The 2009 NCAA State of the Association speech, as delivered by Wallace I. Renfro, NCAA vice president and senior advisor to President Myles Brand.

It has been Dr. Brand’s practice to write a paper each year on the State of the Association.

You have received this year’s paper as you entered today.

It is an expanded discussion on the Challenges of Commercial Activity and a companion to this speech.

This paper and speech is the result of significant thought, discussion and writing that Dr. Brand has given to the relationship of commercialism to sports, a relationship that exists because sports is a significant part of the human experience.

It is present in our lives from children’s play to the most elite professional contests.

Our language is filled with sports metaphors, and we ease into deeper conversations by finding neutral ground in sports talk.

The relevance of sports to our global culture was made evident when China used the attention of the Olympics for two weeks in August to announce that it is moving back onto the world stage.

In America, we have developed a rich tradition for both participation and consumption.

There are a variety of professional sports leagues in America from lacrosse to ice hockey, from soccer to football, from golf to basketball.

Indeed, there are more than two dozen professional leagues.

But, as pervasive as professional sports has become in this country, college sports occupies a central place in the American culture.

It has become integral to many of our universities and colleges, institutions which are the guardians of our traditions and histories and the harbingers of our futures. College sports generates a significant economic impact in communities all across the country.

The estimated annual budget for all of intercollegiate athletics is $6 billion.

A large number.

But to help put that number in perspective, it should be noted that the total spent by athletics departments in America each year would not fully fund even two of this nation’s largest public universities for a year, where annual budgets for a single comprehensive public research university range from $3 to $4 billion.

Unlike professional sports, however, the bottom line in the collegiate model is not the bottom line.

It is not creating profits for owners and shareholders.

The reason America’s colleges and universities sponsor athletics – for more than a century and a half now – is the positive effect participation has on the lives of young men and women.

We should feel good in knowing college sports empowers these young people to become contributing members of their communities and country.

College sports rely on the hard and good work of many, and we should praise those who coach and administer intercollegiate athletics.

Indeed, we could easily spend our time today citing the successes of intercollegiate athletics.

There are innumerable and wonderful stories that need to be told.

Make no mistake: sports in college are very, very good.

We should all be unabashed advocates.

Nonetheless, intercollegiate athletics is faced with issues it must resolve.

There are a number of ongoing challenges – academic reform in Division I, future strategic directions for Division III, and a dearth of diversity in hiring for coaches and administrators in all three divisions.

The key overarching issue for each of the divisions, in its own way, is the integration of athletics into the life of an academic institution.

There is both good news and ongoing frustration in all these areas.

And there are serious efforts that must yet be made.

These issues are rarely subtle in their ability to grab our attention; but with persistence, they can and are being brought to manageable size.

But today, the focus will be on an even more exasperating challenge for intercollegiate athletics: the proper role for commercial activity.

Indeed, there may be no more pressing issue for us over the next decade, especially as the economy constrains university and college budgets.

Our ability to understand both the necessity of monetizing the assets of college sports and the potential dangers of commercialism gone wild…and to find a proper balance that helps financially support as many participation opportunities as possible without swamping the principle of amateurism…may either ensure the place of intercollegiate athletics in higher education and the American culture or relegate it in many instances to third-rate professional sports.

If this issue has not already reached crisis, it is certainly approaching it.

There are several reasons for that.

First, universities are accelerating their spending on college sports. For more than a decade, the rate of increase in athletics’ expenditures in Division I has exceeded the rate of increase in the general university budgets by a factor of three to four.

Revenues for athletics tend to increase faster than the general university budget.

Yet, in recent years, they have not, on average, kept pace with expenditures.

As a result, just six athletics programs in Division I have been in the black for each of the past five years.

In any given year, only five percent of the FBS programs operate in the black.

Gate receipts – not an insignificant revenue source for some institutions – generally hold static.

Athletics cannot depend on increased gates to cover the increased costs.

Where do new funds come from in order to meet the increased expenditures? There are basically three potential categories: increased donor contributions; increased subsidy from the university general fund; and increased commercial activity.

There is no question that Division I athletics directors have had to increase their efforts in fundraising.

True, they have had some success.

But there are natural limits, especially in times of economic downturn.

Moreover, the successes of athletics departments in fundraising is beginning to have consequences for the rest of the university; while philanthropy is not a zero-sum game, funds raised for athletics in some instances appear to be coming from those that in the past went to other parts of the university.

Increased fundraising, while important, may not be the best solution.

Almost every campus subsidizes athletics, and there is nothing wrong with subsidization.

The issue is, rather, whether the subsidy so burdens the rest of the university that there are adverse academic consequences.

Given the budgetary difficulties for many institutions, most especially those highly dependent on state allocations or tuition, continued large increases in subsidy for athletics is proving problematic.

That, then, leaves increases in commercial activity to fund increased expenses in athletics.

The second reason why commercialism can be problematic is that there have been dramatic changes in the media, including especially the sports media, that have generated new and greater opportunities for commercial activity associated with athletics.

Nearly three decades ago, ESPN began solely featuring sports on TV.

There is no doubt that ESPN has been highly successful, its initial platform has not only turned into an entire network, but it now includes print media, radio and importantly new media configurations.

It is not an exaggeration to say that ESPN has shaped an entire generation in how sports are consumed.

Media presentation of sports – including college sports – is big – very big – business.

The desire of media outlets to obtain college sports content and to use it as programming to sell advertising sometimes seems limitless.

Media companies are quite willing to pay universities, conferences and the NCAA to present this content in ways that are attractive to audiences.

The more attractive the sports are, the more media are willing to pay.

For colleges and universities, the issue goes beyond increased revenue.

The broadcast presentation and distribution of a school’s athletics events can increase its visibility and name recognition.

Athletics is one good way to market the university.

Such successful marketing can result in higher application rates for the general student body, as well as campus morale and community building.

The third reason for increased commercialism is related to the expansion of the sports media.

We are in the midst of a media revolution in which there are rapid changes in the modes of presentation and in how audiences consume media.

It was not that long ago when sports were featured only in the print media and three TV networks.

Now, the options are almost limitless.

Where television once opened us to the pictures and sounds of sports on one screen, there are now three types of screens to watch: traditional TV, including network and cable, local and national; computer screens, which not only include live Internet presentations, but also animated sporting events through video games; and hand-held devices that permit mobile viewing tailored to the audience’s taste and convenience.

Indeed, video screens are becoming ubiquitous, in airports, elevators, taxis – wherever you look.

There are expanding opportunities for universities to generate revenue by selling the rights to present and distribute their sporting events to these new media outlets.

But the new media environment is highly competitive, and so expanded access becomes
a condition for the sale of these rights.

Examples of expanded access include moving the games to nontraditional days of the week and adjusting the starting times to accommodate broadcast schedules.

Access includes live interactions with coaches and student-athletes in order to bring the viewer “into” the game.

The confluence of the Internet and reality animation makes difficult control by content providers – namely us.

These three primary reasons explain why there is increased commercialism and why, at this time, the challenge to finding the right balance for is critical.

How do we ensure continued revenue from commercial activity, especially when these monies are needed more than ever, without abridging the values and mission of higher education?

The central questions then become: What is the balance point between too much and too little commercial activity and how do we adhere to it?

Aristotle argued for the doctrine of the Golden Mean.

The virtuous path is one that avoids the excesses of the extremes.

An example of such a virtue is courage.

Courage strikes a balance between debilitating fear and foolhardy disregard of danger.

Aristotle did not claim that the right path is always the middle one.

But warns us to avoid the ends of the spectrum.

In the case of commercialism, the extremes of unrealistic idealism and crass commercialism are not the right courses of action, but between them – somewhere – there is an acceptable balance point.

Finding this balance point, it can be argued, is the next greatest challenge we must address.

Some believe that college sports should be totally devoid of commercial interests.

They believe the enterprise should be “pure,” that only the competition between student-athletes is relevant.

Advertising and other commercial activities sully the contests and the contestants.

This idealistic approach may work in the cases of recreational and club sports, but not for competitive, organized sports, including intercollegiate athletics.

Training, coaching and competition are not free in the collegiate environment.

Coaches work for salaries, equipment must be purchased, and travel to the competition and conducting the events can be costly.

Championship competitions, in which the best compete against their peers, are a key part of the collegiate athletics experience, and championships certainly are not free to conduct.

Some level of commercial activity – from nominal levels of local sponsorships to huge media and corporate contracts – touches every NCAA athletics program in the country regardless of division.

Without commercial activity, intercollegiate athletics as we know it could not exist. 

This is true even on the Divisions II and III levels.

A critical part of the Divisions II and III experiences is championship competition.

Championships in these divisions are almost entirely supported by revenues generated from the Division I men’s basketball tournament.

Thus, the ability of Divisions II and III to conduct championships are based – indirectly at least – in commercial activity.

Every member of the NCAA has a stake in how commercialism is conducted in college sports.

The only way to operate athletics on campuses without the revenues from commercial activity is to reduce it to recreational or club sports, without paid coaches or good equipment and facilities.

While that, of course, is always an option, the benefits of student participation in high-level, organized athletics; the branding and marketing of the institution through athletics; and the value to the community, including economic development, would all be lost.

The loss of these benefits to gain pure idealism is unwarranted.

The higher education community has understood this equation for over one hundred years. On the other hand, commercial activity can go too far and can subvert the values and mission of higher education.

Some critics of contemporary intercollegiate athletics argue that the problem is not commercialism itself, but rather the artificial limits placed on that activity by the higher education community.

Competitive success, they argue, is the goal of athletics programs.

The reason we play the games is to win.

Such success is costly, and becoming more so over time.

Since there are limitations to institutional subsidy, athletics programs should pursue commercialism, no matter its form, to pay the bills.

Intercollegiate athletics, so goes this argument, should do all that it can to generate revenues – a no-holds-barred approach.

Surely, this extreme position is mistaken.

Crass commercialism is no better than unrealistic idealism.

Both are unacceptable extremes.

There are commercial activities in which universities should not engage even if it generates substantial revenues for athletics.
A crystal clear example is that student-athletes should not be commercially exploited.

They are students, not professionals.

Exploiting student-athletes for commercial purposes is as contrary to the collegiate model as paying them.

There are several orthogonal parameters that must be understood in order to find the balance point for commercial activity.

These parameters include the locus of responsibility for controlling commercial activity, the underlying types of activity relevant to college sports, and the potential for diminishing or eliminating cases of run-away commercialism.

There must be shared responsibility in the oversight of commercial activity.
In particular, there are critical roles for the NCAA national office and there are critical roles for the individual campuses.

Without this complementary exercise of control, there is little opportunity to contain over-commercialism.

The role of the NCAA national office is to work with the membership to articulate the core principles that apply to commercial activity, and to disseminate these principles widely so that they are well understood within the college sports community and among the media and corporate sponsors.

The NCAA national office also has responsibility for conducting and managing the media rights for championship events (except BCS football).

It likewise has the responsibility for implementing the principles governing commercialism in these championship events.

The role of the NCAA members is to oversee their athletics programs and the events in which their teams participate, so that the core principles are followed.

That includes educating their athletics communities, including those off campus, about the nature and limits of commercial activity.

Conferences, also, have a role to play.

They oversee conference championships, and they negotiate media and corporate contracts on behalf of and at the direction of their conference members.

In some cases, conferences combine their efforts to create multi-conference events, including football bowl games in Division I.

Generally speaking, then, the national office is operationally responsible for post-season national contests, with the exception of FBS football, and the individual campuses have responsibility for all the other intercollegiate contests, including those conducted by their conferences.

This is the system of shared responsibility.

There are some who believe the NCAA national office should have oversight for commercial activity for all of college sports.

It would not be a good idea, however, for the national office to exercise campus-based control of commercialism.

Local control permits each campus to take best advantage of its unique opportunities and to market and depict itself in the manner it judges most appropriate.

The development, advancement and protection of an individual institution’s brand ought to be within its purview.

If the NCAA national office were to assume this responsibility, it would become overly intrusive into the affairs of its member institutions.

That is not a recommended that course of action.

So, we understand that some level of commercial activity is necessary, even appropriate.

But, we also understand that there must be a balance reached so that such activity does not overwhelm the values of higher education.

And, we understand that there is shared responsibility for finding and maintaining the balance point.

What, then, are the limits of commercial activity?

What is off the table?

What is not acceptable under any circumstances?

We need first to distinguish between two types of commercial activity.

Namely, there is commercialism that directly involves student-athletes and commercialism that does not.

The central stricture on commercial activity concerns the exploitation of student-athletes.

There must be a clear distinction between those activities that directly involve student-athletes and those that do not.

The NCAA Manuals for each division are filled with rules and bylaws that address the status and standing of student-athletes.

Fundamental to that standing is that these are young women and men who are students and not professional athletes.

The justification for this premise, we must continue to emphasize, is straightforward: The underlying reason why universities support intercollegiate athletics at all is that it provides educational value for those students who participate.

Thus, any adequate policy of commercial activity must ensure that student-athletes are not commercially exploited.

Call this the condition of nonexploitation.

This condition is further delineated in the paper you received as you arrived today.

When we say “student-athlete exploitation in commercial activity,” we should have a specific definition in mind.

Since student-athletes are amateurs, not paid professionals, they cannot accept payment for endorsing or advertising any commercial product or service.

It also means they should not be put in a position in which the natural interpretation by a reasonable person is that they are endorsing or advertising a commercial product or service.

But most cases of exploitation are subtle and indirect.

Instead of obvious product endorsement, the marketing can include game pictures, films, audio or video of student-athletes that make it appear to a reasonable person that a student-athlete is endorsing a specific commercial product.

The student-athlete may well have no knowledge or awareness that his or her reputation, image or name is being used for these commercial purposes.

But exploitation may be the result, nonetheless.

Generation of much needed revenue does not justify the exploitation of student-athletes.

We can – and we should – debate the nature of proper commercial conduct.

However, one principle is not subject to debate: commercial exploitation of student-athletes is not permissible.

Period.

This is the clearest and most important line of demarcation between college and professional sports.

In many ways, the two models are similar.

But the key differences are that, first, the function of college sports is based on education while the function of professional sports is based on entertainment.

And second, those who participate in college sports are students while those who participate in professional sports are paid employees.

It is critical to note that a sound definition of student-athlete exploitation does not include the promotion of most college athletics by institutions or charitable events.

Using pictures of student-athletes by athletics programs to promote the upcoming big game or to promote literacy by showing the athlete reading to young children is acceptable.

The reason that these cases are acceptable is that these are not commercial, for-profit based activities.

There is a difference between charitable and university activities, on the one hand, and commercial, for-profit activities on the other hand.

The other type of commercial activity in college sports pertains to instances not directly involving student-athletes.

There are numerous examples of this type.

For example, there can be the sale of merchandise, such as clothing, that use the athletics department logo; or a coach might endorse a commercial product or service; the institution might sell signage within its athletics facilities, including scoreboard space, in order to advertise a commercial product or service; or an institution or athletics department might adopt a certain commercial product for a fee, say a brand of athletics shoes or soft drink.

This type of commercial activity, when properly conducted, does not exploit student-athletes.

The NCAA does not regulate this type of activity.

It does not do so because that would intrude on institutional autonomy.

Some who are uncomfortable with the growth of commercialism focus on the tastelessness of some of these activities.

They may find the quantity of institutional commercial activity within athletics venues overwhelming, noisy or inappropriate; or they may find that the products or services advertised are unbecoming for higher education.

In the latter case, the NCAA does have rules prohibiting advertising that is degrading of race or gender.

But not all advertising that some find unacceptable is degrading.

For the two types of commercial activity, that which directly involves student-athletes and that which does not, should there be consistency among those who have responsibility for oversight?

The answer is: yes and no.

Without question, there should be universal rules that apply to all who have oversight responsibility prohibiting student-athlete exploitation.

These rules are not easy to formulate correctly, however.

Indeed, over the past several years the NCAA governance structure has tried and failed to do so.

A recent attempt by a committee of presidents, it is hoped, will be more successful.

Rules only make sense in this context if they are enforceable and if there are sanctions for noncompliance.

If we are serious about protecting student-athletes from commercial exploitation, and it is not merely rhetoric, then we must have enforceable rules and meaningful sanctions.

Be assured that we must be serious about this.

By contrast, the question of consistency in oversight for commercial activity not directly involving student-athletes has a different answer.

Namely, there need not be consistency at the national, conference and institutional levels in commercial activity.

As a matter of fact, to require such consistency is to try to legislate taste, and trying to do that is at best foolish.

True, not every ad or marketing ploy is appropriate, and we want institutions of higher education to use good judgment and not succumb to temptations for the outrageous or the overly provocative.

But within these boundaries, there is a great deal of room for disagreement, and trying to set national policy will only frustrate the goal of shared responsibility.

The NCAA national office takes a conservative approach to its oversight responsibilities for the championships.

The national office has, and will continue to eschew advertising and other commercial activity that can be reasonably interpreted as offensive.

Championships are conducted in “clean” venues, in that advertising and signage are kept at a minimum and the highest standards of propriety are practiced.

In the case of venues and media presentation under the control of individual institutions and conferences, it is their taste that is controlling.

There may well be differences of opinion about what is appropriate and what is too much, but these often are differences of taste rather than differences in principle.

So be it.

Rules governing commercialism not directly involving student-athletes, therefore, are to be kept at a minimum.

We already have rules about treating all people with respect, and against racism and sexism.

Nothing more may be needed. Nonetheless, there are better and worse ways to conduct commercial activity on campuses, and on conference and national platforms.

Some ways better represent higher education than others.

It is understood that commercial activity is undertaken to generate revenue.

But it does not follow that the greater the flurry, the greater the revenue stream.

Good judgment and sound contract negotiations with the media and corporate sponsors is the key to revenue generation.

Focusing on the special higher education features of college sports is more effective than emulating professional sports, with its strong entertainment focus.

While rules are not the answer, guidelines based on best practices make good sense in bringing order and propriety to commercial activity.

These guidelines should be in the form of recommendations to institutions and conferences, not enforceable requirements.

This solution is likely to be unsatisfying to some.

They would like to have rules and accompanying sanctions for all commercial activity, whether or not it directly involves student-athletes.

However, a balanced approach to commercialism recognizes the differences in regulatory conditions when student-athletes are and when they are not directly involved, and it takes into account differences in matter of taste.

The framework for commercial activity just described is based on a key premise: Namely, issues surrounding student-athletes are central to any adequate policy for commercial activity in intercollegiate athletics.

Leaving aside radical critics of one orientation or another, there likely is widespread agreement with the condition of nonexploitation of student-athletes.

But we also know that there is lack of agreement on how to apply this condition in particular cases.

Can we solve the problem of determining when student-athletes are exploited?

Not easily, we suspect.

The first inclination is to try to develop an algorithm or mechanical rule that automatically gives the right answer.

That approach seems doomed to failure.

Obviously, a student-athlete cannot be depicted holding a product and saying “Buy this.”

But there is a great deal of gray area.

One recent attempt to provide a mechanical rule was to specify the percentage of space that can be devoted to advertising when a student-athlete is in the frame.

But there are multiple factors that make it appear that the student-athlete is endorsing a product beyond the percentage of space devoted to it.

No matter how carefully such mechanical rules are crafted, wily advertisers would likely find a way within the rules to give the appearance of product endorsement.

That would lead to revising the rules, and then new attempts to push the boundaries.

You can already see the NCAA rule book getting fatter.

The point is that this type of regulation cannot be mechanical.

Rather, what is required is the exercise of good judgment by sensible people who understand the rationale and purpose of the condition of nonexploitation.

This is the only reasonable way to proceed.

Even so, we will not likely achieve agreement on every case.

There will be borderline instances in which persons of good will, knowledge and experience will disagree.

We need, in particular, a systematic approach to adjudicate cases in which it is alleged that there is student-athlete commercial exploitation.

In similar cases, when good judgment is required to apply NCAA rules, such as student-athlete eligibility, we depend on trained, national office staff.

We should do so here, as well.

Moreover, as we do in other cases, there should be an appeals process involving NCAA members that would review staff decisions.

In addition, there may also be the need for an oversight committee of membership peers that will review the landscape of commercial activity in intercollegiate athletics, make binding determinations of instances in which there is student-athlete exploitation even if NCAA amateurism rules are not violated, and evaluate trends in commercial activity to ensure that the values of higher education and the best interests of the “collegiate model” of athletics are not abridged.

Actions of such an oversight committee would both guide decisions of the staff and appeals body directly with regard to student-athlete exploitation and inform the membership when trends appear to be compromising the values of higher education and the collegiate model.

Marketing expertise and new media technologies have changed the landscape in which student-athlete images and names are used.

We can expect those factors to continue to reshape the landscape.

Thus, our process of adjudicating the claim of student-athletic exploitation must be sufficiently forward-looking and flexible to take into account these factors.

It is incumbent on all to ensure that the national office staff and any oversight committee charged with undertaking decisions about student-athlete exploitation in commercial activity are knowledgeable and objective.

To sum up, then, at the highest level, there are two key principles that govern commercial activity in intercollegiate athletics.

First, student-athletes are not to be exploited in commercial activity.

Second, all such activity in college sports undertaken by universities and colleges, conferences and the NCAA national office must be consistent with the values and mission of higher education.

These two high-level principles must be translated into more specific NCAA legislative rules, as well as guides for best practices.

That detailed, careful work is necessary to assist athletics and university administrators in conducting commercial activity properly.

There is no question that commercial activity is necessary for mounting intercollegiate athletics programs, certainly in Division I, but also in Divisions II and III.

But that activity must be undertaken within the context of higher education.

It must be done the right way.

Contemporary marketing practices of college sports by the media and by corporations can unintentionally, and sometimes intentionally, abridge these two principles.

It is not easy, at times, for the college community to protect intercollegiate athletics.

The answer is to use regulation where clear prohibitions are evident – exploitation of student-athletes, for example – and apply values-driven judgment where flexibility is required.

We must not be lured into forced algorithmic solutions, which merely present a puzzle to be solved by those who want to take unfair advantage of student-athletes.

Rather, there needs to be a process by which experienced, objective, and careful judgment resolves the issues.

The NCAA staff should play that role in interpreting rules pertaining to student-athlete exploitation.

But, as we also do in other cases, there also needs to be an appropriate appeals process and oversight of staff decisions.

College sports are incredibly popular among fans and within the higher education community.

And for good reasons.

It consists of athletics contests among earnest young men and young women, who are students representing their colleges and universities.

There is a sense of exuberance, as well as high-quality performance, which is characteristic of intercollegiate athletics.

We should do everything we can to protect this significant enterprise.

But reality imposes itself.

Almost every university and college must provide financial subsidy to conduct intercollegiate athletics.

To help meet these costs, revenues from commercial activity are required.

The objective, then, is to determine the balance point, all factors considered, between crass commercialism and unrealistic idealism.

Once that occurs, we will be able to move forward in the conduct of intercollegiate athletics with a clear conscience.

Intercollegiate athletics has become an integral part of college life and culture.

Given the educational value of participation in athletics, it is important to not sell this great enterprise short. But it is immoral to sell it out.

We must do it right.