The NCAA makes a compelling argument that participation in athletic competition fosters its educational mission. Its hard to disagree in principle. However, here's the heart of the matter:
Q. Educational institutions in other NCAA divisions spend a fraction of the amount Division IA schools spend on their football and men’s basketball programs. These higher expenditures are ostensibly for educational purposes. What additional educational value is received by participation in Division I-A athletics beyond that which is received by participation in other division or intramural athletics? If additional educational value is derived from participation in Division I-A athletics, does the additional educational value justify the higher expenditures?
A. Generally speaking, educational institutions in other NCAA divisions spend a fraction of the amount Division I-A schools spend on any of their other educational programs. For example, the budget for the mathematics department, as well as the athletics department, at Ohio State University is larger than the budget for the mathematics department, or athletics, at Defiance College in Ohio. Even though each institution has invested to a considerably different level, both are providing a quality educational experience and meeting the expectations of their students. In fact, because of higher amounts of outside revenue to support athletics at Ohio State, the athletics budget at Defiance – or any other Division II or III institution – is considerably higher as a percentage of institutional resources than at Division I schools. Is the difference in the educational experience of students at a large public university quantitatively better than at a small private college? It may or may not be, but we generally don’t try to make that quantitative differentiation. We understand that there are different approaches for a variety of reasons and to accommodate a diversity of circumstances. A more robust athletics program is often identified as one of the advantages of attending a larger school. The range and cost of programs – in athletics as well as in academics – are largely responsive to expectations of students, parents, alumni and others, as well as the financial circumstances of each institution and are difficult to quantify. Nonetheless, all NCAA member institutions conduct their athletics programs consistent with the academic missions of their respective campuses.
The question is, if the "educational" benefits an athlete receives from participating in sports is what justifies the exemption of the activity, what additional benefits do football players at say, Ohio State, get, that football players at a Division III school not get? The NCAA says, basically, the math budget is higher at Ohio State than it is at a division III school, so who's to say what method is best. Yes, but the math budget is higher because they have thousands of more students. But what justifies the additional marginal cost PER STUDENT of big-time division I athletes. Certainly its not the additional educational benefits received by those students. Indeed, statistics cited elsewhere in the NCAA's response, suggest the relationship is inverse. That is, the big time athletes get less educational benefit than the participants at small schools and in less visible sports. Their graduation rates are drastically lower, etc, etc.
The obvious answer is that Ohio State spends more per football player than a Division III program not because its program provides better educational benefits to the athletes, but principally to generate income for Ohio State. This income is certainly generated directly through ticket sales, bowl revenues, tv income, merchandise sales, etc. But it is also generated indirectly. The success of the football program increases the exposure of the school and increases (dramatically) alumni donations and participation. This is all fine and good, but Thomas' point is that this mission is NOT a permissible nonprofit activity (see post I).