SBJ/September 19-25, 2011/Opinion

Solution to NCAA: Legislate free market into college sports

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We seem to be deluged with articles lately describing the so-called corruption and scandals in college sports as well as the money that drives it. Amateurism and money are inapposite, yet college sports has become a multibillion-dollar enterprise. The NCAA’s enforcement mechanism is and has always been arbitrary and ineffectual, but we seem to indifferently watch who gets punished and who doesn’t for similar things without much care.

In the end, nobody does anything about these periodic crises, and life goes forward with colleges and universities, their athletic conferences, and the NCAA getting richer off their lucrative media deals, albeit with some perfunctory posturing along the way.

The reality makes all of us jaundiced. Should we be outraged anymore about this outrageous system that is anything but amateur, even though less than 1 percent of the 350,000 to 400,000 college athletes every year will ever go on to a professional career? What can we do about the proverbial fox in the henhouse having commercialized college sports to what has become a $60 billion a year industry?

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The NCAA punished North Carolina’s football program in 2010, but to what effect?
I would propose that Congress should adopt the following Collegiate Athlete and Employee Fairness Act (“CAEFA”), which would essentially solve most if not all of the current problems with college sports by inserting the free market into the system. CAEFA would require that:

1. The athletic conferences, the NCAA and any related associations shall no longer be deemed IRS 501(c)(3) charitable entities and shall hereafter be deemed 501(c)(6) trade association entities;

2. Any college or university with an athletic department that derives revenue from its athletic program shall operate from within that institution and not from within any separate entity, and the athletic department’s finances shall be audited according to generally accepted accounting principles and publicly and separately reported with its annual IRS Form 990;

3. Any college or university with an athletic department that derives revenue from its athletic program shall provide disability, health and life insurance to its college athletes and athletic department employees;

4. Any college or university’s net profit from its athletic department shall be taxed under the unrelated business income tax theory, because making profit on amateur activities is inapposite to amateurism;

5. Any entity purporting to regulate college athletes or athletic department employees shall apply the same rights and privileges to these athletes and employees as it does to its members; colleges and universities shall apply the same rights and privileges to all of their students, whether they participate in athletics or not;

6. Any entity purporting to regulate college athletes or employees shall not make an agreement with any college or university that limits or attempts to limit any rules or regulations or terms of admission and recruitment or attendance, a grant-in-aid or letter of intent, or athletic department employment;

7. Any entity purporting to regulate college athletics or athletic department employees shall not abridge any rights or privileges afforded by the constitutions and laws of the United States and its several states and territories as may be applicable to that athlete or employee, and no such entity shall attempt to penalize resort to the judicial system via restitution rules, penalties or otherwise;

8. The Uniform Athlete Agents Act and any federal or state analogs are hereby superseded by this Act, which invalidates or withdraws the same and replaces them with the simple and universal truth that all college athletes and employees are entitled to representation of their choice at any point in time for any reason whatsoever under any terms agreed to by the agent or attorney and college athlete, which shall be deemed confidential and privileged; and

9. Congress shall establish an administrative law system within the Department of Education to adjudicate any enforcement of any rules or regulations of any entities purporting to regulate colleges and universities and their college athletes or athletic department employees, which shall be fully and totally financed by those entities on a yearly basis pursuant to a formula to be determined by the Department, which shall adopt rules and regulations to carry out this Act, including rules and regulations as to when the entity must provide counsel for athletes and employees who cannot otherwise afford to retain the same. Appeals shall be heard by the Federal Circuit Court of Appeals, and certiorari may be entertained by the U.S. Supreme Court.

So what does CAEFA do?

First, the NCAA and the various athletic conferences are pass-through trade associations no different from the professional sports leagues, with huge executive salaries and perks with little to no charitable purpose. They should be treated as such. They are not nonprofit entities by any stretch of the imagination.

Second, colleges and universities that have monetized their athletic programs — and in many instances placed them into separate, unaccountable legal entities — would no longer be able to do so, and they would be required to be financially transparent.

Third, no more bankrupting of kids who get injured and do not have insurance. If the program is designed to be a revenue-maker, then the colleges and universities have a moral and legal obligation to provide adequate disability, health and life insurance.

Fourth, colleges and universities, after following actual accounting guidelines, would no longer be allowed to profit off of their athletic departments, which today act just like Hollywood, where no movie ever makes a profit when in reality an entire industry is being hidden here.

Fifth, the NCAA would no longer be allowed to treat colleges and universities differently than it treats college athletes and athletic department employees, the former who get due process rights and the latter who do not.

Sixth, the NCAA and its members would no longer be able to engage in rampant antitrust violations. So if a member wants to offer a four-year instead of one-year grant-in-aid to a talented high school athlete, because the free market requires it to do so, then it can. If it wants to offer a stipend for spending money for the same reasons, then it can. If it wants to give everyone on the team a grant-in-aid, then it can. No longer can athletes be subject to a bait and switch, where they’re recruited by a coach who then leaves, and they’re stuck with that college or university, or they lose a year of eligibility if they transfer. No more limiting how many coaches a team can have; the more the merrier. It’s a complete free market in lieu of the Iron Curtain that has been built by the NCAA and its members to control its members’ costs at the expense of athletes and employees.

Seventh, no more rampant violation of civil rights. College athletes and athletic department employees have a right to be free from absurd demands, like “Tell us what your lawyer told you,” “Show us your bank statements and those of your family,” and “Pull down your pants and pee in this cup.” If Congress feels that any single right that we all otherwise enjoy should be abridged, then let it pass such an amendment to this Act, subject to constitutional scrutiny. Ditto in regard to passing rules and regulations designed to disenfranchise these athletes and employees from their right to access the courts, just like all other Americans.

Eighth, no more malarkey that agents and attorneys spoil a system that is ingesting cash by some estimates of $60 billion a year. College athletes whose skill level merits representation should have it, just like everyone else does — meaning their coaches, colleges and universities — not to mention the NCAA and the athletic conferences.
Finally, the NCAA has only 30 or so investigators. Its investigations are all reactive, its punishments are all arbitrary.

It’s time for a fair and impartial legal system to hear these charges.

Richard G. Johnson (rgjcolpa@aol.com) was plaintiff’s counsel in Oliver v. NCAA, which established college athletes’ right to counsel, and he is the author of “Submarining Due Process: How the NCAA Uses its Restitution Rule to Deprive College Athletes of their Right of Access to the Courts … Until Oliver v. NCAA.”
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