Is the NCAA Really a Part of the Mafia?

Every day sports headlines across the country proclaim the latest news on the new sport of NCAA Division I Football Bowl Championship conference realignment.  On October 26 news outlets reported that an unknown source with inside knowledge of Big East Conference scuttlebutt “confirmed” that West Virginia plans to announce a move from the Big East to the Big 12 later in the week.  The only holdup is of course that until Missouri announces whether or not it is leaving the Big 12 for the Southeastern Conference (SEC) the Big 12 has no room at its table for West Virginia.

Assuming that these moves do come about the Big East will be down to five football playing members.  It has been working on a plan to invite six new members to join to bring its numbers up to 12; but now the math doesn’t work because five plus six does not equal twelve.  Stay tuned.

At the same time news outlets are reporting on the NCAA’s desire to enhance penalties for schools not meeting minimum Academic Progress Rate (APR) scores.  NCAA President Mark Emmert wants to require that any school not graduating at least 50% of its athletes in basketball (equivalent to an APR of about 930) not be allowed to send its team to the postseason Division I basketball tournament.  Had this rule been in place in 2011 national champion Connecticut would have been barred from the tournament as would 2 of the other 7 schools whose teams made the Elite 8 round.

President Emmert also has been imploring member schools in the Bowl Championship Series (BCS) conferences to slow down the pace and to tone down the rhetoric of conference realignment.  He has stated that it is embarrassing to see academic institutions engage in what many see as a shameless search for more money for their athletic programs.  He continues to argue that “This is not the NFL, the NBA.  It’s not a business”.

Many observers would beg to disagree.  Earlier this year USA Today provided data on the revenues earned by FBS member schools’ athletic programs and the money paid out to head and assistant coaches in football and basketball.  The University of Texas saw its athletic program earn over $110 million in the 2009-2010 academic year.  That same year several head coaches were paid between $3 and $5 million and some assistant coaches in football now earn over $1 million per year.  The median annual income for FBS football head coaches is almost $1 million per year.

College athletics may indeed be a business; but it’s not a very successful one.  Data obtained by USA Today and the NCAA show that only around 14 athletic programs in the FBS division actually made a profit in 2009-2010.  That is out of some 120 programs.  It doesn’t seem to matter, however.  In spite of shrinking budgets for higher education as a whole, athletic departments routinely rely on general funds from their institutions and/or fees assessed to students as activity fees to make up the difference in their budgets.  And the band plays on.

The fear here of course is that someone might start seriously listening to people like Rep. John Conyers (D. Mich.), who on Oct. 21 called on Congress to investigate whether or not college sports programs are in violation of U.S. anti-trust laws.  Rep. Conyers specifically mentioned his concerns about the constant conference hopping of teams and the move towards the formations of so-called “super conferences” that would monopolize revenues and possibly even alter the competitive landscape of college sports.

Everyone associated with big-time college athletics, from the NCAA President to bowl representatives, to the BCS leadership to college presidents and athletic directors, assures the public that college sports is an amateur enterprise governed with the best interests of “student-athletes” in mind.  These leaders scoff at the idea that Congress should investigate.  They proclaim that even if Congress does waste time and money looking into the current situation there is nothing to be found.

Yet those assurances may mask some real concerns.  A quick look at history suggests that the NCAA may not be immune to change brought about by Congress and/or the legal system.

First, let’s look at the term used by the NCAA to describe athletes who compete on member school sports teams.  They are referred to as “student-athletes”.  Back in 1975 TCU played the University of Alabama in football at Legion Field in Birmingham.  A TCU, player, Kent Waldrep, was seriously injured during that game and was paralyzed from the neck down.  He spent the rest of his life coping with that condition.

Waldrep attempted to file a Workers’ Comp claim through TCU and it was denied on the grounds that he was not an employee of the school when injured.  The case went to the Texas Supreme Court, which affirmed lower court rulings in the school’s favor.  The U.S. Supreme Court declined to hear the case.

One of the outcomes of the case was the NCAA soon adopted the use of the phrase “student-athlete” to describe those who play college sports.  This emphasizes the fact that these individuals are students first and are not employees of the school they represent.  Prior to the 1970s scholarships included a token amount per month for “washing, laundry and miscellaneous expenses”.  This amount was soon removed from a scholarship out of fear that it might imply benefits beyond an education that might be construed as “pay for play”.

The NCAA has never enjoyed the kind of legal protection afforded other sports.  Major League Baseball has enjoyed an exemption from anti-trust law since the U.S. Supreme Court ruled in its favor on May 22, 1992 in a lawsuit filed in 1919 by prospective owners who had been foiled in attempts to buy a franchise.  All-Star player Curt Flood filed a legal challenge after being traded from the St. Louis Cardinals to the Philadelphia Phillies following the 1969 season.  In 1972 the U.S. Supreme Court reaffirmed the exemption stating that it was up to Congress, not the courts, to effect change.

Baseball players did gain free agency in 1974; but it was from an arbitrator’s decision concerning the California Angel’s failure to properly execute its contract with pitcher Andy Messersmith.  Owners were terrified that unrestricted free agency could result and negotiated a system of free agency with the newly formed players union.

The National Football League was effectively granted an exemption when Congress passed the TV Broadcast Act of 1961.  This act held that the NFL could consider itself a single entity enterprise in negotiating TV contracts.  The NFL was challenged in 1986 by Donald Trump and other United States Football League owners in federal court.  A jury found that there was an unreasonable effort on the part of the NFL to restrain trade.  It then awarded damages of $1.00, which under anti-trust law were trebled to $3.00.  The USFL folded soon afterward.

The NCAA was taken to court by the Universities of Oklahoma and Georgia in 1983 over its alleged monopoly of TV rights.  The case reached the U.S. Supreme Court in 1984, and it ruled for the plaintiffs and against the NCAA by finding there was an unreasonable restraint of free trade that had negative economic consequences for colleges wanting their football games televised.  This was a major blow to the NCAA’s efforts to control revenues flowing to college athletic programs.

The number of televised college football games jumped from 28 in 1983 to some 112 in 1985.  The per-game broadcast rights initially went down; but we now see a situation where ESPN alone is paying some $700 million this year to televise college sporting events.  Each Big 10 member school pocketed some $22 million this past year in TV rights fees and each SEC school took home over $18 million.  The University of Texas in the spring signed a 15-year deal with ESPN to create the Longhorn Television Network.  The school will receive $20 million per year over the course of the contract.

The NCAA is currently litigating a potentially groundbreaking action in federal court in northern California where it has been sued by a number of former college athletes.  Former UCLA basketball star Ed O’Bannon is the named plaintiff.  Former greats such as Bill Russell of the University of San Francisco and Oscar Robertson of the University of Cincinnati are among the plaintiffs who have joined the lawsuit.  The plaintiffs contend that the NCAA has been selling their images for years in licensing agreements without their permission and without paying them any money.

This lawsuit actually deals with intellectual property rights under copyright and trademark law.  It also may have first amendment and anti-trust law implications.  The NCAA is surely concerned that it could be found to be a single entity acting to unfairly constrain trade—essentially the reason for the ruling in the landmark 1984 case involving TV rights.

The HBO series, Real Sports, ran a piece recently looking at problems with monetary outlays by college football bowl committees.  Special attention was given to the Fiesta Bowl in Arizona and to the Sugar Bowl in New Orleans.  The reporters on this story gathered information that called into question whether the bowl committees were in fact benefiting various charities with their expenditures as is required by them to maintain their IRS status as 501(c )(3) non-profit organizations.  In fact, it was found that far more money is spent lobbying governmental and Bowl Championship Series officials than is given to charities.

Businesses spend money to make money.  Businesses try to marginalize competitors in order to maintain market shares.  Businesses pay CEOs huge amounts of money and provide numerous perks to reward them for keeping the flow of cash coming in.  Many observers see little in any of this that suggests a concern for academics and for the welfare of student-athletes.

Two mothers of injured college athletes spoke before a Congressional panel on Nov. 1, 2011.  The hearing was chaired by Rep. Bobby L. Rush (D. Illinois).  Both women testified about how their sons sustained injuries that left them unable to perform.  Their schools refused to certify them as medically unable to perform (which would allow the schools to keep the students on scholarship while no longer playing) and canceled their athletic scholarships, which are renewable annually.

John Conyers stated in the hearing that he feels college athletics has “reached a tipping point”.  Rep. Rush went further, comparing it the Mafia when he said, “they’d make the mob look like choir boys”.  There does seem to be public pressure mounting on someone to do something.

The NCAA recently authorized Division I members to add an additional $2000 per year to the cost of scholarships to cover “incidental expenses”.  They left implementation of this up to individual conferences.  Everyone knows that many schools will be unable to afford this additional expense across their entire athletic departments.  This could simply result in a further division in college sports between the haves and have-nots.

The NCAA does not enjoy legal protections that have long been available to professional leagues.  Like many areas of society it may be that the legislative and judicial branches of government will be the forces that bring about significant change.  One thing seems certain.  Big changes are coming for the top level of college sports and the law may not protect the big boys in the end.

Josh Luchs is the former agent who was the source for a major Sports Illustrated story published in 2010 that detailed his experiences as an agent when he paid illegal benefits to college football players.  Luchs attended the recent hearing.  Afterwards he borrowed a phrase from a 1965 commencement speech given by Dr. Martin Luther King at Oberlin College.  King said, “The time is always right to do what’s right”.  That time may be now for college sports.

Greg Tyler is the editor of The Sport Digest.  He is the Library Director at the United States Sports Academy where he also teaches classes in sport law and agency.  He is a former practicing attorney who occasionally writes articles for the Digest dealing with contemporary issues from a legal perspective.  Anyone interested in pursuing a degree that deals with sport from an academic perspective should visit http://ussa.edu.