A Look Into the NCAA Nonprofit Mission

(Check back this month for continued Key Elements Group coverage on this issue)

As discussed in the previous installment of this month’s March Madness series, the NCAA’s purported mission is to foster academic achievement through athletics. In the process, the tax-exempt organization generates revenue for universities, which can be used to improve campuses and offer scholarships.

On paper, the organization is a financial powerhouse, towering over the stature and resources of many nonprofit groups. According to the 2013 NCAA 990 tax form, the organization holds just under $800 million in assets. The widespread popularity of the top money-making sports – football and basketball – evidently pays off big, with ticket sales and media rights propping up such a resource-rich organization.

These sizable earnings are contingent on the players themselves, designated by the NCAA as “student-athletes.” While many top tier athletes receive scholarships in compensation for their efforts – reenforcing the NCAA’s narrative that it supports scholarly pursuits through sports – players receive little else, as illuminated by Shabazz Napier’s comments last year that there were “hungry nights” in which he was unable to purchase food.

The NCAA’s “student-athlete” categorization undergirds the legal barrier that prevents players from receiving compensation. This was codified in the 1950s, when Ray Dennison – player for the the Fort Lewis A&M Aggies in Colorado – died after sustaining a head injury on the field. The university fought his widow’s attempt to secure workers’ comp. The case ended up in the Colorado Supreme Court, which agreed with the school’s argument that Dennison was a “student-athlete” and not an employee eligible for benefits, further stating that Fort Lewis A&M did not have to pay because it was “not in the football business.”

Over time, however, universities have increasingly appeared immersed in the sports business. The media rights for the 2013 March Madness tournament went to CBS for $10.8 billion. Ads sold for an average of $150,000 per second. In 40 out of 50 states, the single highest paid public employee is a university coach, the average pay being $2.1 million and reaching as high – in the case of Nick Saban of Alabama – as $7 million. Writing for The Atlantic, Taylor Branch uncovered tax forms that confirmed that the NCAA spent $1 million chartering private jets in 2006. In 2013, NCAA President Mark Emmert made $1.7 million.

While collegiate sports generate immense wealth, any attempt by players to capitalize on their stardom results in suspension and other penalties. Take for example the case of A.J. Green – a wide-reviewer for Georgia during the 2010 season. Green sold his own jersey from the previous season in order to raise money for a spring break trip. The NCAA suspended Green for this minor transaction, all while replica jerseys emblazoned his number still sold in the team’s swag shops (some earnings of which go to the handsomely compensated coaches).

These rules do more than keep cash-strapped players from enjoying spring break to the fullest. Kent Waldrep was a Texas Christian University running back until he was paralyzed below the neck by a gruesome tackle in 1974. The school paid for hospital bills for just under a year and abandoned Waldrep’s scholarship. Bound to a wheelchair, Waldrep brought forth a lawsuit in the 90s through which he hoped to receive workers’ comp for the high medical costs. Under the “student-athlete” defense, the case was ruled in the university’s favor in 2000.

Considering how stringent the NCAA is with regard to athletes’ legal status and how committed it is to preventing financial benefits for players, it would be paramount for the core mission – that of promoting academic achievement – to actualize through real results. The benefits, however, are murky.

Top-tier athletes spend up to 60 hours a week training, leaving very little room for academics. The NCAA’s maintains a 1-year scholarship rule, leaving it up to coaches to choose who to keep after each season. In the event of injury that renders their value as money-making athletes null, players can easily lose scholarships and thus their sole means of acquiring a degree.

NCAA guidelines require schools to use earnings from collegiate sports to tutor athletes. In the 2006-2007 school year, the NCAA distributed $19.8 million out of its Academic Enhancement Fund to Division I schools for the explicit purpose of schooling athletes. Nonetheless, many schools have players who literally cannot read and write, and many universities go to great (and illegal) extents in order to ensure player grade eligibility. This was evidenced by the recent University of North Carolina scandal in which the school employed summer “paper classes” to artificially inflate players’ grades. Indeed, two former athletes are suing the NCAA and the University of North Carolina because they were deprived a quality education because of this deceptive system.

Many individuals have simply become habituated to these practices, with players in Florida providing self-incriminating evidence during an NCAA investigation because they figured that everything was approved on account of the pervasiveness of grade-gauging and cheating.

Considering that fewer than 2 percent of athletes proceed to professional sports leagues following university, this track record is poor and makes the continued privation of student-athletes difficult to justify. While offering salaries for players is not likely the best solution, other proposals have come up. Steve Spurrier of South Carolina, for example, has proposed stipends for players.

The discussion is gaining more and more traction, with even President Obama weighing in. The NCAA is not pursuing its mission. As an op-ed in the Boston Globe states, the organization can’t have it both ways. It either needs to calibrate its practices to better serve its stated purpose, or it needs to rebrand itself.

Has the NCAA Veered off Course?

(Check back this month for continued Key Elements Group coverage on this issue)

March Madness is here again. The annual month-long tournament is one of the biggest in U.S. sports. As the 68 team bracket whittles down over the course of the month, millions of fans tune in across the country. The final between the University of Kentucky and the University of Connecticut last year alone attracted 21.2 million TV viewers.

The tournament brings together players’ dreams of athletic greatness and the United States’ unshakeable enthusiasm for college basketball. Not to mention broadcasters’ unshakeable enthusiasm for big profits.

Over the course of March, 2014 tournament ad revenues nearly exceeded the entirety of the NFL postseason that year. This, of course, includes the Superbowl, which hawks 30-second spots for $4.5 million, or about $150,000 a second. Between 1981 and 2011, the price of March Madness broadcast rights multiplied by 50. The 2014 tournament cost a gargantuan $10.8 billion, which CBS and Turner Broadcasting were more than willing to pay considering the lucrative returns.

The $10.8 billion went to the NCAA (the National Collegiate Athletic Association), a group that regulates collegiate athletics and controls media rights to college sports events.

On-and-off, the NCAA is the target of scrutiny, largely due to the fact that it is a registered 501.c.3 nonprofit. The organization’s stated purpose is to promote academic excellence and achievement through athletics. This mission – no matter how worthy it sounds – is at best marginally pursued, and at worst used as an altruistic-sounding cover for the group’s lack of transparency, its deleterious effect on general student populations, and its exploitive profiteering of student labor. This poses the question: if a nonprofit is not pursuing its mission, what exactly is it doing?

Last year, Shabazz Napier – the exceptional UConn point guard – famously opened up about his difficult college experience, informing reporters, “We’re definitely blessed to get a scholarship to our universities, but at the end of the day that doesn’t cover everything. We do have hungry nights that we don’t have enough money to get food . . . but I still got to play up to my capabilities.”

On a deeper look, it is rather shocking that a key participant – whose labor makes the tournament possible – literally went nights without food while nonprofit executives and publicly-employed coaches enjoyed multi-million dollar paychecks. Napier is now a pro, playing with the Miami Heat, and is therefore in a much more secure position. But few players have that luxury – fewer than 2 percent of NCAA athletes from the two money makers (Basketball and Football) wind up in professional leagues. For hundreds of struggling players, there is no silver-lining at the end of their college careers, especially considering that tough training regimens often prevent students from receiving meaningful educations.

This month, Key Elements Group will peer into the NCAA, providing analysis on how its practices and operations contribute to athlete’s careers – both in sports and education – ultimately assessing just how well the association follows its purported goals, and asking the question: what does it mean when nonprofits veer off course?

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