Author Archives: Mit Winter

Will California Mandate Cost of Attendance Scholarships and Stipends?

Whether student-athletes should be allowed to receive full cost of attendance (“COA”) scholarships has been a frequent topic of discussion in the college sports world over the past few years. First, an antitrust lawsuit brought in 2006 by former college basketball and football players—White v. NCAA—asked the courts to allow full cost of attendance scholarships. Although the case settled, it did not result in changes to the NCAA’s scholarship rules. Then, the issue appeared to be settled nearly two years ago when the NCAA Board of Directors approved a proposal to allow universities to give student-athletes $2000 stipends on top of their athletic scholarships. But the proposal never went into effect after more than 160 Division I members voted to override its implementation.

Now, a current bill winding its way through the California legislative process (assembly Bill 475b) seeks to end this debate for certain California universities. And not only does the bill require full cost of attendance athletic scholarships for certain athletes: it also requires that athletic scholarships be guaranteed for five years and that a “full” athletic scholarship include a stipend.

Before getting into the details of the new bill, a refresher on California’s Student Athlete Bill of Rights is in order. The Student-Athlete Bill of Rights, which was passed last year, requires California universities making at least $10,000,000 in annual income from the sale of athletics-related media rights to continue providing scholarships to athletes who suffer career ending injuries or who exhaust their athletics eligibility before they graduate. Assembly Bill 475b proposes that the $10,000,000 per year threshold be increased to $20,000,000 per-year and include money made from licensing fees (for things such as video games, jersey sales, etc.), not just the sale of media rights.

For now, this would be an insignificant change. The only California universities making $10,000,000 per year from media rights are Cal, UCLA, USC, and Stanford. And, due to the Pac-12’s new media deals, these universities are also making $20,000,000 per year from media rights and licensing fees. So, this amendment would not affect who the law applies to. It only gives other California universities (San Diego State, Fresno St, etc.) more of a buffer from having the law apply to them.

The important changes are Assembly Bill 475b’s scholarship-related amendments. First, the bill would require all athletic scholarships to be guaranteed for five years, or until the completion of the student-athlete’s eligibility, as long as the athlete is in good standing with the school and continues participating in his or her sport. This is a big change in the way scholarships are usually awarded. Currently, NCAA members are allowed, but not required, to offer multi-year scholarships. In the year and a half since the NCAA began allowing multi-year scholarships, the vast majority of athletic scholarships are still awarded for one year and are renewable at the school’s discretion. It is also important to note that this provision would apply to all athletic scholarships, not just full athletic scholarships. So it would apply to scholarships awarded in sports like baseball and track where partial scholarships are the norm.

Second, the bill would require that all full athletic scholarships cover a university’s full cost of attendance. Pursuant to NCAA rules, a full athletic scholarship only covers tuition, room and board, and books. This leaves a gap of around $3,000 between the value of a full athletic scholarship and the full cost of attendance at most schools. For example, the yearly cost of tuition and fees, room and board, and books at Stanford is $57,362. But, according to its own calculations, the total cost of attendance at Stanford is $60,749. This leaves a difference of $3,387 between the value of a full athletic scholarship and the total cost of attendance. And this number does not include transportation to and from a student’s home, which varies by student. When transportation is included it pushes the difference closer to $4,000. Assembly Bill 475b would require that Stanford cover this difference for all of its athletes receiving full athletic scholarships (football, basketball, volleyball, etc.).

The bill does not stop with mandating cost of attendance scholarships. It also provides that all full athletic scholarships must include an additional $3,600 stipend. Called a “student athlete participation stipend,” this is money that is intended to be used for expenses that fall outside of those included in the definition of cost of attendance. Stanford’s cost of attendance calculation includes amounts for clothing, toiletries, incidentals, and dorm activities. So, an athlete receiving a full athletic scholarship could use the stipend to cover expenses he has beyond these categories.

If the bill is signed into law, it sets the stage for a major fight between California and the NCAA, as it would require UCLA, USC, Cal, and Stanford to violate NCAA rules. With all of the criticism currently coming its way, the NCAA is likely rooting for the bill to die in order to avoid that showdown.

College Athletes and Trademark Rights: Will Others Follow Johnny Football’s Playbook?

Last week, the NCAA ruled that Johnny Manziel can keep damages his LLC is awarded in its trademark infringement lawsuit against the maker of t-shirts that contain the words “Keep Calm and Johnny Football.” This prompted a wave of commentary in the sports world about the ruling creating a loophole that allows college athletes to profit off of their names and likenesses. All a college athlete would need to do is find a wealthy booster willing to infringe upon the athlete’s intellectual property rights, sue the booster, and then quickly settle for a large amount of money.

Well, all of the college athletes out there can stop looking for those rich boosters (although, as the Miami case demonstrates, they may already be well acquainted). According to Andy Staples of SI.com, the NCAA told Texas A&M that the orchestrated scheme described above would be an NCAA violation. Despite the storm of recent criticism it has received, I’m sure the NCAA considered and addressed the booster loophole before deciding that Manziel could collect in his infringement lawsuit.

Although there is no get-rich-quick loophole, this shouldn’t deter college athletes from protecting their rights in slogans, nicknames, and catchphrases that play on their names or likenesses. And with all of the publicity surrounding Manziel’s lawsuit, I would expect more college athletes to follow Manziel’s lead and attempt to claim trademark rights in their nicknames. Cody Zeller is a perfect example. A quick internet search turned up a number of people online selling t-shirts that include Zeller’s nickname, “The Big Handsome,” along with his number 40. And a group of people, apparently unrelated to Zeller, have even filed a U.S. trademark application for the nickname.

But, a college athlete claiming trademark rights in a nickname or phrase is a somewhat tricky proposition. The biggest issue: in order to claim trademark rights in a phrase the phrase must be used “in commerce” by the person claiming rights in the phrase. This means that the phrase must be used on or in connection with a good that is shipped across state lines in furtherance of a sale. So, in order for a college athlete to claim trademark rights in a nickname or other phrase it must be used in connection with an item that is sold.

This presents a problem. NCAA rules explicitly prevent athletes from profiting off the use of their name or likeness. And this interplay between trademark law and NCAA rules is especially problematic when others seek to cash in on an athlete’s nickname, which is exactly what happened to Manziel (and is happening to Zeller).

So, how can a college athlete avoid violating NCAA rules to claim trademark rights in a nickname? By licensing rights in a nickname to someone else. Under U.S. law, qualifying “use” of a trademark may also be made by someone related to the owner, such as the owner’s licensee. Once a license agreement is in place, the licensee can then use the nickname on goods that are sold, or in connection with the promotion of an event. And, voila, the nickname has been used “in commerce” and the owner has trademark rights in the nickname. There is still a catch to this whole process. The trademark license has to be a free license.  Otherwise, the license itself would be an NCAA violation.

Licensing the “Johnny Football” nickname to a third party is exactly what Manziel did. He licensed the trademark last year (presumably for free) and was then able to rely on the licensee’s use of the mark “in commerce” to gain trademark rights and as the basis for the recent filing of his federal trademark application. While it is not necessary to have a federally registered trademark to sue an infringer, it will make it easier for Manziel to prevail in future lawsuits.

It is unclear from the trademark application who Manziel licensed the Johnny Football nickname to, but it appears one of the entities may have been Texas A&M. Manziel’s application specifies that he is relying on Texas A&M’s use of “Johnny Football” in several videos posted to A&M Athletics’ YouTube channel to establish the requisite use in commerce.

As mentioned above, I anticipate other college athletes with marketable nicknames will follow Manziel’s lead and seek trademark protection for those nicknames. It will be interesting to see how the NCAA deals with this issue going forward. College athletes seeking trademark protection for their nicknames is likely not something the NCAA ever envisioned.

Connecticut Follows California’s Lead With Proposed Student-Athlete Scholarship Bill

Last year, I wrote about California’s groundbreaking Student-Athlete Bill of Rights.  The legislation, which becomes effective during the 2013-14 school year, requires California universities receiving at least $10 million annually from the sale of athletics-based media rights to, among other things, continue providing scholarships to athletes who (1) suffer incapacitating injuries, or (2) have exhausted their athletics eligibility prior to graduating.  Universities covered by the law are only required to provide scholarships to athletes that fall into the second category if they are a member of a team that has a graduation success rate of less than 60%.

Now, Connecticut may soon be joining California in passing similar legislation.  A bill introduced by Connecticut State Senator Martin Looney requires public Connecticut universities receiving at least $5 million in media rights revenue to provide academic scholarships to athletes (1) whose athletic scholarships are not renewed due to incapacitating injury or illness resulting from participation in the school athletic program, or (2) who have exhausted their athletic eligibility, but are still in good academic standing and pursuing a degree.

While the Connecticut bill and the California law are similar, there are a few key differences.  For starters, the California bill covers all California universities, public or private.  The Connecticut bill only covers public universities.

Second, the California law covers universities that receive $10 million from the sale of athletics-based media rights.  As currently drafted, the Connecticut bill does not contain the same limiting language.  It takes into account revenue earned from the sale of all media rights when determining which universities would be covered by the bill.  While I doubt this lack of limiting language ever expands the bill to cover any university besides UConn (let’s face it, Central Connecticut State isn’t receiving $5 million in annual media rights revenue, athletics-based or otherwise, anytime soon)*, it is something that the Connecticut legislature could tweak on the bill’s journey through the legislative process.

Lastly, the California law only requires universities to continue providing scholarships to athletes who have exhausted their athletic eligibility prior to graduation if their team has a graduation success rate of less than 60%.  This severely limits this portion of the California law.  Based on recent NCAA data, only basketball and/or football players at Cal, USC, and UCLA would be able to take advantage of the California scholarship continuation provision.  This leaves out athletes on revenue producing teams such as Stanford’s football team.  The Connecticut bill, however, allows any scholarship athlete (in good academic standing) who has exhausted his or her athletic eligibility prior to graduation to continue receiving a scholarship.

The Connecticut bill still has a few hurdles to pass before it becomes law.  But, if it does pass, it could be the beginning of a movement of similar laws being passed in other states.

*And with the rapid deterioration of the Big East, and its decreasing value to TV networks, UConn might not even be receiving $5 million in annual media rights revenue in the future.

Grants of Television Rights, Not Increased Exit Fees, Are The Solution To Realignment Frenzy

A number of Division I conferences have recently increased the fees a member school must pay when it withdraws from the conference.  These fees are commonly referred to as exit fees.  The ACC is one of the conferences that recently increased its exit fees.  And its exit fee provision has been receiving a lot of attention lately because of Maryland’s departure to the Big Ten.

The ACC actually increased its exit fees twice in the span of a year.  The ACC first upped the fees from around $12-14 million to $20 million in September 2011 when it announced it would add Syracuse and Pittsburgh.  The fees were then upped again this September after the conference added Notre Dame (in all sports except football and hockeyl).

The ACC’s current exit fee calls for a withdrawing member to pay an amount equal to three times the conference’s total operating budget at the time of withdrawal.  Based on the ACC’s 2012-13 operating budget, this equates to an exit fee of more than $52 million.  It is this amount that the ACC is seeking in its lawsuit against Maryland for the school’s move to the Big Ten.

When the ACC and other conferences increase their exit fees, the general thinking is that it further discourages members from leaving the conference.  But, because of how courts analyze the legality of these exit fee provisions, increasing the amount of the fee can actually increase the chances of the exit fee provision being deemed unenforceable.  So, instead of discouraging schools from leaving, it can actually embolden them to do so.

In legal terms, conference exit fees are known as liquidated damages.  Liquidated damages provisions are commonly added to contracts.  They set the amount a party to the contract must pay in the event it breaches the contract.  Liquidated damages provisions are useful because they theoretically save the parties the time and expense of litigating the amount of damages caused by the breach.

But, the amount of liquidated damages specified in a contract cannot be randomly selected.  Courts will generally only enforce liquidated damages provisions if (1) the anticipated damages in the event of a breach are difficult to ascertain at the time of contracting, and (2) the amount of liquidated damages is a reasonable estimate of the actual damages that would likely be caused by a breach.  If a liquidated damages provision does not meet this test it is deemed a penalty and is unenforceable.

Assuming that the ACC’s liquidated damages provision fulfills the first element of the test, it is questionable whether it would meet the second element.  The requirement to pay three times the conference’s operating budget does not appear to be related in any way to the actual amount of damages the ACC would suffer if a member withdraws.  It just seems like an easy way to ensure that the exit fee continues to grow without having to continually vote on it.  This makes it look like a penalty.

And the actual number that results from this provision, $52 million, is not a reasonable estimate of the ACC’s actual damages.  For example, Maryland’s departure will not result in the ACC’s tv deal being reduced by $52 million.  A good argument can be made that the ACC actually suffered no damage when Maryland left.  Maryland’s departure allowed the conference to add Louisville.  And the general consensus is that the ACC is now stronger athletically as a result (at least in the two sports that matter for tv revenue purposes, football and men’s basketball).

This is consistent with recent realignment history.  Over the past two years the Big 12 lost Nebraska, Colorado, Texas A&M, and Missouri.  Yet, after adding TCU and West Virginina, the Big 12 signed the most lucrative tv deal in the conference’s history this year. (The one exception to the no damage upon withdrawal argument would be the Big East.  The defections in that conference have definitely hurt the value of its tv rights).

When a liquidated damages provision is determined to be invalid, the party attempting to enforce the provision is allowed to instead seek its actual damages from the breaching party.  But, as discussed above, conferences often suffer minimal damage when a member withdraws, either because the member added little value to the conference or because the conference quickly replaces it with a new member of equal value (at least in tv executives’ eyes).

As a result, exit fees often leave conferences in a tough position.  They have to be high enough to discourage a member from leaving the conference.  But, if they are too high they could be declared an invalid penalty.  And, if the exit fees are invalid, the conference would then have to prove its actual damages, which are usually much less than the amount of the exit fee.  As a result, exit fee disputes have always settled without a court deciding the validity of the liquidated damages provision.  Recent examples include the Big 12 settling with Nebraska, Colorado, Texas A&M, and Missouri for less than the mandated amount of exit fees.

So, what is the solution to the problems with exit fees?  Grants of television broadcast rights.  In these agreements, all of the conference members grant their television broadcast rights to their athletic contests to the conference for a certain period of time.  If a member leaves the conference during that time, the conference retains the member’s television rights.  Because the value of a school to a conference is the television revenue it can help generate, a grant of rights agreement makes the members essentially worthless to another conference that is looking for new members.

While grant of rights agreements do have potential issues (sovereign immunity issues being the biggest), they are not subject to a subjective test like liquidated damages provisions.  Thus, they are much more likely to hold up in court as valid contracts.

Currently, only the members of the Big Ten, the Pac-12, and the Big 12 have executed grant of rights agreements.  Other conferences that want to ensure stable membership would be wise to insist on their members signing similar agreements.  (Yes, even the mighty SEC should have its members sign grants of rights).  If the ACC had one in place, Maryland likely would not be joining the Big Ten.

A Deeper Look Into The Potential Damages In The O’Bannon Case

The O’Bannon case has recently been in the news again. This time the focus has been on the release of the plaintiffs’ class certification expert report. In the report, Stanford economics professor Roger Noll attempts to show that the plaintiffs will be able to prove their case against the NCAA using evidence that is common to the putative class members (i.e., current and former Division I basketball players and FBS football players). If plaintiffs cannot make this showing, their case will not be certified as a class action and the case will likely fade away. So the report is one of the most important documents that will be filed in the case.

Most of the media’s coverage of the report has focused on Noll’s live broadcast revenue damages calculations. Specifically, it has been reported by a number of media outlets that under Noll’s formula SEC football players on team rosters during the 2009-10 school year would share $61.5 million of live broadcast revenue, SEC basketball players $42.5 million, Pac-10 football players $26.3 million, and Pac-10 basketball players $30.4 million. The media reports don’t explain how Noll reached these numbers. But, because you have the good sense to read BusinessofCollegeSports.com, you will now learn.  I must give one warning though.  If you don’t like math you might want to skip the next few paragraphs.

The first step in Noll’s formula is determining the amount of live television revenue a conference’s football and basketball teams generated in a given year. According to Noll’s figures, in 2009-10 the SEC’s football teams generated $123,096,376 in live television revenue and its basketball teams generated $85,043,590.  The Pac-10’s football teams generated $52,506,327 and its basketball teams generated $60,480,049.  (On a side note, the huge gap in the amount of TV revenue earned by the SEC and the Pac-10 points out just how far the Pac-10 was falling behind the other BCS conferences in revenue generation.  Luckily, the Pac-10 members hired Larry Scott as their commissioner and have now closed the gap).

Noll’s formula assumes that this revenue is shared equally among conference members.  That leaves us with the following per-team revenue numbers:

• Each 2009-10 SEC football team earned $10,296,733 in live broadcast revenue.

• 2009-10 SEC basketball teams earned between $6,991,974 and $7,205,685 in live broadcast revenue (the basketball calculations also include a small amount of school specific live television revenue).

• Each 2009-10 Pac-10 football team earned $5,250,633 in live broadcast revenue.

• 2009-10 Pac-10 basketball teams earned between $5,519,602 and $7,142,893 in live broadcast revenue.

Noll’s formula also assumes that yearly live broadcast revenue is split evenly between a school’s athletic department and the members of the men’s basketball and football teams. So, each of the per-team numbers above is divided in half to calculate the players’ share of the live broadcast revenue. Here are those numbers:

• 2009-10 SEC football players’ share per school: $5,129,016

• 2009-10 Pac-10 football players’ share per school: $2,625,316

• 2009-10 SEC basketball players’ share per school: between $3,490,636 and $3,597,328

• 2009-10 Pac-10 basketball players’ share per school: between $2,744,750 and $3,551,969

Lastly, to calculate the per-athlete damages, Noll divides the players’ share of the live broadcast revenue by the number of players on a team’s roster.  Because the roster size is different at each school, the amount of per-athlete damages varies by school. Here are the per-athlete damage numbers:

• Per-athlete damages for an SEC football player on a 2009-10 roster vary from $46,627 to $66,610.

• Per-athlete damages for a Pac-10 football player on a 2009-10 roster vary from $26,253 to $44,497.

• Per-athlete damages for an SEC basketball player on a 2009-10 roster vary from $177,860 to $295,475.

• Per-athlete damages for a Pac-10 basketball player on a 2009-10 roster vary from $171,547 to $253,171.

A couple of interesting observations can be made by examining the per-athlete numbers and Noll’s model in general.

First, although football generates more total broadcast revenue, basketball players will be entitled to more money under Noll’s damages calculation than football players. There is one reason for this: because of the large difference in roster sizes there are fewer players on a basketball team to split the revenue with.

The per-athlete basketball and football numbers are so skewed by roster sizes that a basketball player at a mid-major like Bucknell would be entitled to more live broadcast revenue than a football player at USC. Using Noll’s formula, a basketball player on Bucknell’s 2009-10 team would be entitled to $34,903. (This revenue comes solely from the broadcast rights to the NCAA men’s basketball tournament).  A member of the 2009-10 USC football team is only entitled to $28,229.

Second, in many instances, a BCS football player’s live broadcast damages would not even be equal to the value of his athletic scholarship. For example, the per-athlete number for Stanford’s 2009-10 football team is $36,463. The value of a full athletic scholarship at Stanford in 2009-10 was over $50,000.

Lastly, while the O’Bannon case is still a long way from resolution, if it results in a system like Noll’s being implemented if will be a shock to the collegiate athletics model. Division I members will lose a large chunk of their athletics budgets. As a result, colleges are paying close attention to the case. For example, the Big 12 has recently convened a task force to study what the college sports landscape will look like if the O’Bannon plaintiffs are successful.

The NCAA will also lose the vast majority of its revenue if the plaintiffs prevail. Nearly 88% of the NCAA’s revenue comes from the sale of the broadcast rights for the NCAA men’s basketball tournament. But, in a post O’Bannon world, all of that money will be distributed to Division I men’s basketball players and the schools, not the NCAA. Despite this, the NCAA will not be as affected as the schools. The NCAA already distributes 96% of its annual revenue to NCAA member schools. The loss of NCAA revenue will most hurt the schools that are reliant on the NCAA distributions.

In the end, the O’Bannon case has the potential to be as important as the U.S. Supreme Court’s NCAA v. University of Oklahoma Board of Regents decision. That decision granted schools the ability to sell the broadcast rights to their athletic events. Prior to tha decision, the NCAA controlled and sold the television rights. With schools allowed to sell their television rights, money began to flow directly into the school’s athletics coffers. If the O’Bannon plaintiffs are successful, some of that money will begin to flow directly into the hands of the student-athletes.

Davidson Says “No, Thanks” To The CAA, College of Charleston Says “Yes, Please”: What Happens Next?

Last week the Southern Conference made an announcement that had been rumored for weeks: Davidson has rejected the Colonial Athletic Association’s invitation to join and will remain in the Southern Conference. While some may be surprised at Davidson’s decision to remain in a less highly-rated conference, the decision actually makes sense for a number of reasons.

First, although the CAA is a higher rated basketball conference (14th in last year’s RPI compared to the Southern Conference’s 23rd), moving to the conference wouldn’t have necessarily benefitted Davidson’s basketball program.  It could have actually harmed the program.

Davidson’s men’s basketball team is currently the cream of the crop in the Southern Conference.  This would not be the case in the CAA.  Although the CAA has recently received multiple tournament bids, it is usually a one bid conference like the Southern.  In moving to the CAA, Davidson would be moving to a tougher one bid conference, thereby harming its chances of making the NCAA tournament on a regular basis as it recently has done as a member of the Southern Conference.

Second, I doubt Davidson would realize much, if any, financial benefit from moving to the CAA.  Although the CAA did recently sign a television deal with NBC Sports Network that will increase the conference’s national exposure ( NBCSN will carry 18 CAA men’s basketball games nationally this season), the CAA members receive no money from the deal.  NBCSN pays for the members’ production costs.  That’s it.  And there is no guarantee that any of Davidson’s games would actually be selected for a national broadcast.  NBCSN did not select one of my alma mater’s games for a national broadcast this year.

It is true that the CAA has recently received much larger payouts from the NCAA’s Basketball Distribution Fund than the Southern ($3,355,296 versus $2,156,976 for the 2010-2011 season).  However, most of the CAA’s larger payout has been a result of VCU’s recent NCAA tournament successes.  With VCU now gone to the Atlantic 10 and Old Dominion leaving the CAA next year for Conference USA, the CAA is losing two of its basketball programs most likely to experience deep tournament runs. As a result, the Basketball Fund payouts for the CAA and the Southern will likely be much closer in the future.

Lastly, Davidson is just different than most other Division I members.  It is content with its current position in the college sports pecking order.  There is nothing wrong with that.

Despite Davidson’s rejection, the CAA didn’t leave its foray into the Southern Conference empty handed.  On Friday, the College of Charleston’s board of trustees gave the school’s president authority to negotiate Charleston’s entrance into the CAA.  Charleston’s president cited a number of reasons for being in favor of the move: stronger conference opponents, increased opportunities for at-large bids to NCAA tournaments, the ability to  recruit better student-athletes, stronger academic support for student-athletes, alumni living outside South Carolina will now have access to Charleston games, and access to the resources of the Colonial Academic Alliance, which promotes undergraduate research, study abroad opportunities, and faculty and staff professional development.  It’s obvious from this list that Charleston is looking to enhance its athletic and academic programs in making the move.

So, with Charleston in the fold where does the CAA go from here?  Look for at least one other Southern Conference member to join Charleston in the CAA at some point.  Rumors have focused on UNC-Greensboro, Elon, and Furman. Whatever happens, don’t expect the CAA to retain whatever membership configuration it ends up with for long.  There are only 4 teams remaining from what was the CAA when I graduated in 2001.

On a side note, if there would have been fewer defections since then, along with a few additions, the CAA would be even better basketball-wise than it recently has been.  Check out this hypothetical conference line-up: Richmond (left after 2000-2001 season), VCU (left after 2011-2012 season), Old Dominion (leaving after 2012-2013 season), East Carolina (left after 2000-2001 season), George Mason, Drexel, Delaware, William and Mary, UNC-Wilmington, James Madison, Northeastern, and Charleston.  That conference would compare favorably to any other mid-major basketball conference in the nation.

Student-Athlete Name & Likeness Litigation: Will it Lead to a Stronger College Athletes Union?

Documents that were recently released in connection with the filing of a motion in the NCAA student-athlete name and likeness litigation (O’Bannon v NCAA) show that one of the defendants, the Collegiate Licensing Company, has contemplated starting a college athlete’s union. The CLC aids many universities, conferences, bowl games, and the NCAA in protecting, managing, and developing their brands. As part of that process, the CLC is the trademark licensing agent for these entities.

Presumably, the idea behind starting a college athlete’s union is the opportunity to provide the same types of services to the union and its individual members: college athletes. But, what many, including the CLC, may not know is that a college athlete’s union already exists: the National Collegiate Players Association (“NCPA”).

The NCPA was founded by Ramogi Huma. Huma is a former UCLA scholarship football player. He started the NCPA after the NCAA suspended one of his teammates for accepting groceries after his scholarship money ran out at the end of the month. The NCPA claims that it has over 14,000 current and former student-athletes as members.

Huma and the NCPA have been behind some of the recent efforts to make NCAA bylaws and state legislation more student-athlete friendly. For example, the NCPA was intimately involved in the White v. NCAA litigation. This case sought to allow Division I institutions to provide athletics-based scholarships to men’s basketball and football players equal to each school’s actual cost of attendance. I was a member of the attorney team that represented the NCAA in this case and it ultimately settled with no change to the NCAA bylaws. Ironically, the NCAA now agrees with the NCPA’s stance on allowing Division I members to award athletics-based scholarships up to a school’s cost of attendance. But, much of the membership is still opposed to the rule change. I previously discussed this topic in this earlier entry.

More recently, the NCPA was successful in lobbying California to pass legislation known as the Student Athlete Bill of Rights. The legislation mandates that certain California universities continue to provide scholarships to student-athletes who suffer career ending injuries, pay health insurance premiums for low-income student-athletes, and pay for injured student-athletes medical bills (even after they are no longer attending the university). Governor Jerry Brown signed the bill into law last week. I previously covered some of the problems with the legislation here.

The NCPA also, among other things, successfully pressured the NCAA into increasing the amount of the NCAA death benefit and removing the cap on the amount of money a student-athlete can earn from a part-time job.

While the NCPA has had success in changing NCAA bylaws and passing state legislation, it appears the CLC envisions taking things a step further: organizing student-athletes for the purpose of licensing the use of their names and likenesses during and after their college careers (the CLC documents refer to the organization as the College Student-Athlete Players Association). For example, if a Manhattan, Kansas car dealer wanted to use Colin Klein in a TV ad, CLC would negotiate the terms of the deal. CLC would do the same for other current and former student-athletes who had offers for advertising, apparel, or other promotional opportunities.

The CLC’s potential plan has one big problem: current student-athletes are deemed ineligible the moment they accept payment from third parties based on their participation in college athletics. Once Colin Klein accepts payment from the car dealer he can no longer play football for Kansas State. And he is no longer on TV, no longer being talked about as a Heisman candidate, and no longer helping the car dealer to sell cars. The same would be true for other current student-athletes who sign on with CLC, and CLC would quickly run out of student-athlete clients.

The only chance of current success for the CLC’s potential plan would be a massive organizing campaign of FBS football and Division I men’s basketball players. These student-athletes are helping to generate nearly all of the revenue for many university athletic departments and the NCAA. If they were to strike, and if the flow of revenue stopped, it would cripple the athletic departments and the NCAA. Perhaps the NCAA would change its bylaws to allow student-athletes to profit from their names and likenesses as a result.

Would current Division I football and men’s basketball student-athletes organize en masse and refuse to play in an effort to gain the ability to license their names and likenesses? Maybe. Putting myself back into my 18-year-old mind, if a CLC representative came into the locker room and told me that my teammates and I would be able to get paid for promotional appearances if we joined the CSAPA it would be appealing. But, if he or she then told us that we would likely not be playing basketball for at least a portion of the season and that we could potentially lose our scholarships, I would have likely rejected the invitation to join. I’m sure many current student-athletes would feel the same way. Putting a free education at risk for non-guaranteed licensing payments is a big risk.

But, if the plaintiffs in the O’Bannon lawsuit are successful that risk could be eliminated. The plaintiffs in the case are currently asking the court to implement a system where money generated from the licensing of the names and likenesses of Division I football and men’s basketball players is held in trust until the student-athletes’ playing careers are over. This would be a lot of money as it includes the money the NCAA, the conferences, and the schools receive from television broadcast rights agreements.

It would be interesting to see how the NCPA and the CLC react to the implementation of this system. Would they join forces to act as student-athletes’ licensing agents or fight for supremacy? We’ll have to wait and see how the litigation progresses, so stay tuned for further developments in the case.

Study Shows Athletic Success Impacts Academics Positively

A recent article in the Journal of Sports Economics co-authored by economists Devin and Jaren Pope has confirmed what many anecdotally believed to be true:  success in Division I men’s basketball or FBS football leads to increased interest from potential high school applicants.  The article, titled “Understanding College Application Decisions: Why College Sports Success Matters”, shows that between 1991 and 2001 the number of SAT scores sent by high school students increased for a 1-2 year period after a school’s men’s basketball team made the NCAA men’s basketball tournament or its football team ended the season in the AP Top 20.  Where students sent SAT scores is used as a proxy for where students actually sent applications.

And, as would be expected, the number of SAT scores received was higher for the schools which were most successful in the basketball tournament or finished higher in the AP football poll.  Schools received 2.2% more SAT scores when their men’s basketball teams made the NCAA tournament, 3.8% more if it made the Sweet 16, 5.7% more if it made the Final Four, and 9% more if it won the national championship.  A top 20 finish for the football team resulted in a 2% increase, a top 10 finish resulted in a 5.2% increase, and a (pre-BCS) national championship resulted in an 11% increase.

Besides proving that successful men’s basketball and football programs do play a part in some high school student’s college decisions, the article bring up another issue:  the allure of maintaining a Division I men’s basketball program and/or a FBS football program.  Most schools are looking for ways to increase their applicant pool and to expand their brand.  If a school is not in Division I for basketball or FBS in football, it is missing out on one of the ways to do these things.

In fact, there may not be an easier way for a school looking to grow enrollment and its brand than through success in men’s basketball and football.  This is demonstrated by one of the most amazing statistics in the Pope’s article: the effect of making it to the Final Four in basketball or the top ten in football is approximately equivalent to the effect of a school improving its academic rank by half (e.g. 100th to 50th or 50th to 25th)!  I have no idea how hard it is for a school to improve its academic rank by half, but I have to assume it’s a difficult task.  In many cases, it may be easier for a school to make its way into the top ten in FBS football than to improve its academic rank by half.

Let’s look at Old Dominion University as an example.  After a 68 year hiatus, ODU football took the field again in 2009.  It played as an independent FCS team during its first two seasons.  In 2011, the ODU football team became a full member of the Colonial Athletic Association football conference.  ODU finished that year second in the CAA (regarded as the SEC of FCS football conferences), hosted and won a FCS playoff game, and finished 10th in the final FCS poll.  All of this was accomplished in three seasons.  And it gained ODU entrance into the FBS (ODU will become a member of Conference USA in 2013), where it has the chance of finishing in the AP top ten.

While there is no guarantee that ODU will ever make the top ten in football, its chances of doing so before it improves its academic rank by half seem good.  We can look to Boise State as an example of what is possible.  Boise State moved up to what is now the FBS in 1996.  It first finished in the AP’s top 10 in 2006, when it was ranked number 5 after its memorable Fiesta Bowl win over Oklahoma.[1] Boise has finished in the AP top 10 three times since then (2009, 2010, and 2011).  So, it took Boise 10 years to make its way from FBS newbie to top ten finisher.

Can ODU improve its academic ranking by half in ten years?  Not likely.  In the latest US News rankings ODU received a “Rank Not Published” (RNP) designation in the National Universities category, signifying it resides outside of the top 200.  Let’s be generous and assume that ODU’s rank is 201.[2]  That means it would have to improve its ranking to 100 to see the same type of application bump that comes along with a top ten FBS football finish.  Again, I don’t have any data on how quickly a school can improve its academic ranking, but I have to assume it would take longer than 10 years to move from 201 to 100.  Perhaps the Pope brothers can look into this next.

 

For a look at how the study could predict multi-million losses for Arkansas thanks to their defeat at the hands of Louisiana-Monroe, check out this piece on ESPN.com by BusinessofCollegeSports.com founder, Kristi Dosh.



[1] Statue of Liberty, anyone?

[2] This bit of generosity is hard for me.  I played basketball at William and Mary, which is in the CAA with ODU.  Let’s just say that the alumni/fan bases aren’t too fond of each other.