What happens when NCAA athletes unionize?

Darthmouth men’s basketball took the next step in forming the first union of NCAA athletes. What does that mean? First, some background. The NCAA is divided into Division 1, 2, and 3 schools. Division 1 schools earns roughly $16 billion per year, the lion share of the revenue. The organizing institution, the NCAA earns about a $1 billion per year, and while their website reports that they return 75% of that to member schools, $250 million dollars per year is nothing to sneeze at for doing little more than managing and enforcing a cartel. Until 2 years ago, the NCAA prohibited any compensation for athletes beyond scholarships, room, and board. Now they can earn incomes from their image rights. In the Ivy League, athletes aren’t even allowed to receive scholarships (though I’ve been told by many personal friends that financial aid packages are unusually large for athletic recruits).

Cards on the table, I’ve long felt this was the most egregious abuse of labor currently active in our country. We scream at each other over whether the minimum wage should be higher while ignoring a group of workers upon whom a cartel is enforcing a maximum pecuniary wage of zero? Is there a side of the political spectrum currently arguing for ceilings on wages for anyone? How bans on athlete compensation survived this long is beyond me, though when left to speculate upon it my mind inevitably wanders to our worst cultural sins.

Let’s assume that the union eventually comes to be. Let’s further assume that the unions of teams and sports federate, eventually forming an umbrella union of all NCAA athletes across all divisions and sports. What will happen? When economists talk about unions, they typically focus on two channels through which they can have positive effects for their members. The first is they can close shop, restricting the supply of labor, driving up wages. This is Econ 101, not a lot of controversy. The second is that they can solve a collective action problem, enabling cooperation amoung members when bargaining for wages against employers. The size of this benefit depends largely on how organized employers are. The more cartelized employers, the more effectively they can collude, the larger the expected gain from collective action on behalf of labor. As such, we can expect the largest positive effect for labor when the union is negotiating against a monopsonistic employer (i.e. the employer constitutes the entire labor market) or a perfectly organized cartel of employers.

As such, when economists argue about (private sector) unions, any disagreement typically comes down to an empirical question: how concentrated is the labor market? How much power does the employer have in the labor market? With long-standing unions, political economy and bigger picture policy cost come into play, but we let’s put that aside for now (NB: we won’t even touch public sector unions. Those are a completely different bag).

What makes the NCAA context interesting is that there is no debate as to whether the NCAA is a cartel or sufficiently well-organized to impose significant costs on labor. It’s a >$16 billion dollar industry and the mission-critical employees haven’t been getting paid any pecuniary income at all. My suspicion is that even amongst the most union critical economists you could fine, most would agree that, conditional on the continuing existence of the NCAA, athletes would benefit from unionizing.

Ok, great, but what’s going to happen?

Athletes will incrementally unionize.
Compensation will increase, even beyond Name, Image, and Licensing (NIL) compensation.
Scholarships will appear, in some form, at Ivy League schools.
Sports will remain nearly everywhere, but I expect some schools will find that costs now exceed benefits, exiting Division 1 and 2.
The model of compensating with “exposure” to professional scouts will continue to dissipate. You don’t need to be on national television anymore to have a scouting profile. Data and YouTube have changed the value-add of playing for a top 10 versus top 200 school, which means that compensation will become an even more critical deciding factor in recruitment.
Athletes will frequently exit college with savings but also having already peaked in terms of lifetime yearly earnings. Which is fine – there is no shame in never making $200k/year again.
The competive advantage of the the top schools in “big roster” sports i.e. football will grow. This will make already lopsided football matchups less tenable and, quite frankly, too dangerous. The formation of a collegiate football “super conference” is inevitable. It will make big money and so will the athletes. The NFL will have a true minor league, albeit one with a rabid fan base. It’s the rare win-win-win.
Alumni donations will create “upstart schools” in sports overnight. A single $5 million dollar donation can make you the best gymnastics program in the country overnight. University hospitals have long been funded by saving the lives of very grateful, very rich people. Don’t be surprised when a walk-on who wrestled at 149 pounds and invented the next killer app writes a check that creates a dynasty.
Coaches salaries will decline, often enormously. Head coach salaries will recover to some degree, assistant coach salaries will not. Coaches will become the labor class being most paid in “exposure” and “opportunity”.
My guess is the only losers in this entire story will be a) Division 1 football and basketball coaches and b) officials at the NCAA. I will shed no tears for them.
Enterprising athletes will start making money on Twitch playing the video game version of their sports, possibly themselves, against fans on their nights off. It will be awesome until 19 year olds start getting canceled for saying bad things in the heat of competitive video game competition.
Athletes will negotiate more favorable practice and travel schedules. Graduation rates will go up.
Schools won’t want to pay salaries for unused players. Red shirt rates will go down.
Athlete influencers. There’s going to be so many college athlete influencers.