By Art Padilla

This is what failure to act looks like. After two decades of excess, inanity, and myopia, universities are now living with the often-predicted consequences that should have been anticipated, both in their big-time sports programs and in the rest of the university.

Part I: Big-time college sports

Considering big-time college athletics first, we see what it means for others to act for us and to lose control over our own destinies. After years of inattention to academics, unhinged spending, astonishing coaches’ contracts, exploitation of athletes and of season lengths, and runaway facilities expansion, the courts and the governments have stepped in—and they’ve done so with ferocity. 

Recent changes in the landscape of college sports have been breathtaking. Some of the NCAA’s archaic rules have been transformed into a much friendlier set of guidelines for college athletes. The risible NCAA notion of “amateurism” has become the piñata that judicial courts and legislatures love to whack.  

Two developments are salient: the name, image, and likeness (NIL) decision and the one-time transfer rule. 

NIL

No one really understands the NIL rules, and the NCAA guidance on the topic is vintage NCAA gobbledygook. Athletes can now be paid legally by NIL groups or collectives affiliated with universities. (NC State’s collective is called Pack of Wolves and UNC-CH’s is Heels4Life). 

But we are also admonished that athletes can’t be paid to play or to attend or remain at a particular university. Clear, right? 

Two things are predictable. First, NIL payments will lead to a widening chasm between the haves and have nots, especially in football, and second, there will be a significant conflict between NIL funds and other athletic fundraising.

Regarding the first point, the Power Five, some 65 universities choosing to participate at the most commercialized levels, will likely become the Power Fewer. The second point implies there are limited booster dollars. It’s difficult to pay each football player $25,000 to $50,000 a year, as many schools will soon be doing, and continue to spend at previous rates. The pressure will be to find other sources of income, such as expansion of the football playoffs. 

Welcome to December-to-January Football Madness.

It’s not over. California, the state that started it all, is now pondering legislation to permit athletes to be paid for playing, to share in the revenues their teams generate. 

This is one step removed from the thing that athletic programs really and truly fear: losing their tax-exempt status. 

The National Basketball Association (NBA) teams have split their revenues between management and players for years. Half of NBA team revenues go to player salaries. If that rule were in place in universities, not an unreasonable speculation in the present environment, the current stratospheric college coaches’ salaries would be impossible to sustain. 

The University of Southern California football team, for example, generated $50 million in revenues in 2018. The program paid out about $6.3 million in grants to their players. If they were required to pay half of the $50 million to athletes, they would have to turn over another $19 million to their players. It would be tough for Southern Cal’s head football coach, Lincoln Riley, to continue being paid $10 million a year under these conditions.

The transfer rule

To try to stay ahead of the sheriff — and of the judges and the legislators — the NCAA has shifted direction again, perhaps inexplicably, with its one-time transfer rule for college athletes. Now athletes can transfer to other schools without having to sit out a year before they can play. Previously, long-time NCAA rules required transferring athletes to miss their first season at their new school.

It’s not apparent how long this rule will last. Coaches opposed it from the beginning. Here’s what Coach John Calipari, a master of one-and-done, said:

“My thing is, if we’re about education, if you transfer once, it’s going to be difficult to graduate near on time,” he said. “If you transfer two or three times, you’ve got no chance of graduating on time. Let’s make it about academics…”

Calipari’s pedagogical apprehensions aside, if the transfer rule remains, coaches will need to adapt their recruiting strategies or else see their fortunes go south. Ironically, NIL payments will play an increasingly important role in keeping most athletes from transferring. However, top athletes dissatisfied with their current salaries will be able to use NIL to shop around. The prevailing order in intercollegiate athletics is being replaced by another one with largely unpredictable consequences for the system’s economics.

Art Padilla: Failure to act, Part II – The rest of the university

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Dr. Art Padilla splits his time between his homes in Wrightsville Beach and Raleigh. He served as a senior administrator at the University of North Carolina System headquarters and later at NC State, where he was chairman of the Department of Management. He has taught at UNC-Chapel Hill, NC State, and University of Arizona, winning several teaching awards and recognitions, including the Holladay Medal, the highest faculty honor at NC State. He recently completed the 2nd edition of his book Leadership: Leaders, Followers, Environments and is at work on his first novel for Penguin.