Posted: Thu Mar 29, 2007 2:28 am
Inadequate aid?
NCAA could take big hit in scholarship anti-trust trial
Has the NCAA illegally fixed the price of an athletic scholarship below the cost of a college education? Or, is the NCAA trying to protect amateurism and competitive balance for its member schools?
A jury in Los Angeles will answer these questions in a trial that will begin on June 12. The jury's answer could be expensive for the NCAA. Very expensive.
Lawyers representing all Division I football and basketball players (there are 11,500 of them) claim that the athletes are shortchanged an average of $2,500 a year because of an arbitrary NCAA limit on scholarships.
If they're right, the athletes are entitled under anti-trust laws to triple damages, a potential liability for the NCAA of more than $86 million for a single year. If the trial includes four years of scholarships, as the players' lawyers suggest, the damage multiplies to $344 million. The NCAA's annual budget is $465 million.
The class action lawsuit is based on an NCAA rule that specifies what may be included in a "grant-in-aid," the NCAA's term for a full-ride scholarship. The GIA does not include school supplies, recommended text books, laundry expenses, health and disability insurance, travel expenses and incidental expenses. Studies of GIA economics have shown that the shortfall averages $2,500 per athlete.
NCAA officials claim the GIA must be limited in order to produce a balance of competition among Division I schools and to protect amateurism.
"For us to produce fair and interesting competition for consumers and fans, we must have a level playing field," said Elsa Cole, the NCAA's top lawyer. "If we eliminate the limit on GIAs, the playing field will not be level. The wealthier schools will be able to recruit and to accumulate all of the better players. The poorer schools would be dropping sports or cutting back on sports because they could not pay the increased GIA."
Cole also defended the GIA cap as a method for ensuring amateurism. "We do not want to pay any more than the cost of education," she said, "because we do not want to make our student-athletes professionals."
Maxwell Blecher, one of the attorneys for the players, disagrees: "There is no cognizable justification for the GIA cap. It is plainly and simply an attempt to save money. They pay the coaches $1 million and $2 million and more in some cases, but they won't let the athletes break even."
Blecher and the players have a powerful position. NCAA president Myles Brand has admitted that the restriction on scholarship money should be lifted. In a letter to the Denver Post on Aug. 17, 2003, Brand said, "Ideally, the value of an athletically related scholarship would be increased to cover the full cost of attendance ... I favor this approach of providing the full cost of attendance."
The NCAA's reliance on the protection of amateurism is a familiar riff. Walter Byers, the former executive director of the NCAA, dismissed it: "Collegiate amateurism is not a moral issue. It is an economic camouflage for monopoly practice."
Although NCAA officials resist assertions that the organization is a monopoly, it has previously been subjected to anti-trust liabilities. One of the NCAA's biggest losses was a $54 million ruling in favor of assistant basketball coaches whose salaries had been restricted to $16,000 by NCAA rule. Although the NCAA made the same claims it now makes against the football and basketball players, both a judge and a jury in Kansas City disagreed. Various appeals by the NCAA also fell on deaf ears. If student-athletes win their lawsuit it will be even more damaging to the NCAA.
NCAA could take big hit in scholarship anti-trust trial
Has the NCAA illegally fixed the price of an athletic scholarship below the cost of a college education? Or, is the NCAA trying to protect amateurism and competitive balance for its member schools?
A jury in Los Angeles will answer these questions in a trial that will begin on June 12. The jury's answer could be expensive for the NCAA. Very expensive.
Lawyers representing all Division I football and basketball players (there are 11,500 of them) claim that the athletes are shortchanged an average of $2,500 a year because of an arbitrary NCAA limit on scholarships.
If they're right, the athletes are entitled under anti-trust laws to triple damages, a potential liability for the NCAA of more than $86 million for a single year. If the trial includes four years of scholarships, as the players' lawyers suggest, the damage multiplies to $344 million. The NCAA's annual budget is $465 million.
The class action lawsuit is based on an NCAA rule that specifies what may be included in a "grant-in-aid," the NCAA's term for a full-ride scholarship. The GIA does not include school supplies, recommended text books, laundry expenses, health and disability insurance, travel expenses and incidental expenses. Studies of GIA economics have shown that the shortfall averages $2,500 per athlete.
NCAA officials claim the GIA must be limited in order to produce a balance of competition among Division I schools and to protect amateurism.
"For us to produce fair and interesting competition for consumers and fans, we must have a level playing field," said Elsa Cole, the NCAA's top lawyer. "If we eliminate the limit on GIAs, the playing field will not be level. The wealthier schools will be able to recruit and to accumulate all of the better players. The poorer schools would be dropping sports or cutting back on sports because they could not pay the increased GIA."
Cole also defended the GIA cap as a method for ensuring amateurism. "We do not want to pay any more than the cost of education," she said, "because we do not want to make our student-athletes professionals."
Maxwell Blecher, one of the attorneys for the players, disagrees: "There is no cognizable justification for the GIA cap. It is plainly and simply an attempt to save money. They pay the coaches $1 million and $2 million and more in some cases, but they won't let the athletes break even."
Blecher and the players have a powerful position. NCAA president Myles Brand has admitted that the restriction on scholarship money should be lifted. In a letter to the Denver Post on Aug. 17, 2003, Brand said, "Ideally, the value of an athletically related scholarship would be increased to cover the full cost of attendance ... I favor this approach of providing the full cost of attendance."
The NCAA's reliance on the protection of amateurism is a familiar riff. Walter Byers, the former executive director of the NCAA, dismissed it: "Collegiate amateurism is not a moral issue. It is an economic camouflage for monopoly practice."
Although NCAA officials resist assertions that the organization is a monopoly, it has previously been subjected to anti-trust liabilities. One of the NCAA's biggest losses was a $54 million ruling in favor of assistant basketball coaches whose salaries had been restricted to $16,000 by NCAA rule. Although the NCAA made the same claims it now makes against the football and basketball players, both a judge and a jury in Kansas City disagreed. Various appeals by the NCAA also fell on deaf ears. If student-athletes win their lawsuit it will be even more damaging to the NCAA.