It’s the best time of the year: college football season. However, this is a particularly unique college football season because this year, for the first time ever, players will be able to be paid for their name, image, and likeness. This is the culmination of a long raging debate over whether or not college football players should be paid for the work they do. Arguments for paying players claim that they rake in cash for their schools, they give their schools valuable exposure, playing for the team is hard work, sports detract from studies, athletes need spending money, and the potential for injury compensation is a must. However, while these are initially convincing, upon further examination they are somewhat lacking. It is true that these athletes provide valuable exposure for their schools, but it is equally true that the universities provide valuable exposure for the athletes. However, the strongest critique that comes from those opposed to paying players is that these players are already receiving scholarships and are thus already being paid. The belief is that none of these arguments for paying players are in dispute because players are already being paid. For this reason, while we describe the argument as whether or not we pay players, the real debate is whether or not we pay players enough in the form of scholarships. This is what makes this college football season so exciting for economists, as this question can finally be addressed.
Because we as Austrians understand that value is subjective, we therefore also understand that we cannot say whether or not a scholarship is the appropriate amount to pay a college athlete. The answer to that has to come from the market process of economic calculation. Each player who takes the action to play football in exchange for a scholarship demonstrates that he values the scholarship and perhaps the potential future offered there more than he values the time spent and effort exerted playing football. In an unhampered market, as these decisions are made at different levels by different individuals; we see economic calculation take place and we see prices that we expect as market rates begin to form. As Ludwig von Mises explains in Socialism: An Economic and Sociological Analysis,
Every man who, in the course of economic activity, chooses between the satisfaction of two needs, only one of which can be satisfied, makes judgments of value. Such judgments concern firstly and directly the satisfactions themselves; it is only from these that they are reflected back upon goods.
In order for us to understand the values appropriate for college football players, we must allow for calculation so that we can see these judgments reflected back upon the players. However, a flaw has always existed for calculation in the world of college athletes. Mises goes on to explain that for calculation to exist, units must exist—prices must exist. Scholarships serve that purpose for us here. However, scholarships have a distinct ceiling of being able to offer at most the price of attending the university. Calculation has never been able to occur at a higher price point than that of tuition. Until now, the best of college football players have received these scholarships; however, it is entirely possible that they could find an incredibly higher value on an unhampered market. For the first time in the history of college sports, we will finally be able to run this experiment, as the ceiling of scholarships is finally gone.
However, the fact that athletes may be compensated for their name, image, and likeness still leaves one wanting in terms of calculation, as it only allows one form of competing on the market above the price of tuition, and that is in sales based on your fame. However, a lineman may not end up having the same demand for commercial appearances as a quarterback, despite the fact that it's possible a quarterback may only be so successful because he has such an exceptionally talented offensive line. Thus only certain members of the community may contribute to the new calculation that is taking place. For that reason, I will conclude with a few options that would allow for more effective economic calculation to allow us to understand better how much any given athlete brings to a school. First and foremost, it’d be helpful if schools were allowed to directly pay players and thus enter the competition themselves. This would lead to the school being allowed to calculate and we’d see the most direct valuations of what the player brings to the school. Additionally, if the National Football League did not require experience playing in college to enter the draft—as several other sports allow—we would see even more competition in the marketplace. Most importantly, this suggestion would allow us to evaluate the degrees, exposure, and potential that the schools offer the players, because right now every player is forced to receive this exposure and pursue a degree, whether they want it or not. Each of these suggestions has its own ethical arguments for and against it, but from a perspective of economics, this is the only way to better answer the question of how much athletes deserve to be paid. If we want to honestly understand this question, we must listen to what Florida state representative Chip LaMarca, said while running the bill to allow compensating players in Florida, “You either allow someone to enter the free market, or you don’t. I don’t think you put training wheels on them.”
