How Can You Quantify the Soft Dollar Value of an Athletic Scholarship?

February 19th, 2018 | by Jonathan Yates
How Can You Quantify the Soft Dollar Value of an Athletic Scholarship?
soft dollar
No greater deal has ever existed for a high school graduate than an athletic scholarship for college in the United States.  While the average earnings of a high school graduate are around $20,000.00 a year, the value of an athletic scholarship can be worth over $150,000.00 annually, according to an article in Forbes.  In this package, according to former college star, NBA player, and ESPN commentator Len Elmore, are “extraordinary benefits.’  Making these “extraordinary benefits” even more exceptional are the “soft dollar” elements.
For a college athlete on scholarship, the “hard dollar” component is the tuition, room, and board costs.  For the University of Alabama, as the example used in this article with approximated figures, that ranges from about $27,000.00 in-state to almost $45,000.00 out-of-state.  The athletic budget at Alabama is about $160 million for more than 600 student-athletes.  About $250,000.00 is spent per student-athlete for the Crimson Tide.  Down in Tuscaloosa, the soft dollar bonanza starts but does not end, at up to nearly $225,000.00 player.  That is the amount expended per student-athlete by the school that is greater than what it costs for tuition, room, and board.  The soft dollar benefit can be much, much higher, though.  This is somewhat like “goodwill” in accounting, which are the assets not readily identifiable such as the value of a brand.
1: Coaching received is invaluable for many factors.  It helps to further develop the student-athlete as they mature, teaching responsibility, discipline, and teamwork, among other attributes needed by teenagers.  There are tremendous career advantages from being coached, starting with respect for authority.  Obviously, it makes it easier to go into coaching after college when one played and learned from a legend like a Nick Saban or a Mike Krzyzewski.  Most athletic directors are also former college athletes, manifesting how this lucrative career path is furthered by playing sports.  In interviews, athletic directors unfailingly attribute what they learned as a player for their career success in college sports administration.  As for the dollar value, at the University of Alabama, again, football coaches are paid $18 million to coach 85 players on scholarship.  That makes the soft dollar value of coaching at over $200,000.00 annually for a football player at Alabama.
2: Branding adds greatly to the value of the coaching.  These media efforts bring media attention to the college athletes they would not receive, otherwise. A recent study put the value of the branding received by football players at the University of Wyoming at $46 million a year.  Laramie, Wyoming is a minor media market,  In a major media market such as Los Angles, Dallas, Miami or others, the branding value is much, much higher.  A player at Wyoming does not pay a dime for the $46 million in branding generated that raises their profile in a positive manner.
3: Access to many lucrative benefits is available only for student-athletes in many highly desirable cases.  Awards such as the Heisman Trophy, William V. Campbell Trophy, and others come with a great deal of prestige and other perks, but only athletes are eligible.  Being an athlete helps greatly for the Rhodes Scholarship, too.  Other awards, but only for athletes in all sports, such as many from the NCAA, have a high cash value.   These honors brand the winner very favorably, too.  There is also an NCAA fund that has spent millions for emergencies such as winter clothing or a travel home, but this is only for players in college, too.  While on scholarship, 2-3 degrees can be completed, which is also only available to student-athletes.
4: Career success comes from the access, branding, coaching, counseling, tutoring, and other soft dollar benefits.  Academic tutors augment the leadership and guidance from the sports coaches.   Athletic directors and others render valuable career advice.  There is an established career network for student-athletes that would be very costly for a non-athlete to replicate, in terms of both time and money.  This obviously offers a huge advantage for careers in sports administration and coaching, as just two examples.  These soft dollar components are the major reason why scholarship athletes graduate at a higher rate and make more than others students.  A Forbes article states that athletes on scholarship can realize $2 million more in higher future earnings, which would require an annuity of about $700,000.00.
5:  Tax treatment is very favorable for athletes on scholarship.  They do not have to pay for the benefits received, which is huge.  Others in similar situations are not treated as well by the IRS for education benefits, especially after this year’s tax reform. According to tax expert  Lorry Spitzer, this is a considerable amount.
6: Insurance benefits can be very significant for student-athletes.  As just one example here, Richard Giller, a partner with the law firm Reed Smith, detailed in a recent CollegeAD interview the soft dollar benefits of a loss-of-value insurance policy for a college player.  This does not cost the student-athlete anything for this protection against an injury destroying their career, and future earnings potential.
7: Travel rewards are huge for student-athletes.  Vanderbilt athletes visited Washington, D.C. to celebrate Martin Luther King’s birthday.  Those from Colorado State University go to Jamaica on the Green and Global environmental service program.   These are not just for the players, either.  If your team makes it to the men’s or women’s Final Four, the NCAA will pay the travel expenses for the family to attend.
8: Healthcare is far superior for student-athletes.  Many schools have nutritionists, mental health professionals, and others on staff, in addition to team physicians and trainers.  Those professionals focus on the needs of the student-athletes.  There are many other examples.  Sleep research on athletes is one now at many schools.  Those gaining from this not only perform better at sports but also in the classroom and later in the career thanks to operating at a higher level, both mentally and physically, from sleeping well.  This is the same for better eating habits, too.
9: Worker status is a major soft dollar advantage for college athletes.  This emanates from not being considered an employee.  As leading employ lawyer Mike Phillips, a partner with the blue-chip law firm of McguireWoods noted about this, “There are consequences to being an employee.  For soft dollar benefits, probably the greatest consequences will be tax treatment.  Student-athletes may find that employment status means that the IRS considers the value of these benefits to be taxable wages.”  A  major consideration here for international student-athletes is how can one be a college player on a work visa if this soft dollar aspect were to no longer exist?
10: Clothing and associated items come at no expense to athletes that would cost others a significant amount.  If on the school team, a skier does not have to pay for the uniform, bindings, lift tickets, and other necessities that cost dearly.   Those on the golf team do not have to pay green fees.  Stroll around any college campus and it becomes apparent quickly that team pants, shirts, jerseys, and sweatshirts form a huge part of the daily wardrobe for student-athletes.  The emergency fund from the NCAA will pay for needed clothing, such as a warm jacket.
There are many, many other soft dollar benefits.
Those engendered by meal plans, fueling stations, and campus housing are considerable.  Student-athletes receive a tremendous educational and economic boost in not having to shop for, prepare, and clean up after meals, which is what that 50% of college students not on meal plans have to do daily.  Time is not wasted commuting and looking for parking spots as for the 50% of students living off campus.  Fuel stations deliver nutrients at the exercise facilities to student-athletes  An article in The Wall Street Journal reported on businesses that deliver meals to gyms so those working out could eat in the “golden hour” so critical after lifting at a hefty premium.  Student-athletes have this at no charge thanks to the soft dollar factor existing in the form of a proximate fueling station, dispensing nutritional foodstuffs of a high quality.
Hard dollar, soft dollar, nothing tops a college athletic scholarship for a university in the United States for the goods and services it provides.
Charges of student-athletes being indentured, exploited, and plantation-like conditions are countered by the simple fact that no one has ever turned down an athletic scholarship to instead graduate nearly $40,0000.00 in debt like the average American college student.  Institutions of higher learning in the United States are the finest in the world, always dominating global rankings.  Millions around the world spend billions annually in hopes of earning a scholarship to play sports in college in America.  Parents will spend millions for their children to get into the best schools in the United States.  The driving force for those who want to play sports in college is the advantages in school and beyond that emanate from athletic departments that treat student-athletes so well in the unparalleled soft dollar and hard dollar attributes never before witnessed.
Fittingly enough, it is the soft dollar benefits that have the student-athlete at such an advantage, if they are responsible and willing to avail themselves of the unmatched opportunities presented.
About this, Andrew Weidinger, who graduated from William & Mary with two degrees and was the William V. Campbell Trophy nominee as the starting fullback on the football team, remarked that “Scholar-athletes are the ones exploiting the schools.  You get tremendous benefits as part of a scholarship along with leaving a great school like William & Mary with an advanced degree that prepares you for a professional career.”

Jonathan Yates About Jonathan Yates
Jonathan Yates spent much of his career working for Members of Congress in a variety of press and legislative posts. Positions he has held working for Members of Congress and state legislators include Chief of Staff, General Counsel, Legislative Director, Press Secretary, and Legislative Assistant. His journalistic work has appeared in such periodicals as The Washington Post, Foreign Policy, Investor's Business Daily, and TheStreet, among others. He has degrees from Harvard, Johns Hopkins, and Georgetown University Law Center; and has also matriculated at the U.S. Naval War College and The Johns Hopkins University School of Advanced International Studies (SAIS). Jonathan also hosts The Culture of Sports You can follow Jonathan Yates on Twitter at @politicsports13

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