After TV deals, battle was inevitable
The vultures are circling now, the hyenas nipping away from every angle. NCAA insiders deriding Mark Emmert as king of the news conference. Anonymous college administrators predicting that his days as president are numbered. Athletic directors, seeing weakness, demanding and getting more influence. Columnists likening him to the ogre in the room, the catalyst for so much lost talent and credibility with the NCAA's beleaguered, adrift enforcement arm.
Next up for Emmert: Judicial scrutiny of the NCAA's economic model, in the form of the Ed O'Bannon-led antitrust lawsuit that aims to give players in big-time college football and basketball programs a share of media revenues and other commercial products that use their likenesses. A critical stage in the watershed dispute began Thursday, when a federal judge in San Francisco held a hearing on whether the claim should be certified as a group, or class, action.
Judge Claudia Wilken could have denied the request then. She did not, instead asking the plaintiffs to re-file an amended complaint and add a current player to the lawsuit. She also suggested the sides work with a mediator, another good sign for the plaintiffs.
If O'Bannon, Bill Russell, Oscar Robertson and the other named plaintiffs are allowed to invite thousands of current and former players into the lawsuit -- expect a written decision delivered in the next month or so -- potential damages to the NCAA and its co-defendants from an adverse decision could grow into the billions. Even if they aren't, scenarios exist that still could force the NCAA to revise its ban on athletes receiving more than an athletic scholarship for their services.
If you thought Emmert has lost friends in high places lately, just wait if university presidents have to address an issue they've been able to duck for, well, forever.
Lost in the finger-pointing is the fact that the collective storm of crises confronting the NCAA today was inevitable. It began forming nearly 30 years ago. In 1984, the Supreme Court set the new course for college sports when it ruled on NCAA v. Board of Regents, an antitrust lawsuit brought by member schools who objected to the NCAA's control over television broadcast contracts.
The NCAA argued that if it lost, it would doom college sports.
The NCAA lost. Since then, the annual growth rate of Division I-A (FBS) college athletic departments has been 8.2 percent, fueled by growing TV contracts negotiated by conferences. Big-time college sports has grown faster than the U.S. economy (5.0 percent). Even McDonald's (7.7 percent) can't compete.
Billion hamburgers served? Try a billion first-and-goals served to grateful fans.
"If the 1984 case was settled differently, we wouldn't have these issues," said Gary Roberts, dean of Indiana University's Robert H. McKinney School of Law and a former NCAA faculty rep. "The NCAA wanted to limit commercialization of college basketball and football to one game a week, and one network. If that lid had been kept on, we wouldn't have the unleashed commercialization we see today."
The law presumes that market outcomes are the best for all -- that's the essence of antitrust actions, to promote competition and serve consumers. And now conferences and schools were able to sell their valuable entertainment products (games) to the highest bidder, free of the meddling NCAA which had argued that constraints were justified because college sports had an educational mission. Universities began to pursue all of the same revenue streams as pro leagues.
Naturally, expenses began to explode as well. Coaches salaries on par with those in the NFL. Massive facility upgrades. Locker rooms such as Kentucky basketball's, which surpassed those of the NBA. The one expense category that did not take off is player compensation, capped by agreement of NCAA member schools. It covered the cost of tuition, books, room and board, plus a few benefits like laptops for the needy if they bothered to navigate the bureaucracy and apply to a special fund.
As the trade organization representing sports-playing universities, the NCAA feels empowered to perpetuate this economic model because of a fortuitous quirk in NCAA v. Board of Regents. In the middle of his majority opinion, former Justice John Paul Stevens dropped in the following language:
Moreover, the NCAA seeks to market a particular brand of football -- college football. The identification of this "product" with an academic tradition differentiates college football from and makes it more popular than professional sports to which it might otherwise be comparable, such as, for example, minor league baseball. In order to preserve the character and quality of the "product," athletes must not be paid, must be required to attend class, and the like.
It's just three sentences in a 19,000-word brief, on a topic (player compensation) separate from the issue at hand (television contracts). No testimony was taken on the question, no formal arguments made and tested. The lack of rigorous thought is reflected in Stevens' casual, almost off-hand language. What is the exact definition of "paid," given that checks are being written as part of scholarship contracts that can be worth hundreds of thousands of dollars? Does the ban on pay include endorsements from outside entities? How often must athletes be required to attend class? And what in the world does "and the like" mean?
It's hard to know how much Stevens' own undergraduate experience influenced his fuzzy, sentimental ideas about the nature of college sports -- the University of Chicago cancelled football during his time there in 1939 in a statement about the purpose of higher education. But most legal scholars treat his passage as "dicta," or commentary that, while not to be ignored, doesn't pass as the law of the land.
Not the NCAA, which has continually cited the gift language when challenged in the courts, most recently in the O'Bannon suit. Indeed, since NCAA v. Board of Regents, so many of the NCAA's major initiatives (most notably academic reform) and public relations efforts (those ubiquitous March Madness PSAs about student-athletes going pro in something other than sports) seem calculated to support Stevens' verbiage, as if showing fidelity to those principles will continue to buy the favor of courts.
The hazard, of course, is that water finds the point of least resistance. So instead of colleges giving something extra to athletes, who know they're the talent at the center of these multibillion-dollar media contracts, it's Nevin Shapiro. And Lloyd Lake. And so many other dubious characters the NCAA and its enforcement arm ends up investigating as a way of attempting to separate athletes from cash and benefits, no matter how small. Often, the gumshoes come off like a pack of Inspector Javerts, scorching earth to pursue the guy who stole a loaf of bread.
What is new are signs that the NCAA's special model is now caving in on itself. Conference-shifting that abandons traditional rivalries. Unethical practices by investigators groaning under the pressure to make big cases stick so heavy penalties can be levied. Politics so intractable that Emmert can't even get membership to sign off on a $2,000 stipend (scuttled by smaller programs over cost concerns more than philosophical objections to pay-for-play). Talk of creating a fourth division for big-time programs, further fracturing the cartel.
Until Emmert, every NCAA leader since Walter Byers had been little more than a hood ornament, a face to attach to a monolithic body that serves three key functions:
- Host championships in every sport except FBS football;
- Create something of a level playing field through enforcement actions; and
- Make the case for amateurism, which is central to holding down player costs.
The standard response to breaches of confidence in any of these areas was to create a committee and study it until the media lost attention, or the courts backed off.
Then along came White v. NCAA, the first real threat to the model from the players' side. In 2008, the NCAA settled a lawsuit brought by football and basketball players from big-time programs who argued that the governing body had created a hardship by limiting the value of an athletic scholarship to an amount equal to $2,500 less than the cost of attendance. Forcing the NCAA to come to the table was a federal judge granting class certification to the players.
That's where the O'Bannon side is now, angling for a favorable decision that could bring the NCAA to the negotiating table. On its face, class certification is based on a narrow question: Are the proposed class members similarly situated enough to pursue the claim as a group? But much more is riding on the decision of Judge Claudia Wilken, as the NCAA has loaded up its court filings with arguments on the merits of the overall case that would ordinarily be made after the class certification hurdle is passed. Like his boss Emmert, NCAA lawyer Donald Remy is pressing the issue.
The strategy includes scare tactics, just as it did in 1984's NCAA v. Board of Regents. The NCAA's expert economist predicted consequences to women's sports, and perhaps even the disappearance of scholarships in football and men's basketball, if the plaintiffs win. Jim Delany, Big Ten Commissioner, submitted a statement to the court saying that if athletes got any cut of television revenues, his schools might just go the D-III route and eliminate all athletic aid. He later called his own bluff, saying that his declaration was written by others and he just signed it.
It takes a brave judge to want to shake up a popular institution, even if it's seen to be in violation of the law. But by laying out its case this early in the process, the NCAA is gambling that it also hasn't revealed critical flaws in its argument. For instance, in justifying its restraint on player compensation, the NCAA effectively admits that it denies market outcomes -- a key test under antitrust law. Its economist also conceded that if athletes could be paid, stars might stay in college longer. That would serve both the educational mission and interests of fans.
Wilken's ruling on the class cert motion is being seen by legal scholars as portentous, as a nod one way or another could signal how she plans to rule when the case goes to trial on the merits in June 2014.
Roberts is betting on the NCAA's chances of largely, and ultimately, prevailing.
"If the court finds what the plaintiffs are arguing, it'll be earth-shaking," he said. "But I just can't imagine that the court will grant that and say you can't put the players on TV (unless they get a share of revenue). These guys on football and basketball teams are getting full scholarships. It'll be hard for the courts to say that scholarships alone are fundamentally unfair.
"I think there's a level of exploitation of players that is embarrassing. But we haven't reached a point where the public is outraged. There's a segment of population that is outraged, but it's not a politically significant group."
Should O'Bannon win, Roberts sees a parade of iconic coaches making their way to Capitol Hill and signing autographs. He sees Congress passing a law that preserves the status quo, no matter how much money the top programs wring from jersey sales, video games and other revenue sources featuring athletes.
"Who are the kids who are being exploited?" he said. "They're young African-American males. Not much political clout among young African-American males. Meanwhile, who benefits? Coaches, who are very influential, and the athletes from swimming and golf who are getting scholarships but not generating much revenue. These are mostly middle and upper-middle class white kids. So you tell me where the political groundswell is going to come from. Out there in the hinterlands where people cast ballots, the system works well for a lot of people."
However, Congress would be asking an African-American president with labor ties to sign that law. So much could happen between now and any such moment.
All that's clear now is that if history serves as a guide, fans at the end of the day will still get Ohio State-Michigan on a lovely Saturday afternoon each fall. The market will dictate as much, no matter the underlying economics.