O'Bannon case against NCAA sheds light on big-time athletic departments' fuzzy math
The looming possibility that on June 1 a federal judge in U.S. District Court in Northern California could grant the potentially earth-shattering lawsuit of O'Bannon v. NCAA class-action status has left college athletic administrators concerned.
What started four years ago as a simple, if big-dreaming, lawsuit – former UCLA basketball great Ed O'Bannon suing over the NCAA's continued use of his likeness, long after his 1996 graduation, in a video game – has snowballed into a legal challenge of college sports' entire economic model.
Here on the eve of the 2013 NCAA basketball tournament, there isn't anyone in college athletics that isn't taking it seriously. One day soon, maybe even by 2015, the players themselves could be getting a share of the billion-dollar revenue, a once-unthinkable development.
The O'Bannon side is seeking a 50/50 split. The NCAA wants to keep it 100/0 and has expressed no interest in negotiating. Billions of dollars hang in the balance.
Last week, a cadre of college administrators, including Big Ten commissioner Jim Delany, Texas athletic director DeLoss Dodds and Wake Forest president Nathan Hatch, submitted written declarations in an effort to persuade the judge from granting class action. They were mostly filled with gloom-and-doom predictions of what would happen should colleges have to actually share any of the money with current or past players.
Much of the media attention has focused on Delany claiming the Big Ten would never comply and instead would "take steps to downsize the scope, breadth and activities of their athletic programs," he wrote. "Several models exist … such as Division III."
There is zero chance the Big Ten will move to D-III. Ohio State is not going to become Kenyon College. Delany's claim is perhaps his most absurd in a career full of sky-is-falling, pouting proclamations.
Which isn't to say his declaration wasn't revealing. It was. By attempting to employ a scare tactic, Delany – and the others – clearly stated the value their universities place on field hockey, swimming and any other non-revenue sports.
Apparently it's not much.
The University of Texas brought in $150.3 million in total revenue in fiscal 2011, according to Department of Education filings. According to Dodds, "approximately 82 percent of that can be fairly attributed to football, and 15 percent to men's basketball." That's 97 percent of incoming revenue. Yet Dodds testified that expenditures on football [$24.8 million] and basketball [$8.5 million] totaled just $33.3 million. That's just 24.7 percent of UT's $133.7 million in total expenditures.
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Where does the rest of the football and basketball money go?
It pays for the entire department, including construction of opulent facilities, upkeep and debt service. There was a national high $22.2 million spent on coaching salaries in 19 sports and another $27.7 million spent on compensation for athletic department personnel. Seven million went to travel and there were 419 either full or partial scholarships that go mostly to athletes in sports that draw few fans and little revenue.
While the raw numbers are bigger at Texas – as is the rare profit – that's the basic formula. At most schools football and men's basketball picks up the tab for everyone else. And often there isn't any coupon clipping in the tab.
The Longhorns' tennis teams, for instance, have for years competed in the 1,800-seat Penick-Allison Tennis Center, dubbed "Outstanding Tennis Facility in the Nation" by the USTA. Despite that, UT just last month cut the ribbon on the new $8.8 million Weller Tennis Center, providing an additional six indoor and four outdoor courts, plus locker rooms and other amenities.
It's an incredible setup, the best getting even better. It is also an example of what critics call the "gold-plating" of college athletics.
Critics contend that athletic departments spend unnecessary millions in skyrocketing salaries, huge support staffs and over-the-top facilities as a way to claim they can't pay football and basketball players – or taxes – because at the end of the year they are broke. Usually less than two-dozen athletic departments turn a profit.
"They are using these sports to camouflage all of the high revenue," said Ramogi Huma, a former UCLA football player and president of student-athlete group the National Collegiate Players Association.
It's also a way of saying that if funding drops, something tangible – scholarship opportunities and first-class travel and facilities, especially for women – might be lost.
While non-revenue teams could continue playing – providing competition and camaraderie – scholarships may no longer be offered. And travel could be reduced to mostly busing around within the state or region to schools of all sizes rather than jetting across in expansive conferences that were designed to maximize football television revenue, not make sense for soccer or softball.
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What Delany and others revealed is that those opportunities and experiences are overpriced, at least to the point Big Ten schools won't see reasonable value in using general funds to keep them going at current levels.
"Revenues derived from college athletics are the sole property of the institution and should be expended in support of the broadest array of men's and women's educational and athletic opportunities, and not solely for the support of men's basketball and football players," Delany wrote.
Within the huge budgets of a major university, athletic revenue remains a drop in the bucket. Delany's assertion that football and men's basketball must support non-revenue sports – rather than, say, the history department or the dorm heating bill – is an attempt to make a moral claim on what is really an accounting and control issue. He is protecting athletic fiefdoms, where ADs dole out every penny, from funding decisions being made with a campus-wide view.
He, among others, testified that should the players get a cut of revenue, then suddenly athletic departments might not have enough cash to blindly support non-revenue teams.
As such, funding for those teams would then require the university as a whole to determine whether it's more aligned with their mission to fund full scholarships for 12 kids based on their field hockey skill or 12 kids based on their promise as biology students, let alone whether an athletic facility would need rehabbing over a computer lab.
Universities provide scholarships for any number of reasons – academic merit, socioeconomic, a determination to value the arts [dance, music], etc. It's the school's money. They can do whatever they want with it, prioritize whatever they see fit. If Texas wants to build an $8.8 million tennis facility, hey, more power to them.
It's just that Delany doesn't sound confident that less popular sports will make that cut.
"I believe," Delany wrote, "that paying football and/or men's basketball players would reduce opportunities for student-athletes overall."
It's a nice alarmist claim. Big, mean Eddie O'Bannon and his lawyers are trying to kill the swimming program, and who the heck could be against a nice swimming program?
It isn't true though. The only people who can kill the swim team – or cut scholarships and travel budgets – are some of the very leaders who are writing these legal testimonials.
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The University of Michigan, for instance, is a Big Ten member with an endowment of about $8 billion. If it wants a field hockey team, it can most certainly afford one. Cutting football players past and present in on some of the tens of millions that program generates or allowing them to profit off their own likeness or to put a percentage of jersey sales into a trust fund, isn't going to bankrupt the school. And if Title IX can't be reworked (and it almost assuredly can), then Michigan would do just that to comply with federal law.
What Delany is saying is that left to its own decision, Michigan won't see field hockey as worth the money. He's acknowledging that outside the myopic prism of the athletic department, gold-plated, non-revenue sports don't make much sense.
Right now Michigan athletics gets 100 percent of the revenue and things roll on. If the players get a cut, then it will have to "reduce opportunities for student-athletes overall."
So it's the players' share of the revenue – the money the O'Bannon case is trying to divert – that is propping up the other sports … the same other sports that Delany doesn't believe the university itself considers a sound investment.
Which begs a simple, if inadvertent question: if Michigan doesn't think it should pay for a field hockey team, then why does it think Denard Robinson should?
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