Some thoughts on the NLRB ruling

In no particular order:

1) Mike and Mike did a good job of discussing the issue this morning. They gave it the attention it deserved, they had a good interview with Kain Colter about what the players’ goals are, and Lester Munson had an informative segment on the show. One somewhat funny aspect of Mike and Mike this morning was that the guys settled on the notion that there might be unintended consequences deriving from unionization. In particular, Golic kept suggesting, if the players are employees, then their compensation would be subject taxation. How will players and their parents react, Golic wanted to know, if they get stuck with a $100,000 tax bill (a gross exaggeration of the tax consequences of a four-year scholarship…)? This went on for two hours before Munson came on at 9:30, near the end of the show, and quite categorically said that the grant-in-aid would remain a grant, not subject to taxation. Too bad for Golic, who is a long-time defender of many aspects of the present system and seemed clearly disappointed when Munson broke this particular piece of news to him. As Munson noted, if players were to negotiate salaries above the level of the grant-in-aid, that would certainly be taxable income. Golic followed up by asking whether Northwestern might try to make the scholarship taxable income. Munson pointed out that, apart from the fact that Congress would have to change the laws governing college scholarships, such an action by Northwestern would merely be punitive – it certainly wouldn’t benefit the university.

The one striking exchange came right at the end of the broadcast, when Golic learned, apparently for the first time, that most institutions of higher education in the United States, including Northwestern, Stanford, Duke, USC, Miami and the other schools affected by this ruling, are tax-exempt non-profit organizations. Munson had just raised the point that the NCAA and its member schools are making billions of dollars off sports, and that these revenues are largely tax exempt. They might, therefore, open up a pandora’s box if they were to muck around with the tax-exempt nature of athletes’ scholarships. This left Golic dumbstruck – he simply had no idea that these institutions could rake in the cash they do and not pay taxes on it (it’s a particular absurdity that college bowls are organized as tax-exempt entities).

All of this buttresses Dan LeBatard’s comment to Colin Cowherd today – that “no reasonable person can read that article (the 2011 Taylor Branch opus) and say that this system is anything close to fair.”

2) I see that Zirin nodded to this – that the introduction of collective bargaining into the football programs of the 17 or so private schools potentially affected by the decision, might actually give them a competitive advantage. Imagine a player considering USC, Notre Dame or Alabama. At SC or Notre Dame medical benefits are guaranteed, so is the four year scholarship, as are transfer rights more favorable to the player. At Alabama, a right-to-work state very unlikely to change its labor laws any time soon, players would not receive such benefits. Might this sway a recruit’s decision? It certainly could, at least in some cases. I wouldn’t assume that an elite player would go to Wake Forest instead of Ohio State as a result, but differential benefits could become an interesting factor in the process of securing talent. That’s leaving aside whether, down the road, player salaries would be on the table. It’s also certainly possible that such differentials might induce more cheating – more under the table payments at a place like LSU or UNC – in order to offset whatever is on offer from the unionized programs.

It’s an interesting set of dynamics to contemplate. Certainly, the NCAA, or whatever successor body ends up managing collegiate athletics, could have strong incentives to make certain practices uniform for competitive purposes across college sports. Unions are much maligned in the United States, but one clear benefit they’ve delivered was to raise benefits and salaries even for workers who were not unionized, as competition for labor – when labor markets were tight – forced non-unionized businesses to offer competitive compensation packages. For various reasons, I think it’s fair to assume that the market for elite athletes will remain an especially tight one.

3) Cowherd has made some very critical (and dumb) comments about college athletes and unionization in the past. Today, at least the segments of the show that I heard, he was a little better. He acknowledged to LeBatard that players deserved guaranteed medical benefits as well as protection from revocation of scholarship due to unforeseen circumstances and also the right of players to make money from merchandise sales.. He did question the players’ expressed desire to transfer at will. But I have little doubt that this is an issue that would be collectively bargained with the universities, so that there would be some constraints on transferring or, at least, an orderly and somewhat predictable process for doing so. Cowherd also had the labor attorney Jeffrey Kessler on the show, who is leading his own lawsuit against the NCAA. Cowherd did feel a need to repeat about a thousand times that Kessler was “pro player,” but he certainly gave Kessler the space to make his case. Kessler dismissed as categorically as Munson did the prospect of the grant-in-aid becoming taxable income. And when Cowherd asked whether, once the players become employees, they could be fired at will, Kessler dismissively retorted that “he can be fired now. If he doesn’t perform on the field…they can cut him.”

Kessler emphasized that whatever representation the players can secure is “going to be a dramatic improvement over nothing.”



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