patent, you could potentially generate a return, that far exceeds all the revenue generated in College football. Yet, you'd only be paid the 70-80k stipulated by your employment agreement.
Overall there was roughly 10.6 Billion Revenue Generated by College athletics. To make that money required 10.5 billion in expenses. That 100 Million in profit. There are roughly 420,000 student athletes. So 100,000,000/420,000 is about $238 per athlete in compensation available. Of course, there won't be quite an equitable distribution of money, but it does highlight the lack of available money across the system to make a meaningful payment system.
If you paid only D1 football players that's $4,801 per player. Yippee. Of course basketball players would be mad, because they generate higher margins. Unfortunately, there are a lot of those guys. Given the current system profit available, the total sinks to 3.9k, darn, that sucks.
Current US law recognizes them (scholarship athletes) as compensated, but gives an exclusion (code section 17 I believe) that alleviates the tax burden, because athletic scholarships are not considered "compensation for services." Any change made by courts would immediately create income for all athletes on scholarship and the total would then be added to there gross income for the year in question. Imagine getting a scholarship, then having to pay the tax in cash. better start signing some freaking autographs, hope you don't suck.
The main problem with the "pay the kids' crowd is they do not understand the economic model that generates all that dough. Economics on a basic level, is the study of incentives and resource allocation. There are several types; one is to pay someone in monetary terms (think NFL) and another is to motivate people based on intrinsic pride, work ethic, and the like (college football). Psychologists and economists will note most people are actually motivated better by recognition and respect.
This model is how the college athletic system was built. The NFL style model if applied, would destroy that system, completely. If you pay the kids a paltry sum, they just won't try that hard. At least not enough of them to keep a comparable product on the field. Ultimately, less will play and less will be developed for the NFL. The quality will drop substantially. Since scarcity is not introduced, like it is built into the pro sports teams, salaries will remain low. Actually, since the market is perfect competition, they will likely be lower than the numbers presented above.
There are far more unintended consequences... Of course, we can still hope the NCAA simply points to tradition. The law frequently recognizes economic traditions to uphold established institutions.
