All posts by Alicia Jessop

A Look At Oregon’s Alleged NCAA Violations: What Could Hurt The Ducks The Most

After making a public records request in December, the Oregonian and KATU.com received over 500 pages of documents related to alleged NCAA violations committed by Oregon’s football program between 2008 and 2011.  The documents detail findings related largely to Oregon’s payment to a recruiting service company, whose talent scout, Will Lyles, allegedly had impermissible contact with prospective Oregon student-athletes.  While reports have focused upon Oregon’s payment of $25,000 to Lyles’ recruiting service agency, it appears that the bulk of the NCAA’s concern does not lie with that payment, but rather, practices that Lyles allegedly engaged in.

One such practice is that Lyles allegedly did not provide written or video reports about recruits to Oregon.  Under NCAA bylaw 13.14.3, recruiting services must provide subscribers with written or video reports quarterly.  Up until 2011, Lyles allegedly provided neither, but instead, provided Oregon with oral reports about prospective student-athletes.  On the face, this practice seems like a minor issue and another instance of the NCAA making a mountain out of a molehill.  However, the NCAA requires recruiting and scouting service companies to provide written or video reports to prevent institutions from gaining unfair advantages when it comes to gleaning information about recruits.  Requiring written or video reports ensures that each institution subscribing to the service receives the same information.

Given that Lyles allegedly was providing oral reports to Oregon, the notion is that Oregon was getting information about recruits that other institutions using Lyles’ services were not receiving.  It is unknown whether this was the case, but a number of recruits with ties to Lyles eventually signed with Oregon.  This, however, does not in and of itself depict any impropriety by Oregon or Lyles.

Perhaps the biggest issue Oregon faces, though, is explaining allegations that upon the NCAA’s discovery that Lyles wasn’t providing Oregon with written or video reports, that Lyles allegedly provided “outdated” reports to Oregon.  From the outside, this allegation depicts a cover-up of sorts.  If a cover-up was in fact orchestrated, it is for the NCAA to decide who ordered the cover-up.  Did Lyles earnestly provide written reports to save face with the NCAA in an honest attempt to continue being an NCAA-sanctioned recruiting service?  Or, did Oregon ask him to do so after the NCAA realized that Lyles hadn’t provided the report?  In the coming months, Oregon should prepare to answer this question.  Should the NCAA find that the cover-up was upon Oregon’s request, the program will likely suffer stiffer penalties from the NCAA.

For now, the biggest issue Oregon faces is whether the football program’s alleged receipt of Lyles’ oral reports on recruits was a major or secondary NCAA violation.  Secondary infractions are those isolated or inadvertent instances that only provide minimal recruiting, competitive or other advantages.  Major infractions provide major recruiting or competitive advantages.  Over the coming months, the NCAA’s committee on infractions will issue a final report on its findings related to whether a major or secondary violation was committed.  Thereafter, sometime within the year, Oregon will have a hearing before the committee on infractions.

The good news, perhaps, for Oregon is that reports indicate that the NCAA found neither a lack of institutional control nor unethical conduct present.  These factors should help Oregon avoid some of the NCAA’s harsher penalties.  However, one issue Oregon continues to face is that the NCAA may determine it is a repeat violator, as the alleged violations came within five years of Oregon’s 2004 violations.  Should Oregon be deemed to be a repeat violator of the NCAA bylaws, harsher penalties could be imposed on that ground.

Overall, Oregon must prepare the case as to why this alleged violation did not amount to a major violation.  To do this, it must show that it did not receive major recruiting or competitive advantages.  This may be difficult, given the recruits Lyles was allegedly tied to who committed to Oregon.  Reports indicate that Lyles served as a “mentor” to LaMichael James, Tra Carson, Dontae Williams and Marcus Davis, all of whom committed to Oregon.  Thus, Oregon must work to demonstrate that it would have recruited those student-athletes even without the information Lyles provided them with orally.  Given the talent level of these players, this arguably won’t be difficult to accomplish.  Additionally, Oregon must demonstrate that those recruits’ decisions to commit to Oregon were unattached to any relationship they may have had with Lyles.  This may prove to be the more difficult task for Oregon.  However, given the program’s offerings and success over recent years, it likely will not be impossible.  Nonetheless, spring is shaping up to be a busy time for Oregon’s athletics department.

Alicia Jessop is a Colorado-based attorney and the founder of the sports law website RulingSports.com.  Follow her @RulingSports and at AliciaJessop.com.

The Impact Of A $3.1 Million Verdict Against Riddell On Future Football Concussion Litigation

Jurors in a small southern town in Colorado found that Riddell Helmets contributorily negligent in the head injuries a former Trinidad High School (CO) football sustained in 2008.  As a result of its verdict, the jury awarded damages in the amount of $11.5 million, of which Riddell is responsible for paying $3.1 million.

The lawsuit arose after Rhett Ridolfi participated in a “Machine Gun Drill” during an early morning practice.  During the course of the drill, Ridolfi allegedly made helmet-to-helmet contact with another teammate.  This contact resulted in Ridolfi sustaining a serious head injury, which according to Ridolfi’s attorney, has left Ridolfi with impulse and behavioral problems and has left in a walking brace and with limited functions on his body’s left side.

Ridolfi’s mother filed the lawsuit on his behalf in March 2010.  The lawsuit alleged negligence not only against Riddell, but also against six of Ridolfi’s football coaches.  Three of the coaches were found by the jury to be negligent.  However, reports indicate that damages were not ordered to be paid by them.  Ridolfi’s attorney told the media that he will be filing a motion to have Riddell pay all of the $11.5 million in damages awarded by the jury.  Riddell plans to appeal the verdict.

While the court transcript has not been reviewed, it appears that Ridolfi’s attorney argued that the defendants were liable for two types of products liability negligence:  product defect and failure to warn.

With respect to the product defect claim, Ridolfi’s attorneys argued that the padding in the front of Ridolfi’s helmet which was manufactured by Riddell wasn’t safe enough.  They also argued that another type of padding could have been used which would have protected Ridolfi.  This argument was rejected by the jury.

However, the jury found that Riddell was negligent in the type of warning it provided on its helmet, which was worn by Ridolfi.  Under tort law, a product may be defective as a result of the manufacturer’s failure to give adequate warnings as to the risks involved in using the product.  For liability to attach, the danger must not be apparent to users.

Reports indicate that Riddell has included a warning label on its helmets since 2002.  However, in this instance, it appears that the Colorado jury found that the warning label present on Ridolfi’s helmet in 2008 was inadequate.  This was likely due to the fact that the warning label did not warn against the possibility that the helmet would not protect against concussions and serious bodily injury sustained from instances including helmet-to-helmet contact.

A statement released by Riddell indicated that it believed that if testimony from a “warnings” expert would have been admitted by the judge, that it would have been fully exonerated in this case.  It is likely that Riddell’s appeal will argue that point, as well as the damages awarded and that its warning was sufficient.

This case, which arose out of a small town in Colorado, likely has larger implications than the damages which Riddell is facing paying.  First, it demonstrates juries’ willingness to hold helmet manufacturers liable for failing to adequately warn of the injuries football players can sustain even while wearing a helmet.  This factor is relevant as Riddell is currently facing at least two other cases on this issue, one of which is brought by 4,000 former NFL players.  Whether juries in other jurisdictions–where the other cases against Riddell are located–will find similarly will only be determined by time.  Furthermore, it is to be seen whether other courts allow Riddell’s “warnings” expert to take the stand and how that testimony may impact the outcome of the trial.

Riddell, however, can likely breathe a small sigh of relief that the Colorado jury did not find the design of its product to be defective.  Thus, Riddell may feel fairly certain that the product design defense it has created may be successful in other jurisdictions and in front of other jurors.

Nonetheless, the road for Riddell is not clear.  In coming months, it faces cases against plaintiffs who are more well-known (for example, the family of the late Junior Seau), have deeper pockets and greater media attention on their sides.  It is to be seen whether given these factors, juries return similar verdicts to that reached by the Colorado jury.

Alicia Jessop is a Colorado-based attorney and the founder of the sports law website RulingSports.com.  Nothing in this article is legal advice and no attorney-client relationship is intended to be created by this article.  Follow Alicia @RulingSports and at AliciaJessop.com.

Auburn Justice: The Serious Issue Facing Former Auburn Football Player Mike McNeil

Selena Roberts’ serious allegations against the Auburn athletics department earlier this week caused an uproar among members of the media and college football fans. If true, the story’s accusations of rampant drug use by football players, coaches handing players money under the table and academic officials changing football players’ grades to ensure their eligibility, are enough to turn Auburn athletics on its head. Tucked away in the story, though, is an issue more pressing and with greater possible harm than any NCAA sanction can impose. It is one that may cost former Auburn football player, Mike McNeil, his freedom.

McNeil is currently facing trial on two felony counts of first-degree robbery. The charges stem from allegations that four former Auburn football players robbed a home while armed. While building allegations of Auburn’s alleged athletic improprieties to a crescendo, Roberts quickly slipped a fact into her story that a trained legal eye would not let go unnoticed. Eight paragraphs into Roberts’ Auburn expose, was the following quote,

“To show you how innocent he is, Mike is willing to go to trial because he says he didn’t do it,” says Ben Hand, who recently was dismissed as McNeil’s attorney after the family formally complained that he had a conflict of interest. “Mike McNeil didn’t rob anyone.”

As it turns out, McNeil’s attorney previously represented a man who lived in the house that McNeil allegedly robbed. In the legal world, this is called a “conflict of interest.” And in the legal world, a conflict of interest is a reason for which a criminal defendant can appeal the outcome of his case, should he be convicted.

Roberts’ assertion in her article that Hand was dismissed as McNeil’s attorney is incorrect. That is because today, the Auburn educated judge hearing McNeil’s case ruled that Hand could not withdraw as counsel for McNeil’s case. Rather, McNeil’s case will proceed to trial next Monday.

At that trial, McNeil faces three options when it comes to legal representation. The first, is to be represented by a lawyer who once represented someone whose home McNeil allegedly robbed. The second is for McNeil, without a college degree, to represent himself in a felony case in which he faces 21 years to life in prison. The third option, is for McNeil to hire a new attorney who will assist his conflicted attorney. That attorney will have 72 hours to prepare for a trial that took the prosecution nearly two years to bring to fruition.

Arguably, there is not an attractive choice present in this bunch. As depicted above, Hand has maintained McNeil’s innocence to the media and will likely advocate zealously for him. Additionally, the presiding judge in McNeil’s case, in ruling that Hand cannot withdraw from the case, determined that the prosecution will only proceed to trial against McNeil on two charges, as opposed to the seven charges he was originally facing. This was based upon the judge’s finding that conflicts existed between Hand and those charges, but were not present in the two charges McNeil continues to face. Regardless of these facts, questions likely persist in McNeil’s mind as to whether his attorney bears any biases towards him and if he will receive a fair shot at justice.

As the time on the clock dwindles down to McNeil’s trial date, a review of 11th Circuit (the circuit in which Alabama is located) and Supreme Court case law is necessary. One basis upon which a defendant can appeal his conviction is for ineffective assistance of counsel. The United States Supreme Court has ruled that a criminal defendant’s right to effective assistance of counsel is violated where a defendant’s attorney has an actual conflict of interest that affects the defendant adversely. Something is an actual conflict of interest when a lawyer has inconsistent interests. 11th circuit case law says that a conflict of interest exists when a defendant can point to specific instances in the record to suggest an actual conflict or impairment of interest. Specific instances could include an attorney choosing to elicit or failing to elicit evidence helpful to one client but harmful to another.

The question here, then, is does Hand have inconsistent interests when it comes to representing McNeil? While Hand represented a resident of the home McNeil allegedly robbed, that representation came on an unrelated matter that occurred prior to the alleged robbery. Given the differential between the matters and the time that has passed sense, does an actual conflict exist?

If an actual conflict of interest existed, case law also requires that the conflict adversely affected the counsel’s performance in order to successfully appeal on the basis of ineffective assistance of counsel. A defendant must show three things to prove an adverse effect: 1. That the defense attorney could have pursued a plausible alternative strategy, 2. that the alternative strategy was reasonable and 3. that the alternative strategy was not followed because it conflicted with the attorney’s external loyalties.

At this stage, only McNeil and Hand know what alternative strategies exist, if any. And at this stage, it is likely that they are the only two people who know why one defense strategy was chosen over another.

Should McNeil be convicted and wish to appeal his case, the real question that may persist is whether he waived his right to conflict-free counsel. A defendant waives his right to conflict-free counsel when he chooses to proceed to trial with an attorney who has an adverse conflict of interest. Arguably, this decision could bar an appeal on this issue, as the Supreme Court case of Johnson v. Zerbst found that a “waiver of the right to conflict-free counsel ‘disposes of the need to evaluate the actual or potential ineffectiveness of counsel caused by the alleged conflicts of interests.’” To demonstrate a waiver, it must be shown that the defendant was aware of the conflict, recognized it could impact his defense and knew of his right to obtain other counsel. Notably, today, the presiding judge in McNeil’s case advised him of his right to proceed to trial without an attorney or with a new attorney to assist Hand. It is to be seen what decision McNeil makes.

Many unknowns face Mike McNeil at this moment. The decisions facing McNeil as his trial approaches are lofty. Truth be told, they are likely as big as the choice he made to commit to playing football at Auburn University.

Follow Alicia Jessop on Twitter @RulingSports.

2012 BusinessofCollegeSports.com Exclusive Midnight Madness Guide

Today marks the start of college basketball season, as teams are allowed to begin practicing in preparation for the upcoming 2012-2013 NCAA basketball season at 5 p.m. ET.  BusinessofCollegeSports.com reached out to some Division I Men’s Basketball pre-season favorites to learn what their plans are for Midnight Madness.  The following is one of the most comprehensive guides available online detailing the exciting events hosted by perennial NCAA basketball powerhouses.

To learn more about the history of Midnight Madness, click here.

Arizona

What:  McDonald’s Red-Blue Game

When:  Sunday, October 21 at 2:00 p.m.

Cost:  $5 to $8 dollars by October 20, $7 to $10 dollars the day of the event.

Event details:  Along with featuring an inter-squad scrimmage, the event will commemorate the 25th anniversary of Arizona’s 1988 Final Four team. Many members of the team are expected to return to campus and be in attendance.

Connecticut

What:  First Night sponsored by Webster Bank

When:  Friday, October 12 at 5:00 p.m.

Cost:  Free, with the first 75 students to arrive receiving VIP courtside seating.

Event details:  The event begins with an autograph signing session with the men’s and women’s teams.  Recording artist Bobby V will perform, as will the UConn band, cheer and dance squads.  The event features introductions of the players and coaches, a dunk contest and giveaways.

Creighton

What:  Bluejay Madness, presented by First National Bank of Omaha

When:  Friday, October 12 at 8:00 p.m.

Cost:  Free

Event details:  The event will include player introductions, a three-point shooting contest, a dunk contest and scrimmages.

Duke

What:  Countdown to Craziness

When:  Friday, October 19.  The team will hold a practice before military personnel at Fort Bragg on October 15, which will be televised by ESPNU.

Cost:  The event is ticketed at an unspecified cost.

Event details:  The event features a Blue-White scrimmage and dunk contest, along with other activities.

Florida State

What:  Seminole Madness

When:  Friday, October 12 at 7 p.m.

Cost:  Free

Event details:  FSU students will compete against assistant coaches in shooting challenges.  The team will compete in three-point and dunk contests as well as a scrimmage.  Autograph and photo sessions will be held after the event.

Indiana

What:  Hoosier Hysteria, presented by Smithville

When:  Saturday, October 20 at 7:00 p.m.

Cost:  Free

Event details:  Fans will get their first look at what is expected to be an impressive 2012-13 Hoosier team.  A canned food drive will also be held for a local food bank.

Kansas

What:  Late Night in the Phog, presented by Hy-Vee

When:  Friday, October 12 at 6:30 p.m.

Cost:  Free

Event details:  The event features music by the KU pep band, skits by both basketball teams, video highlights, coach and player introductions, and scrimmages by the KU men’s and women’s teams.  A food drive of non-perishable items to be given to a local food bank will also be held.

Louisville

What:  Red-White Men’s Basketball Scrimmage

When:  Saturday, October 13 at 4 p.m.  The team will hold a private practice on Friday, October 12.

Cost:  $5 to $10, which Louisville says is used to cover facility costs.

Event details:  The first of three Red-White scrimmages, Saturday’s event coincides with Louisville’s homecoming.  Along with watching the men’s basketball team play, fans will have the chance to be entered into a drawing for a trip to the teams’ upcoming game in the Bahamas.

Marquette

What:  Marquette Madness

When:  Friday, October 12 at 7 p.m.

Cost:  Free

Event details:  Fans will receive a glow-in-the-dark t-shirt and watch as the team’s surfboard from the Maui Invitational, in which Marquette will play this season, is delivered.  Special jumbotron presentations will be made and teams will compete in activities.

Michigan State

What:  Midnight Madness

When:  Friday, October 12 at 9:30 p.m.

Cost:  Free

Event details:  Last season, Michigan State men’s basketball coach Tom Izzo entered the arena in a fighter jet.  Fans are expected to once again be surprised by Izzo’s entrance.  The event will feature an autograph signing session, introduction of the men’s and women’s teams, performances by the Spartan Marching Band, Michigan State cheerleaders, MSU dance team and Sparty, along with giveaways.

North Carolina

What:  Late Night With Roy

When:  Friday, October 12 at 7:30 p.m.

Cost:  Free

Event details:  Fans will get their first glimpses of the 2012-13 Tar Heels at the event named for men’s basketball head coach, Roy Williams.

North Carolina State


What:  Primetime with the Pack, presented by PNC

When:  Friday, October 12 at 7:00 p.m.

Cost:  Free

Event details:  The event will include player introductions, skills competitions, giveaways, autograph sessions and a scrimmage.

Syracuse

What:  AmeriCU Credit Union Orange Madness, presented by TK99

When:  Friday, October 12 at 8:00 p.m.

Cost:  Free

Event details:  Rapper Wale will perform, and fans will watch the teams compete in scrimmages, skills challenges and other activities.

Notre Dame and the ACC: A Logical Partnership

Today’s news that Notre Dame is leaving the Big East for the ACC surprised many.  Similar to its arrangement with the Big East, all of Notre Dame’s sports will compete in the ACC, save for its football program which will remain independent.  The one difference from its membership in the Big East, though, is that Notre Dame football will be able to compete in the ACC’s non-BCS bowl games.  Given that the Big East is the only conference of the six BCS AQ conferences that does not have a bowl set aside for its conference champions, this is a significant perk for Notre Dame.  This perk, along with Notre Dame’s financials depict why the school’s transition from the Big East to the ACC is a logical move.

After months of watching the conference realignment carousel turn, there is no question that finances drive schools from one conference to another.  There are several components to the finance issue at play when a school chooses to switch conferences.  First, is how much money the school can bring in from the respective conference.  Second, is how the respective school’s athletic department’s finances stack up against other athletic departments in the conference.

Notre Dame will undoubtedly reap more revenue from ACC membership than it does from its current Big East membership.  The timing of Notre Dame’s decision is arguably not coincidental:  Its current conference is in the midst of a 60-day exclusive TV rights negotiation process with ESPN.  The outcome of those negotiations will shape how lucrative of a new television deal the Big East obtains.  Given that Big East basketball powerhouses Syracuse and Pitt recently defected the conference for the ACC, the conference’s bargaining power has arguably decreased.  Take away Notre Dame on top of that, and the Big East’s bargaining power has dramatically shifted.  In contrast, Notre Dame is joining a conference which in May, negotiated a $3.6 billion year television rights contract through 2026-27.  Prior to Notre Dame’s addition, it was expected that ACC members would capture $17.1 million per year from the television contract.  The addition of Notre Dame, however, will likely increase that figure.  It is likely that the recent television contract contains a term allowing it to be modified upon the addition of a new conference member.  Given Notre Dame’s national popularity, this will likely drive the price of the contract up, and as such, put more money in each ACC school’s pocket.  The realization that it will earn more per year in television revenue as an ACC member than as a Big East member was likely a driving factor in Notre Dame’s decision to move conferences.

As noted above, an athletic department’s financial health is another factor schools take into consideration when moving conferences.  A school must be able to expend and bring in a similar amount of revenue as its competitors in order to remain competitive.  In terms of the ACC, Notre Dame is on similar footing to its competitors.  According to data submitted to the Department of Education, in 2010-11, Notre Dame had the sixth-highest net income of all Division I athletic departments.  That same year, the ACC school with the highest net income was Virginia, whose net income was just over $13 million less than Notre Dame’s.  The control of its budget puts Notre Dame on strong footing as it enters the ACC.

Similarly, Notre Dame’s spending is comparable to ACC members’ spending.  Per data submitted to the Department of Education, in 2010-11, Florida State’s athletic department spent the most of any ACC institution at $86,946,503.00.  While Notre Dame’s expenditures were more than $11 million less than that, the athletic department’s $75,360,209.00 worth of expenses were still sizable.  In fact, Florida State was the only ACC institution that out-spent Notre Dame in 2010-11.

Overall, entering the ACC is a victory for Notre Dame.  First and foremost, it achieved a coup by keeping its independent status in football.  Secondly, it gained access to greater TV revenues by partnering with a conference that is home to a more lucrative television rights deal.  Finally, Notre Dame will be on more equal financial footing with its ACC competitors than it was with other Big East members.

 

 

Banning Student-Athletes From Social Media: A Potential First Amendment Violation

With college football season underway and college basketball season quickly approaching, stories of coaches and athletics departments limiting or banning student-athletes’ social media usage will become more frequent.  Schools have taken a variety of approaches to address student-athletes’ improper use of social media websites like Facebook and Twitter.  Some limit their usage during the season, arguing that such is necessary to ensure their focus upon the season at hand.  Others have implemented various usage rules and have enacted monitoring systems to enforce those rules.  Then there are those that have banned the usage of Facebook and Twitter by student-athletes altogether.

While much has been reported upon this subject, the question remains:  Do policies that outright ban the use of Twitter and Facebook violate the student-athletes’ First Amendment rights?

The First Amendment to the United States Constitution grants five rights, including the freedom of speech.  Freedom of speech is a fundamental personal right that is protected against state action under the Fourteenth Amendment.  As such, in order for a First Amendment violation to exist, a government actor must be infringing upon someone’s freedom of speech.  Therefore, this means that from a constitutional standpoint, public state universities–and not private universities–could potentially found liable for infringing upon student-athletes’ First Amendment rights.

In the realm of First Amendment law, there are several concerns related to state universities altogether banning the use of social media by student-athletes.  Arguably, banning student-athletes from using social media outright amounts to a prior restraint.  A prior restraint is government action that prevents speech before it occurs.  Preventing student-athletes from communicating on Twitter before they do so arguably amounts to a prior restraint.  Courts rarely uphold government action that amounts to a prior restraint.  In order for something amounting to a prior restraint to be upheld by a court, the government (here, the public universities banning social media use by student-athletes) must prove that a societal harm will result absent the prior restraint.  This would likely be difficult for a university to prove.  While a student-athlete’s Twitter usage may likely cause an athletics department many headaches, it is highly unlikely it will cause a societal harm.  Additionally, the school would be required to show that their limitation is narrowly drawn with reasonable and definite standards.  Cutting the student-athlete off from the two communication methods used the most by his generation arguably is not a narrowly drawn limitation.

The issue, though, is that in order for a government action to be overturned as a prior restraint, is that an injunction to the action must be promptly sought.  Thus, student-athletes who have been banned from social media usage would be required to seek an injunction to the restraint promptly.  To date, no student-athlete has challenged his school’s banning his social media usage in the courts.  Therefore, in order for student-athletes to gain ground against these bans on the First Amendment front, a student-athlete will need to seek an injunction the next time an athletics department bans social media usage.  Thereafter, the court would have to give a prompt and final determination on the validity of the restraint.  For the reasons set forth above, it is likely that a court would not allow a social media ban.

This analysis should cause some concern for athletics departments in public universities who have instituted outright bans of social media usage by their student-athletes.  If the athletics departments have banned social media usage without having in place a contract with the student-athlete waiving their right to use social media, there is a strong likelihood that their social media policy is unconstitutional.  As such, public schools seeking to ban social media usage should attempt to enter into contracts with their student-athletes whereby the student-athlete waives their right for the consideration of participating in athletics on the campus.  If the school is unable to do this, the school should not institute an outright ban of social media usage.  Rather, the school should adopt narrow social media usage policies that allow student-athletes to use the communication medium in a way that does not damage the school’s reputation.

NCAA Joins Professional Leagues In Lawsuit Seeking To Prevent Sports Betting In New Jersey

On Tuesday, the NCAA, NBA, NFL, NHL and MLB filed a lawsuit in the United States District Court for the District of New Jersey seeking declaratory and injunctive relief challenging the State of New Jersey’s “plan to sponsor, operate, advertise, promote, license and authorize gambling on amateur and professional sports.”  The lawsuit names New Jersey Governor Christopher Christie, the state’s Director of Gaming Endorsement and the Executive Director of the New Jersey Racing Commission as defendants.

On January 17, 2012, Governor Christie signed into law N.J.S.A. 5:12A-1, which according to the lawsuit, “purport[ed] to permit wagering at casinos and racetracks on the results of certain collegiate and professional sports or athletic events.”  According to the lawsuit, the act signed into law by Governor Christie violates federal law.  In particular, the plaintiffs assert that allowing gambling on amateur and professional sports in New Jersey violates the Professional and Amateur Sports Protection Act, and contravenes the Supremacy Clause of the United States Constitution.  The Professional and Amateur Sports Protection Act generally outlaws sports betting, save for certain exceptions, which the plaintiffs argue do not apply to New Jersey’s law.  Notably, those exceptions are:  that New Jersey conducted sports gambling activity prior to the law’s enaction in 1992, New Jersey authorized sports betting in a one-year period following the law’s 1992 enaction or the gambling relates to pari-mutuel animal racing and jai alai games.

The plaintiffs’ lawsuit comes just three weeks before the public comment period for comments on proposed regulations concerning the licensure and operation of sports gambling in New Jersey expires.  The timing is notable, because according to the lawsuit, once the regulations are in place, New Jersey casinos and racetracks will be able to allow their patrons to gamble on sporting events.

Ultimately, the plaintiffs are seeking a declaration that New Jersey’s sports gambling law and its regulations violate Professional and Amateur Sports Protection Act in that the New Jersey law allows sports gambling in contradiction to the federal law.  Additionally, the plaintiffs seek an injunction preventing the implementation of New Jersey’s sports gambling law and regulations.  The plaintiffs are also seeking costs, attorney’s fees and other relief as the court finds appropriate.

The defendants will now have to file an answer in federal court responding to the allegations in the complaint.  Given the nature of this matter, one can expect that it will not be settled out of court.  Rather, those planning on placing bets in New Jersey during the football season will more than likely have to hold onto their money, as the legal process will likely drag out to determine whether New Jersey’s sports betting initiative violates federal law.

Penn State’s NCAA Sanctions: The Impact On The Athletics Department

Yesterday, the NCAA levied what many consider to be unprecedented penalties upon Penn State.  Including within the NCAA’s sanctions, was the imposing of a $60 million fine to be paid by Penn State over the next five years.  This $60 million figure is clearly large, leading some to believe that while the NCAA did not impose the “death penalty” upon the football program, it nonetheless intended to decimate it.

How though, will the $60 million fine actually impact the operations of Penn State’s football program and the Penn State athletics department?  In the grand scheme of Division I athletics, Penn State has posted impressive revenues in recent years.  For 2010-11, the most recent year for which Department of Education data is available, Penn State’s athletics department reported total revenues of $116,118,026.00.  The athletics department also reported expenses of $84,498,339.00.  While many athletics directors will note that the numbers reported to the Department of Education are not inclusive of every cost incurred by an athletics department, these figures at least give some idea as to the type of budget Penn State’s athletics department is operating under.

That being said, it is arguable that at least when considering the Department of Education data, having to shell out on average $12 million per year over the next five years to comply with the NCAA’s sanctions is not going to destroy Penn State athletics.  However, the story is not that simple.  One has to take into consideration the multitude of budgetary factors Penn State’s athletics department is likely now facing as a result of the NCAA sanctions.  Along with losing sponsors like State Farm and facing a possible credit downgrade by Moody’s, Penn State athletics likely now has to rework its budget to determine where the $60 million is going to come from.

Frank Hardymon is the Associate Athletic Director – CFO at Georgia Tech.  While he can only explain the budget planning process engaged in at Georgia Tech, he notes, “I would guess our methods of planning and budgeting are similar to those utilized by other institutions.”  This planning begins the spring prior to the July 1 start of the fiscal year, when the upcoming year’s budget is completed.  “In our case, nearly every dollar which we project receiving is accounted for in the budget,” Hardymon noted.

Likely, a similar circumstance exists at Penn State.  While the Department of Education arguably demonstrates that the athletics department is operating with a surplus, many athletics directors are quick to note that is not the case, as not every expense an athletics department incurs is reported to the Department of Education.  As such, Penn State is likely looking towards contingency provisions in its budget to gather the money by which to pay the $60 million fine.  “We build in as much contingency as we can every year; some years we may have close to $500,000.00 in contingency factors into the budget, other years that amount is quite a bit less,” Hardymon said.

It is unknown whether Penn State’s athletics department had any contingencies built into its budget.  If so, it is highly unlikely that the contingency amount would allow for the payment of a $60 million fine.  As such, Penn State will likely have to scrape from other areas of its budget to pay the imposed fine.  Areas in which Penn State could cut from its budget would likely be from recruiting expenses, travel costs and future coaching salaries.  However, the most likely area in which Penn State could draw from is facility improvements.  While the department will have to continue paying under the loan terms for already existing improvements, it is unlikely that the athletics department will undertake any new building during the time period in which the fine is being paid.  Hardymon noted, “We also maintain a detailed five-year income projection which we update frequently.  That analysis factors in projected facility improvements needed during those five years.”

Overall, the financial sanction imposed upon Penn State by the NCAA is indeed a blow to the athletics department.  However, given Penn State’s apparent athletics revenue along with proper budgeting moving forward during the next five years, it is likely that the athletics department will be able to continue to function financially.

The BCS Presidential Oversight Committee Meeting: Questions Presidents Must Ask

Today, the BCS Presidential Oversight Committee is meeting in Washington, D.C.  At the meeting, FBS conference commissioners will present the new post-season model, which they endorsed last week, to 12 university presidents.  The BCS has acknowledged that the proposal involves a four-team seeded playoff.  Other reports indicate that the four teams would be selected by a committee and would face-off in already existing bowl games.  Additional reports indicate that the site of the national championship game would be determined by a bidding system.  While the commissioner’s proposed new post-season model marks clear differences from the current BCS system, university presidents should ask the following questions and require sufficient answers before signing off on the plan. 

1.  Term of the Agreement

The first question presidents must ask, is how long of an agreement must they enter into if they approve the proposed plan?  The current BCS system has been in place since 1998.  While it was adopted to thwart previous criticism of the NCAA football post-season model, the current BCS system has attracted a large amount of criticism. 

Recognizing the amount of criticism that seems to befall any college football post-season model, university presidents should suggest that the term of this agreement be long enough to work any kinks out of the system, but not so long that changes cannot be made if it turns out to be an imperfect system.  In that regard, a five to six-year agreement would likely be the most beneficial term.

The elephant in the room when it comes to the length of the term, is arguably television contracts.  The expiration of the BCS’s current agreement coincides with the expiration of its television agreements.  Thus, there is the possibility that the BCS and conference commissioners believe that a lengthier agreement will benefit network negotiations.   Arguably, the longer that the BCS and conference commissioners can say that the new deal is in place, the more that networks will be willing to spend on deals. 

However, by shortening the term, the conferences and universities take away some of the negotiating power from the networks.  Shortening the term essentially requires networks to re-negotiate their television contracts at the end of the term.  Understandably, this opens up the possibility of conferences and universities obtaining more money from multiple television contracts.

2.  The Selection Committee

As noted above, it appears that conference commissioners propose that the teams that participate in the four-team playoff be selected by a committee.  This is arguably the least controversial proposal brought by the commissioners.  Most notably, a selection committee is used to seed the NCAA Men’s Basketball Tournament.  Although it is an imperfect method, it works.  Nonetheless, the presidents should question how the committee will be made up, and what safeguards will be in place to ensure that the nation’s top-four teams play in the playoff.

3.  Costs

The biggest issue university presidents should have with the proposed system, is its cost.  For all intensive purposes, under the proposed model, a team that makes the national championship game would be playing in two bowl games.  Playing in two bowl games understandably involves significant costs.

Before approving the proposed model, university presidents must rest assured that they understand the extent of these costs and who they will be borne by.  Under the current BCS model, teams playing in BCS bowl games are required to purchase a certain amount of tickets.  If they do not sell these tickets, they eat their cost.  This can cost a school hundreds of thousands of dollars.  Additionally, there are large travel costs associated with playing in bowl games.  Under the proposed model, these costs will now have to be borne twice.  This is because teams will have to travel to a bowl site to play in the playoff and then again to whichever city bid the highest to host the national championship game.

For contractual reasons, it is unlikely that the commissioners will sway away from hosting the playoff at a bowl site.  Thus, university presidents must request that the BCS or conferences pay some portion of their travel costs, in order to make this an economically feasible solution.

Overall, in presenting this proposal, the conference commissioners have answered many questions and addressed many of the criticisms of the current BCS model.  However, it is clear that issues remain that must be addressed before it is adopted as the new college football post-season model.

How the Arizona Wildcats Made the College World Series…and Money

It has been quite a season for the University of Arizona baseball team.  Winning the most games of any Wildcats baseball team for a single season since 1989, the Wildcats punched their ticket to Omaha, NE and the College World Series after beating St. John’s University in the NCAA Super Regional tournament.

While the Wildcats’ road back to Omaha is impressive, perhaps what is more interesting about the team’s season is the increase in revenue enjoyed by the the University of Arizona baseball program.  While the team’s on-field success drove interest in the program, the increase in revenue was largely generated by the team’s move from its previous on-campus home of 44-years, Jerry Kindall Field at Frank Sancet Stadium, to the off-campus location of Hi Corbett Field.

Given the history that the Wildcats created while playing at Jerry Kindall Field, along the field’s convenient on-campus location, there was some initial resistance from Wildcats baseball fans regarding the move.  However, University of Arizona Director of Athletics, Greg Byrne, knew that the move to the former Spring Training facility of the Cleveland Indians and Colorado Rockies would bring great things to the team and the Arizona athletics department.

“When we did this, our thought was that there was a community connection with Hi Corbett.  It was a dramatic facility improvement for our team, as we have a great clubhouse, locker room and training facilities.  We felt that if we could re-engage Tucson with our baseball program, it would have a tremendous impact for us this year and many years to come,” Byrne said.

Byrne’s intuition about the success that moving to Hi Corbett Field could bring the baseball program was correct.  The athletics department invested $350,000.00 to update the field’s clubhouse and provide it with University of Arizona paint and banners.  After those measures, Hi Corbett was open for business and fears that fans may not attend games at an off-campus location were quickly quashed.

For starters, ticket revenue for the baseball team this season was five-times that of what it was last year.  In 2011, Arizona baseball brought in $69,000.00 worth of ticket revenue.  This season, the baseball team brought in just shy of $350,000.00 in ticket revenue, which does not include revenue for tickets sold during the NCAA Regional tournament or NCAA Super Regional tournament.  Arizona baseball games were a hit with fans this season, as the team has brought in an average home attendance of 2,460.  Last season, the average attendance for games was just over 1,000.  The popularity of watching the Arizona baseball team play at Hi Corbett Field is further demonstrated by the fact that during one weekend series against Arizona rival ASU, the baseball team was able to bring in ticket revenues of $98,500.00.  The ticket revenue that Arizona baseball was able to generate during one weekend series was nearly $30,000.00 more than it generated all last season.

Along with obtaining revenue from ticket sales, Arizona’s athletic department also receives revenues from concession sales at the baseball games.  One luxury the athletics department has found in its move to Hi Corbett, is the ability to sell beer at baseball games.  This year, $360,000.00 worth of concessions, including beer, were sold at Arizona baseball games.  Of that gross number, the Arizona athletics department received $160,000.00 from Hi Corbett’s concessionaire.  Although beer sales accounted for a significant portion of the concession gross receipts, Byrne is quick to note that he does not believe beer sales are driving ticket sales.  “The nice thing, is that for our NCAA Regional game, we had 5,400 people at the game and we didn’t sell beer.  They came to support Arizona baseball; not for the amenity of beer,” said Byrne.

Arizona’s move to Hi Corbett has also presented the school’s athletic department with another way to generate revenue:  Hosting NCAA postseason baseball games.  For the first time in 20 years, the Wildcats hosted the NCAA Regional baseball tournament.  Additionally, Arizona hosted its first-ever NCAA Super Regional baseball tournament.  To host these tournaments, the athletics department placed bids with the NCAA.  The starting bid for the NCAA Regional tournament was $35,000.00, while the bid for the NCAA Super Regional is $50,000.00.  Byrne noted that the Arizona athletics department exceeded the bid amount for the NCAA Super Regional tournament.  Although Arizona spent money to bring these tournaments to Tucson, it gets to keep ticket sales revenue exceeding  the bid amount.  Additionally, the athletics department gets to keep all concession revenues from the tournaments.  On the first day of the NCAA Regional tournament, $24,000.00 worth of concessions were sold.

For the first time since 2004, the Arizona Wildcats baseball team took the field in Omaha to compete for the College World Series.  While the team’s success is much to celebrate, the financial turn-around of the program that was sparked by the team’s play and move to Hi Corbett is another cause for celebration.  Last year, the baseball team lost revenues of $816,000.00.  This year, Byrne expects the team’s net loss in revenues to be closer to $650,000.00.  In the next five years, Byrne expects the teams net losses to be under $500,000.00.  Although these numbers still represent net losses, in the grand scheme of things, it is a major win for the University of Arizona baseball program.