Lost Wealth: The economic value of Black male college athletes

0
19

Does the National Collegiate Athletic Association unfairly harm and exploit the Black community? Boyce Watkins, Ph.D., assistant professor of finance at Syracuse University, argues that over a 40-year period, Black athletes “working” for the NCAA earned more than a quarter of a trillion dollars, wealth that is being transferred out of the Black community. This number, he points out, exceeds the gross national product of Poland, the financial value of the largest Black-owned companies in America and is 125 times greater than the 60-year fund-raising total of the United Negro College Fund. “In light of the socioeconomic struggles of the Black community, these numbers suggest that a highly valuable resource is being extracted by the NCAA,” Watkins argues in his paper “Professional Amateurism: What Is the True Economic Value of a Black Male College Athlete?”

Revenue Generation
Watkins’ paper notes that the NCAA recently inked a contract with CBS Sports for $6 billion for the rights to air the NCAA tournament. An additional quarter of a billion dollars is earned each year from bowl games and football championships. Still more money is earned during the regular season. The 2004-2005 NCAA annual budget shows the association earned $485 million in operating revenue, but this does not include $242.9 million earned from bowl games or revenues earned during the regular season. Most of the $485 million came from $435.5 million in the television and marketing rights sold to CBS, with the remainder of the revenue generated by championships for Division I, II and III men’s basketball. Revenue generated during the remainder of the season is included.

A disproportionate amount of the revenue generated by college athletics comes from two major sports: football and basketball, which, arguably, are fueled by the athletic prowess of Black male athletes, Watkins writes. “As of 2003, Black males represented 100 percent of the first-team basketball All-Americans and 70 percent of the first-team football All-Americans,” he says. “Additionally, it is not uncommon for the NCAA to market Black athletes in order to generate additional revenues via merchandising or television advertising for upcoming games. Therefore, it is quite evident that the presence of the Black male athlete is overwhelming in modern college sports.”

What is also overwhelming, he notes, is the level of poverty that these athletes endure, which lies in powerful contrast with the vast wealth these individuals generate for the NCAA. “The African-American unemployment rate has consistently been twice as high as that of whites, the median family income is 43 percent lower than that of whites and per-capita net worth for African-Americans is 80 percent less than that of white Americans. At the same time, 43 NCAA coaches earn over $1 million per year, and nine of them earn over $2 million,” Watkins says.

Measuring Black Value
According to the 2004 NCAA Ethnicity Report, 57.9 percent of all Division I basketball players and 45.1 percent of all Division I-A football players were Black. Therefore, Watkins contends, considering the $242.91 million earned in bowl game revenue, we can attribute 45.1 percent of this revenue to the performance of Black athletes. Similarly, we can apply 57.9 percent of the $471.17 million in basketball revenue to Black athletes. Therefore, for the year 2004, $382.35 million in NCAA revenue can be attributed to Black athletes. Using this figure, Watkins calculates the value of Black athletes to be $8.1 billion.

“This number can be put into context as representing the value of an economic institution within the Black community that has been extracted by the NCAA. For comparison, Robert Johnson, the founder of BET, sold his company to Viacom for $3.3 billion in 2000, making him the richest African-American in the United States. Therefore, the amount earned by the NCAA, if it were a firm, would be nearly three times the value of one of the largest Black-owned companies in America,” Watkins says.

Future Value
Watkins’ second measure, future value, gives the long-term economic value of the contribution of the Black athlete in 2004 dollars, assuming that athletes invest the funds for the next 43 years (the average age until retirement for today’s college athlete). The lower boundary for this value is $196.07 billion and the upper boundary is $256.59 billion. “These numbers are of very strong magnitude due to the fact that they reflect the long-term economic value of consistent revenue that has allowed for a reasonable return on investment,” Watkins says. “The numbers are adjusted for inflation, so the purchasing power of these funds remains the same. Therefore, they serve as reminders of the fact that there are long-term implications of short-term wealth transfers.