2008 presentation about anti-trust and the NCAA

1. CHALLENGING THE NCAA
SM 405 Anti-Trust
Thursday, April 17, 14

2. THE QUESTION
Are big-time college sport athletes being cheated by
the NCAA?
An anti-trust lawsuit filed in 2006 may give athletes
their best shot at expanded benefits
Unlike past lawsuits, it steer clears from seeking pay
for athletes
Thursday, April 17, 14

3. THE LAWSUIT
Filed by two heavy hitting Los Angeles firms on the
behalf of 3 former athletes
And indirectly on behalf of all football and men’s
basketball players who competed for 144 Division I
universities from 2002-2010
~20,000 athletes
Thursday, April 17, 14

4. WHAT IT SAYS...
“While big-time college sports have become a huge
commercial enterprise generating billions in annual
revenues, the NCAA and its member institutions do
not allow student athletes the share of the revenue
they would obtain in a more competitive market...”
Thursday, April 17, 14

5. WHAT IT SAYS...(CONT.)
“The NCAA and its member institutions have
agreed to deny a legitimate share of the
tremendous profits of their enterprise to the
student athletes who make the big business of big-
time sports possible”
Football & Basketball players generate “billions”,
and therefore should be able to afford basics like
toilet paper, soap, & deodorant
Thursday, April 17, 14

6. WHAT DOES IT MEAN?
Trying to show the association and its members have
violated federal law by agreeing to artificially suppress
the value of sports scholarships the athletes receive
“Shortchanged student athletes by imposing an
artificial cap on financial aid”
Usually set below the cost of full attendance non-
athletic students
Money is there for coaches, facilities
Thursday, April 17, 14

7. WHAT’S CURRENTLY THE
DEAL?
Schools limit the value of athletic scholarships to
tuition to fees, room & board, and required books
What are typical college student expenses?
Thursday, April 17, 14

8. RAW-DEAL FOR ATHLETES?
Schools do not cover school supplies, health &
disability insurance, and travel cost--aspects of a
typical student’s education
NCAA claims “students” first, right?
NCAA itself values student expenses to average
$2500
Should there be a cap on scholarships?
Thursday, April 17, 14

9. RAW-DEAL FOR ATHLETES?
(CONT.)
Without a cap,“the same competitive forces that
drive schools to provide coaches with million dollar
salaries and build lavish athletic facilities would also
compel those schools to provide athletics-based
financial aid covering the full [cost of attendance].”
Thursday, April 17, 14

10. LET’S DO THE MATH...
Lawsuit doesn’t include exact $ value
144 colleges with 100 football and men’s basketball
players x four years’ worth of alleged annual
scholarship underpayment of $2500 x trebled
damages under antitrust = $350 million
Thursday, April 17, 14

11. NCAA’S POSITION
Recent rule change allows DI colleges to
supplement athletic scholarships with institutional
or other financial aid
Money not based on athletic skill
Permits athletes to work part time
NCAA special assistance fund available
Does it ignore the NCAA’s right to determine
what’s covered in a scholarship and to enact its
own rules? (Members vote on the rules)
Thursday, April 17, 14

12. WHY THIS CASE IS
DIFFERENT?
NCAA business practices, not rules, are in
question
NCAA can’t use argument that it needs the
scholarship restriction to sustain the amateur
nature of college sports
Any attempt to seek payment over and above
what a normal student would get would
professionalize college sport
Thursday, April 17, 14

13. WHY IS THIS CASE
DIFFERENT? (CONT.)
Lawsuit argues “restricting the value of athletic
scholarships is a cost containment mechanism that
enables the NCAA and its member institutions to
preserve more of the benefits of their enterprise
for themselves”
Lawsuit sites a 2003 statement by Myles Brand
saying he favored the idea of increasing the value
of a scholarship to full cost of attendance, money
could come from $6 B TV contract
Thursday, April 17, 14

14. PAST EFFORTS TO INCREASE
SCHOLARSHIPS
Defeated on the grounds of “competitive equity”--
the idea that without limits on spending, wealthier
sports programs would be able to outspend their
smaller peers and ultimately run them into the
ground, decreasing the competitiveness of the
market
Once again, why is this different?
What do you think is the NCAA’s strongest
argument to win this case?
Thursday, April 17, 14

15. NCAA ARGUMENTS?
Limiting scholarships is the only way to maintain a
level playing field in terms of recruitment
Paying up to the cost of attendance will kill non-
revenue sports
What’s the problem with these arguments in regards
to antitrust/encouraging competition?
Thursday, April 17, 14

16. THE WINNER
It would increase competition among NCAA
members
The Ohio State’s and Michigans may say that the
true cost of attendance is 15 times that of Miami of
Ohio and Marshall
But, the athlete would benefit with competition, right?
Thursday, April 17, 14

17. SO WHAT HAPPENED?
NCAA got scared...and have agreed to a settlement
If not approved, the NCAA could look very, very
different in coming years
Thursday, April 17, 14

18. SETTLEMENT TERMS
Allow conferences & institutions to distribute $218M
through 2012-13
Originally from Special Assistance Fund and
Academic Enhancement Fund
New program, with more flexible guidelines
“Student-Athlete Opportunity Fund” (SAOF)
Thursday, April 17, 14

19. ADDITIONAL TERMS
Creation of $10M fund that former athletes can
apply for reimbursement of education expenses
3 years to apply; $500 one-time or max of
$2500 per year for 3 years of education
Allowing DI schools to provide year-round,
comprehensive health insurance
NCAA Membership will examine multi-year
scholarships
Opinions on this?
Thursday, April 17, 14

20. DISCUSSION ITEMS
Will it exacerbate tensions between the richest
sports programs and the “have-nots?”
Does it propel or slow down the push by college
athletes to seek more money?
Does this change the NCAA’s relationship with
college athletes?
Will it restart the conversation again within the
membership?
Thursday, April 17, 14

21. STAY TUNED...
June 23, 2008
Thursday, April 17, 14