College leaders must resolve NCAA issues once unimaginable
NEW YORK -- In two sentences on Wednesday, Big Ten commissioner Jim Delany explained why leaders have had so much trouble addressing the thorniest issues facing major college sports.
"It wasn't planned this way," Delany said at the IMG Intercollegiate Athletics Forum. "It just happened this way."
When Delany left the North Carolina Justice Department in 1975 to start working in college sports, he didn't expect to get rich. He entered an industry that, while fun, often survived financially by the skin of its teeth. Delany didn't intend to become a millionaire television programmer responsible for a network that brings in nine figures thanks largely to the efforts of stars who are paid exactly the same wage as the extras. But that's what Delany is, and now that's what he must deal with.
When Bob Bowlsby took over as Northern Iowa's athletic director in 1984, he probably never imagined he'd someday run a league that commands a television deal that brings in billions of dollars over a 13-year period. But that's what Bowlsby must do as the Big 12 commissioner.
When schools set the NCAA rules that determine how much aid student-athletes can receive, the idea of conference networks and multi-platform rights deals probably sounded like something from The Jetsons. But now they're here, and the NCAA must deal with them.
The intent of the leadership will collide with the reality of the situation multiple times in the next year. First it will happen at the NCAA Convention in January, where the five wealthiest conferences will seek a governance structure that allows them to slide more of their largesse to their athletes without someone making rules to stop them. Then it will happen in the run-up to a class-action federal antitrust suit filed by athletes against the NCAA. The case, which began when former UCLA basketball player Ed O'Bannon filed a lawsuit and escalated when current athletes joined, will essentially determine whether the NCAA's concept of amateurism -- and the attending regulations -- violate federal antitrust law. The case will test the nerve and the intelligence of the people who run the NCAA and the conferences. Will they risk a jury declaring their economic way of life illegal (which could be very, very expensive)? Or will they attempt to make a deal with athletes that shares an even larger slice of a still-expanding pie to avoid that potential disaster of a verdict in favor of the plaintiffs?
It's popular and convenient to paint the people who run college sports as greedy bloodsuckers who have made revenues explode and fattened their own wallets without giving the rank-and-file a raise. It's also wildly inaccurate. Most never expected to get rich, and most would do these jobs even if they didn't make nearly as much. The lifers such as Delany and Bowlsby believe in the model that existed when they started. At that time, college sports was largely a money-losing venture that existed to foster school spirit and help give athletes from a broad range of backgrounds a chance to attend college for free. Football and men's basketball were always the most popular, but only in the past 20 years have they brought in exponentially more dollars. Why are volleyball players able to get scholarships? Because people really like to watch college football teams play, and television networks are willing to pay to reach those viewers.
Given that economic reality, it makes sense that football and men's basketball players should make more than soccer and hockey players, but that runs counter to everything in which the lifers believe. They think everyone should be paid the same. And despite what you read in some of the more blunt commentaries on the subject, college athletes are compensated. The vast majority are actually overpaid relative to their market value. A small but significant minority -- the Johnny Manziels and the Andrew Wigginses -- are underpaid relative to their market value. This is still an injustice, because our national economic model is based on the idea that people with greater market value are supposed to make more.
The commissioners of the five wealthiest conferences are attempting to rectify that market value issue in their own way. They can't promise the Manziels of the world more because Title IX requires they provide equal opportunities regardless of gender, and the universities they serve would prefer to keep their federal funding. So they're trying to make rules that would allow them to add more money to the scholarship package of all their athletes. Because the athletes playing in these conferences are largely the best in their respective sports, this would allow for the top performers to make more in a broad sense, but not in an individualized sense. How much more? Probably a few thousand a year. Delany, Bowlsby, ACC commissioner John Swofford, SEC commissioner Mike Slive and Pac-12 commissioner Larry Scott would like to close the gap between the NCAA grant-in-aid (tuition, books, room and board) and the actual cost of attending college -- which typically runs $3,000-$6,000 more annually. Delany, a former North Carolina basketball player, played when athletes received $15 a month in "laundry money." That was taken away in the 1970s, and athletes' compensation has been flat ever since.
"The rules around a scholarship and what you can provide for student-athletes haven't changed in a long time," the Pac-12's Scott said, "and the sense is we're hamstrung by the one-size-fits-all approach."
They are, and the NCAA Convention in San Diego is where they intend to begin to rectify that issue. After a lot of sabre-rattling that included threats of a new division featuring only the wealthy programs, the rhetoric has shifted to a desire for the creation of more flexible rules. Essentially, the schools that can afford to give more should be allowed to give more. How will leaders streamline the rules in an ecosystem where the solution to seemingly every problem is to create more rules? These are, after all, the same people who once managed to ban cream cheese.
"We're trying to find a way to do simple things, like not restrict the way we feed kids," NCAA president Mark Emmert said. "For God's sake, we have layers and layers of rules about food." But Bowlsby warned on Wednesday that untangling all those regulations could take time. "They are some substance of what all of us have put in place and what all of the members have put in place," he said. "It didn't get into the situation it's in overnight, and it's not going to get out overnight."
Emmert is on board with this plan, and in fact, this is a more extreme version of what he tried to push through when he took office. Much of the criticism of Emmert has been legitimate. His mismanagement of the enforcement department neutered the NCAA's ability to enforce its own rules, and his decision to punish Penn State for the Jerry Sandusky scandal -- a criminal matter being handled by the criminal justice system in Pennsylvania -- was a massive overreach. But despite how he looks when forced into the role by the O'Bannon lawsuit, Emmert is not a status quo guy. He actually has been trying for three years to head off some of the issues the NCAA will address in San Diego. For instance, he tried to push legislation that would allow schools to give a little more money to athletes. That was shot down by the schools that can't afford it.
The wealthy schools finally realized they had a hammer to use on the less wealthy ones: The NCAA men's basketball tournament. By threatening to form their own division, they threatened to take away the golden goose whose eggs feed many of the smaller athletic departments. That was enough to get the less wealthy schools in line. At least the big shots hope that's the case. Heading into an antitrust suit, it wouldn't be wise for the NCAA to divide its membership even more accurately by revenue. The loosening of the rules is a less elegant but far more practical solution. Still, Delany -- who has seen enough of these votes in his life to know people don't always do what they say they're going to do -- tossed out the possibility that a new division remains on the table if the lower revenue schools don't fall into line.
"We need some regulation, but it's got to be sensible," Delany said. "It's got to be flexible, and it's got to acknowledge differences in resources. If we do that, I think we can stay together. ... If we can't do that I think we have to say we have not only external threats, we have internal threats. And the internal threats are that we can't find a way to use the NCAA as a town hall for us to solve our problems."
The external threat is the O'Bannon case, which is now much less about O'Bannon and the former athletes and much more about the current and future athletes. The conferences and NCAA stage a series of highly lucrative television shows without explicitly paying the performers for the rights to use their likenesses. Judge Claudia Wilken took away a giant financial risk for the NCAA when she declined to certify the class of former athletes, but by certifying the class of current athletes, she rendered the case just as dangerous for the NCAA going forward.
This suit was an inevitable consequence of the big five commissioners' success in the media world in the past 10 years. Revenues have soared, and for various reasons -- obstinacy, the unwillingness of the schools that aren't making all the TV money to allow the ones that are to spend it on players -- the money hasn't trickled into the pockets of the athletes. It has created some beautiful lockers and training-room waterfalls, but you can't buy a pizza, a PlayStation or a tattoo with a training-room waterfall. A few years ago, a plan similar to the one the commissioners have hatched now would probably have been enough to head off such a lawsuit. But now that law firms have poured money into the case for four years, they want blood. They either want to be the ones who took down the NCAA or the ones who made the NCAA settle.
At this point, a settlement is a far more sensible alternative. And someone has come up with a model that would probably work for almost everyone. Not me. My plan has always leaned toward the extreme. The idea tossed out in last week's issue of Street and Smith's Sports Business Journal by writers Michael Smith and Bill King seems much more palatable to the people in charge while still giving significant money to the athletes. Smith and King tallied up the amount of new money that will hit the system in the next few years. According to their research, media rights that brought in $943 million in 2012 will bring in $1.71 billion in '15 and $2.23 billion in '20. They suggested taking only a quarter of that new money and passing it along to the athletes. This is far less than the amount the plaintiffs have suggested. They'd like half of all media rights revenue. If that money was split among every scholarship athlete in the five power conferences, each scholarship athlete would receive an additional $16,066 a year in '20.
This income would have to be taxed, and it would knock some athletes out of the Pell Grant system, but that actually would replace public dollars with private ones. That's a good thing. Meanwhile, the amount is significant enough that most athletes would probably happily sign away their name-and-likeness rights. The Jameis Winston of 2020 might not make his market value, but remember, thanks to the NBA's collective bargaining agreement, the Miami Heat also don't have to pay LeBron James his full market value. If it's a deal most of the top-performing athletes would agree to, then it would be difficult to complain about.
Most of the current leaders of college sports aren't wired to think of solutions such as this one. They never envisioned an era in which they'd be cable television-funded barons, so they aren't prepared to handle the consequences of that change. But they're going to have to figure it out soon. Otherwise, they risk a jury figuring it out for them.