The NCAA cases: is it losing its hold on college sports in the United States?

Published 07 March 2013 By: John Wolohan

Basketball under foot

With a projected revenue of $871.6 million in 2012-13 the NCAA is fighting numerous legal battles that threaten its status as the regulator for college sport in America. John Wolohan discusses some of the key cases the NCAA are in battle over.

 


One of the unique aspects about colleges and universities in the United States is that besides serving as institutions of higher education, they also serve as feeder or developmental programs to North American professional sports leagues. For example, as part of the collective bargaining agreement between the National Football League (NFL) and the NFL Players Association, before an athlete can play in the NFL he must be three years removed from high school. As a result of this rule, gifted athletes will spend the three years and sometimes up to five years, at one of the many college and universities that play big time college football. The National Basketball Association (NBA) has a similar rule, requiring athletes to be one year removed from high school. Therefore, like football, many of the best basketball players will spend at least one year playing college basketball before moving to the NBA. Even those leagues that have minor leagues and a history of signing athletes right out of high school, such as baseball and hockey, have also seen more and more high school athletes opt to attend college and participate in the NCAA.

In an effort to establish guidelines for the recruiting of athletes and the financial benefits available to such athletes, to regulate the relationship between the athlete and his or her college or university, protect the health and safety of the athletes and to ensure a level playing field, the colleges or universities in 1906 created the National Collegiate National Athletic Association (NCAA), an independent organization with the single goal of regulating college athletics.

While the NCAA has worked relatively well over the last 100 years, during the past 10 – 15 years, as college athletics have grown into a multi-billion dollar business, the organization has faced more and more legal challenges from its member schools and athletes.  The purpose of this paper is to illustrate some, but not all, of the current lawsuits filed against the NCAA by some of its member institutions and athletes.

 

Penn State v. NCAA

In response to Pennsylvania State University's athletic and university administrator covering up 13 years of child sexual abuse involving the school's assistant football coach Jerry Sandusky, the NCAA imposed a series of sanctions against the university.   As part of the NCAA's sanctions, the university agreed to pay a $60 million fine, which is approximately one year's gross revenue generated by the school's football program, to create an endowment program for child victims of  sexual abuse, and a four-year ban on postseason play, among other penalties.  However, while the university may have agreed to the sanctions imposed by the NCAA, critics have argued that the NCAA ignored its own enforcement rules, by failing to conduct its own investigation into the scandle, in prosecuting Penn State and have challenged the NCAA two lawsuits filed by state lawmakers.

In the first case, the state's Governor Tom Corbett announced on January 2, 2013 that he would be filing a federal Sherman Antitrust suit against the NCAA asking the court to throw out the sanctions.  Although as a member of the Penn State Board of Trustees, the Governor initially advocated acceptance of the penalties, in the lawsuit he argues that the NCAA acted illegally and that its penalties would cause irreparable damage to the Pennsylvania economy.   In particular, Corbett argues that since Sandusky's conduct was criminal in nature and had nothing to do with athletics per se, the NCAA overstepped its authority in imposing the sanctions.

While Corbett's lawsuit may offer a new wrinkle to the various antitrust NCAA lawsuits the courts have previously considered, if past antitrust lawsuits against the NCAA are any indication, Corbett's lawsuit is a long shot at best.  Historically, the courts have given the NCAA a lot of deference given its mission of promoting amateurism in sports. As a result, of the hundreds of antitrust cases filed against the NCAA over the years, ranging from recruiting violations to the salaries of coaches to compensation for student athletes, only a small number have proven successful.   In fact, the only antitrust cases the NCAA has lost are when it has strayed into matters that do not directly relate to its core mission: promoting fair competition between teams, promoting amateurism in sports, or promoting academics.

In the second lawsuit, State Senator Jake Corman is suing the NCAA to require the organization to keep the $60 million fine paid by Penn State within the state of Pennsylvania.  While the NCAA has said it has no immediate plans to distribute the money, it also does not plan on negotiating with Mr. Corman on how the fine is spent either.

 

In re NCAA student-athlete name & likeness litigation

While receiving nowhere near the media attention as the Penn State cases, the NCAA is facing a potentially devastating class-action lawsuit filed by former football and basketball players over whether the NCAA owns the rights to the athletes' images and likenesses.  In the case, In re NCAA Student-Athlete Name & Likeness Litigation, 2010 U.S. Dist. LEXIS 139724 (N.D. Cal., Dec. 17, 2010), the former student athletes allege that the NCAA and Electronic Arts, the maker of electronic video games such as FIFA 2012, conspired to deprive the athletes of their rights of publicity and that the NCAA's rules and regulations constitute anticompetitive conduct in violation of § 1 of the Sherman Antitrust Act.

In particular, the former athletes allege that in order to retain the eligibility to participate in athletics, the NCAA required that the athletes relinquish all rights in perpetuity to the commercial use of their images, including after they graduate and are no longer subject to NCAA regulations. If an athlete refuses to sign the form, he or she would not be allowed to participate in intercollegiate athletics.  As a result, the former athletes claim that the NCAA's rules and regulations enable the organization to enter into licensing agreements with companies that distribute video games containing student athletes' images without compensating the athletes for the use of their images.

While the money involved in this lawsuit could reach into the millions of dollars, the reason this case is so important is because the NCAA does not allow athletes to receive any compensation for their participation in college sports.  Under NCAA rules, all that the schools are allowed to give the athletes is free tuition, room and board and books.  If, however, the court finds  the NCAA and the schools illegally used the athletes' rights of publicity or violated the Sherman Antitrust Act, each individual athlete would have to be paid a fee for the use of their image.  This in turn will deprive the NCAA and individual member schools of a financial stream, while at the same time opening the door to direct financial compensation to college athletes.

 

Cohane v. NCAA

Another case that has been slowly winding its way through the court system is Cohane v.NCAA. In 2001, an NCAA investigation found that Tim Cohane, the men's basketball coach at the State University of New York at Buffalo and his staff had violated several  relatively minor NCAA violations, such as watching players play pick-up before the official practice date. However, in an attempt to assist the NCAA in its' investigation, school officials reportedly told players they would not graduate if they did not implicate their coach in the NCAA investigation.  In addition to the penalties imposed on the school's athletics program, the NCAA also required that any institution looking to hire Cohane must first justify the decision before the infractions committee.

As a result of the NCAA sanctions, Cohane claims that the NCAA ruined his professional reputation, destroyed his coaching career and destroyed his chances of pursuing a coaching career.  Although the case was dismissed in 2005 Cohane appealed to the U.S. Court of Appeals for the Second Circuit.  The case which is expected to come to trial in 2013 could challenge not only how the NCAA sanctions coaches and schools, but could also call in question the NCAA's status as a private entity for constitutional purposes.  If the court rules that the NCAA was working with the University of Buffalo, it could call into question a number of other cases involving the NCAA.

 

Adrian Arrington v. NCAA

Just like the NFL, which is being sued by close to 4,000 former players over head injuries in at least 175 cases, including the family of Junior Seau who claim that the former linebacker's suicide was the result of brain disease caused by violent hits he sustained while playing football. The NCAA is also facing numerous lawsuits over the long-term neurological damage some athletes have suffered as a result of concussions sustained playing.

The players, who are seeking unspecified financial damages, as well as the establishment of an NCAA trust fund to pay for the medical monitoring of all former athletes who suffered concussions, claim that the NCAA knew as early as 2003 that multiple concussions could lead to health problems.  However, the players claim that even with such knowledge, NCAA officials did nothing to require colleges to have concussion policies until 2010.  In fact, the players claim that the NCAA covered up the risks associated with the sport and the risk of injury to the players.  For example, one player, Adrian Arrington, said he endured five concussions on the field, some so severe that he could not recognize his parents after leaving the game.  However, even after enduring the concussions, he claims that team doctor cleared him to return to action just one day after his injury.  Such repeated trauma, Arrington claims, eventually caused him to develop memory loss, migraine headaches, depression and seizures. He is unable to work, he said, and sometimes can't even care for his young children alone for fear that he will lose consciousness and put them in jeopardy.

The NCAA has responded by arguing that it is not the organizations' obligation to protect the health and safety of the players, but the responsibility of the individual schools.  In addition, the NCAA argues that the athletes each sign forms acknowledging the risk of concussions.

 

Conference Realignment

In the early days of college sports, colleges and universities joined together to form athletic conferences based on geography and similar educational philosophies.  And while schools would on a rare occasion switch from one athletic conference to another based on changes in their educational or athletic philosophies, for the most part the athletic conferences were a stable group of schools.  In the last 10 years, and the last two in particular, due to the increase value of college sports to television, 25 percent of Division I colleges, those competing at the highest level, have moved from one conference to another or announced their intention to switch leagues.

The reason for all the instability in college sports is because the schools and the conferences keep chasing more and more television money.   For example the Big Ten Conference, which is made up of mostly large state universities in the mid-west in late 2012 agreed to add Rutgers and Maryland just for the television markets that the schools could add to the conference's Big Ten Television Network.  The bigger the conference, the bigger the television market, the more homes the network reaches, the more money the conferences can charge ESPN and other television networks to broadcast their sports events.  To illustrate the value of college sports, in 2010, the most recent year records are available, the five major athletic conferences generated $964.8 million in revenue.

The interesting thing about all the instability in college sports, however, is that the NCAA, the one organization created to protect college sports and college athletes and to ensure that the schools compete on equal footing, has done nothing to stop schools from moving to new conferences.  As a result college students all over the United States are going to be asked to travel thousands of miles to play in games.

Another interesting consequence of college conference realignment is that as conferences grown bigger and bigger, some commentators have argued that the four or five strongest conferences will break away from the NCAA and start their own athletic association. This would allow them to break away from the NCAA and keep all the television revenue from the smaller colleges and universities.

 

New Jersey sports betting

In an effort to cash in on a portion of the money gambled illegally on college sports games annually, the state of New Jersey proposed a new law which would allow legal betting on sports in Atlantic City casinos and at the state's horse racing tracks.  New Jersey claims that allowing it to offer such wagering would not undermine the public's faith in the integrity of those sports.  In support of this argument, the state claims that the sports leagues have thrived in spite of illegal betting levels that have grown to an estimated $380 billion annually.  In addition, New Jersey points out that the proposed law does not allow any betting on sporting events involving New Jersey colleges and university teams regardless of where they played, as well as collegiate sporting events held within New Jersey.

In August 2012, the NCAA and the four major American professional sports filed a lawsuit seeking to block the new law from going into effect. In their lawsuit, the NCAA and the professional sports leagues contend that expansion of sports betting beyond the four states, Nevada, Delaware, Oregon and Montana, which currently allow it threatens the integrity of the games and is a violation of the Professional and Amateur Sports Protection Act.  Oral arguments in the case are scheduled for February 2013.

 

NCAA v. University of Miami

As stated in the beginning of this article, one of the purposes of the NCAA is to protect competitive balance between schools by enforcing various rules.  In January 2013, the NCAA announced that former NCAA enforcement staff members improperly obtained information during the course of the organizations investigation into improper payments to athletes by the University of Miami.

While university officials claimed that the discovery should called into question the ongoing NCAA investigation,  the NCAA and its president Mark Emmert still ruled that the University was guilty of "lack of institutional control."

The President of the University of Miami Donna Shalala, a former Secretary of Health and Human Services in the Clinton Administration, has disputed the NCAA's findings on almost every level and has said that the school should get no additional penalties.  Miami's self-imposed penalties included a two-year bowl ban, player suspensions and holding back of scholarships.  The case now goes to the penalty stage.  If the NCAA comes down hard on Miami, some people believe that Shalala and Miami will challenge the NCAA's decision in court, or even appeal to Congress.

 

Conclusion

While the above are just some of the legal battles currently being waged against the NCAA by its members and athletes, the issues represented by the cases and the conduct of the NCAA in investigating the cases has started people talking about whether the organization can still do the job it was created for: regulating college sports. In particular, some people question whether any one single organization can meet the needs of every colleges and university in the United States.  For example, the University of Texas' football team plays in front of 90,000 people every week and generates around $95 million a year for the school.   The university even created its own television network to broadcast events throughout the state of Texas.  However, in addition to developing rules to regulate schools like the University of Texas, and other large Division I athletic programs, the NCAA also must regulate small Division III schools that do not offer athletic scholarships, do not generate any money from athletic and generally treat them as recreational activities for the students.  In addition, these small schools actually have a voice in creating organizational policy.

As the bigger college athletic programs becomes more and more like professional athletics, it seems only natural that this group of schools will eventually break away from the smaller schools and form their own governing body.  Whether college sports has reached that tipping point yet, only time will tell, but even if it has not, most people agree that the current system has probably reached the end.

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Author

John Wolohan

John Wolohan

John Wolohan is an Attorney and Professor of Sports Law in the Syracuse University Sport Management program and an Adjunct Professor in the Syracuse University College of Law. In addition to being one of the lead editors of the book "Law for Recreation and Sport Managers" by Cotten and Wolohan, John has been teaching and working in the fields of doping, antitrust, gaming law, and sports media rights for over 25 years.

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