This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Time for Nike and Under Armour to Pay College Athletes

Stocks in this article: NKE UA

NEW YORK (TheStreet) -- In the cover article for The Atlantic Monthly from October 2011, "The Shame of College Sports," it is detailed how Sonny Vaccaro, who has worked for Nike  (NKE) and Adidas (ADS), used the allure of big bucks to force university heads to allow for sponsor advertising. As Vaccaro put it directly to many in a meeting, "We want to put our materials on the bodies of your athletes, and the best way to do that is to buy your school. Or buy your coach." It has worked well for Nike, Under Armour (UA), and the others.

Now it is time for Nike, Under Armour, Adidas, and others to do the right thing and pay the college athletes, rather than just buying the coach or the school.

It is difficult to think of a more inequitable system involving billions in revenue with millions going to coaches than having players who do not have the money to go to the movies or take a bus home to visit their parents, according to Don Curtis, a trustee for the University of North Carolina. In the words of Dale Brown, who used to coach basketball at Louisiana State University, where Shaquille O'Neal and Pistol "Pete" Maravich played, "Look at the money we make off predominantly poor black kids. We're the whoremasters."

Events are moving in the right direction for college athletes being paid and Nike, Reebok, Under Armour should get out in front.

A multi-million settlement was just announced for video game proceeds. The Ed O'Bannon case, an anti-trust lawsuit against the NCAA by a former UCLA basketball player for use of images, is moving forward. In that matter, University of San Francisco economist Daniel Rascher testified that football and basketball players could make hundreds of thousands of dollars, if not more, over their college career if paid based on a percentage of revenues like those in the pros (NFL players get 55%).

Nike, Under Armour and Adidas should escrow a large percentage of the millions that go to schools until players are allowed to receive payments, preferably in the form of contributions for an annuity, retirement plan or trustee account for future expenses like buying a home. Coaches such as Steve Spurrier at the University of South Carolina have advocated paying their players. As the chart below shows, there is plenty of money to go around at many schools:

School

Sponsor

Amount

Football Coach Total Pay

Football Staff Pay Total

University of Michigan

Adidas

$6 million, plus $6.5 million signing bonus

$4.154 million

$3.072 million

University of Texas

Nike

$5.76 million

$5.45 million

$4.11 million

Florida State

Nike

$4.2 million

$2.75 million

$2.874 million

Auburn

Under Armour

$4.2 million

$2.44 million

$3.495 million

University of South Carolina

Under Armour

$3.1 million

$3.32 million

$2.744 million

Sources: USA Today for coach compensation; different sources for sponsor compensation.

Just as Under Armour and other companies have an obligation to make sure that workers are treated well in their factories, it is the same with the players at the schools they sponsor. But as a cover article on Bloomberg Businessweek for March 3-9 2014, "No Class," reported, that is not happening at the University of North Carolina. That piece focused on forged signatures, changed grades and "phony courses" at Chapel Hill. Obviously that degrades the value of the "education" received at UNC.  That is undoubtedly the case with many other schools. CNN had a show earlier this year based on an investigation with the title, "Some College Athletes Play Like Adults, Read Like 5th Graders."

Escrowing money to pay players will not address the myriad of ways that these teenage athletes are mistreated by adults who should know better.

But it will allow for savings for retirement, buying a home, and other future expenses. Under Armour, Nike, and others are great companies who have done much to upgrade college athletics in the United States. Paying the players will do even more to allow for a higher quality of life for those whom the fans come to root for and watch perform.

8 Big League Team Owners Employing World Cup Talent

Kraft, Kellogg, Hershey and Mondelez Whet Appetite for Food Stocks

Jonathan Yates does not have a position in any of the stocks mentioned in this article.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,756.83 -21.32 -0.12%
S&P 500 2,063.73 +2.50 0.12%
NASDAQ 4,752.76 +4.3640 0.09%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs