“Jeffrey Kessler just had to pee.”

An alert reader pointed me to this piece about the lawyer driving the existential threat to the NCAA’s amateurism protocol.  The whole thing is worth a read, but there are two passages in particular worth highlighting.

First, the big bucks that are involved.  Really big bucks.

The big business of college sports, meanwhile, has only continued to explode. Today, the men’s NCAA Tournament alone provides the organization with nearly $900 million annually in television revenue, while individual conferences have television contracts worth billions of dollars over their lifespans, and schools pay coaches and athletic directors multimillion-dollar salaries. Collectively, the men’s basketball programs that make up Division I and the football programs in the Football Bowl Subdivision generate more than $7 billion in annual revenues. Big-time college sports look more like their professional counterparts than they ever have, with one major exception: The NCAA has restrictive rules in place that prevent schools from compensating athletes beyond the full cost of attending.

“The economics here are that basketball and football have become gigantic businesses,” Kessler said. “The total revenue for basketball and football in Division I is greater than the total revenue of the NBA. It’s greater than the total revenue of the NHL. … It’s the third biggest sport by revenue in this country. The idea that these are not businesses, it makes no sense. And you should allow those who are producing this revenue to be treated in a fairer way.”  [Emphasis added.]

If you continue to wonder why arguments about compensation continue to resonate, the overall context of the revenue generated by Division I football and basketball should be your answer.  Amateurism operates in a totally different financial setting than it did even 25 years ago.

The second illustrates why Kessler is so dangerous to the NCAA and its member schools.

Kessler has read the headlines and heard these arguments. He knows some believe that his case could “suck the magic out of college sports” and turn them into glorified minor leagues that fans simply wouldn’t watch. But even if he wins, he argues, the outcome won’t be nearly as dire or drastic as the skeptics predict.

Kessler’s primary argument is not against the NCAA itself, but its amateurism rules specifically. What violates antitrust law, he argues, is that the schools and major conferences band together under those rules to artificially cap the compensation an athlete can receive for his services to a school. In Kessler’s world, conferences could set their own rules regarding compensation, then compete against each other: The Big Ten might stick to the current rules, for instance, while the Southeastern Conference might elect to pay athletes above and beyond the value of a scholarship. Another might follow the Ivy League model and refuse to grant athletic scholarships at all. The result would be something of a free market for men’s basketball and football players.

Alternatively, the NCAA, its schools and their conferences could follow in the path of major pro leagues, and negotiate a new system with athletes or a body that represents them.

“I know what they’re going to argue in court,” Kessler said, sitting up in his chair and clapping his hands together, his voice nearly cracking from excitement ― and frustration. “They’ll argue what they’ve always argued: that amateurism is this holy grail. The new version of it is that if you pay one penny more than the full cost of attendance … the world will come to an end.”

There are obvious parallels to his previous cases, where the NBA, Major League Baseball and the NFL all contended that more rights, and more money, for players would spell doom for their products. Free agency, of course, has had none of the dramatic and devastating effects the owners once predicted: Salaries have risen tremendously, sure, but so have revenues. Leagues, owners and players are all vastly richer today than they once were.

“It’s utter and complete nonsense,” Kessler said. “Allowing baseball, football, basketball and hockey players greater economic freedom and compensation did not destroy the NFL or NBA. It did not destroy the NHL or Major League Baseball. It made those sports fairer and better. It did not decrease popularity or interest in the Olympics.”

That’s some tough precedent for the NCAA to argue against.  Even tougher, if it tries to claim that college sports have a special attraction and value because of amateurism, how does it explain away the trends that have driven those same college sports in the general direction as those same pro sports from which it wants to distinguish — conference expansion, postseason expansion, conference networks, massive increases in coaches’ and AD’s salaries, etc.?

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23 Comments

Filed under See You In Court, The NCAA

23 responses to ““Jeffrey Kessler just had to pee.”

  1. Wow … if the NCAA and its members don’t see the danger here, they really are as dumb as they appear to be. All Kessler wants is a free and fair market … what red-blooded American can argue against that?

    He wants the conferences to be the rule-making body. I had never thought about that, but it makes a LOT of sense to encourage competition since the TV money is concentrated on the conferences. If Jim Delany and his bosses want to cling to the romanticism of amateurism, that’s their right. I imagine Corch would be getting a really bad headache and heart palpitations within a year. Harbaugh would be heading back west as soon as he could. The B1G would become Division III without a shot being fired.

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    • He wants the conferences to be the rule-making body. I had never thought about that…

      It’s the only saving grace the schools have in antitrust court. Everything that gets outsourced to the NCAA is essentially a cartel’s collusion.

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      • I find it interesting that Kessler threw them this lifeline that may make him go away. It’s not burning it down, but it does address a large part of the issue. The only question is how would the NCAA manage March Madness. Given there are so many schools that will be in conferences that wouldn’t pay beyond the scholarship (think the Butlers of the world), would they pass a change to the NCAA rule book to allow this to happen and be eligible to participate in the tournament? Would the P5 tell the rest of D1 they can pound sand as they break away from the NCAA? The politics and economics of college sports are going to get very interesting as Keasler’s suit winds its way through the legal system. I don’t imagine Stacey Osburn will have any comment on this.

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  2. 92 grad

    I think the tv money created the problem. When it was decided that the media rights go directly to the conference they created the monster. I love being able to watch all our games plus most other conference game but I don’t think it was wise to send all the money to the conferences. I don’t know the answer but I’d be inclined to have all the media money go to the NCAA where it can be dispensed equally on a national level. Part of what makes college sports great is that any team can win on any given day, protecting parity seems to be what the amateurism concept is.

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    • … protecting parity seems to be what the amateurism concept is.

      Since when?

      There is less parity in college football than in any major US sport.

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    • South FL Dawg

      Protecting the salaries of people who work for the conferences, NCAA, and athletic departments is what it looks like to me. The cherry on top is that it’s tax exempt money so they have more to pay themselves than the professional leagues do.

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  3. Got Cowdog

    I will still watch the Dawgs play, as outside of whatever baseball team my son plays for it is the only team I care about paid players or not. But what about bending or lowering academic requirements to accept athletes? Then compensating them, then providing the education, then the facilities and “swag”, training, etc, that comes with attendance?

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  4. I think Toneil Carter would rather have that $10,000 in his pocket than the swag on his locker at Texas.

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    • Meant as a response to Got Cowdog

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      • Got Cowdog

        I bet they all would. I would too if I were in their shoes. My point is, do they meet the academic requirements of the institution they play for and are they enrolled in legitimate classes (not remedial) toward the standard core or a specific major?
        My point, and YMMV, is: If they do not meet the same requirements as the rest of the student population, then why do they receive compensation through the university as students and not employees like say, the faculty or facilities staff?

        I think we have the old quote “We’ve established what you are, Madam, we are merely negotiating the price.” skewed a little. We need to establish what they are.

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  5. Southernlawyer11

    What was Todd Gurley worth beyond the $43,000 +/- per year he was already receiving ? If he never enrolls at UGA, what is the impact on UGA’s revenue during those years ?

    One problem is that the sum revenue produced by 85 players is way more than the impact any one of them has on the revenue. If Todd Gurley never enrolls at UGA and all else is the same, then UGA’s revenue is probably roughly the same. Does he deserve more than $43,000 per year he already received ?

    If any one of them is replaceable but together they all produce something great (in terms of revenue), then doesn’t that say more about the value of the “platform” they have been given ? In other words, “you didn’t build that, somebody else built that.” (where have we’ve heard that before).

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    • Maybe if Todd Gurley could negotiate directly with Nike to endorse their apparel, we’d figure out what he’s worth.

      Liked by 1 person

      • southernlawyer11

        100% agree with that. And i think it’s the lifeline universities should run to. Why they do not is mind boggling.

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      • Cosmic Dawg

        This is it, exactly. I don’t know why even Kessler wants to go around his ass to get to his elbow by paying students who should be amateur athletes. I don’t want to watch the Athens Falcons, I want to watch the Georgia Bulldogs, made up of Georgia students.

        The right solution is market driven and simple and 100% fair, if enough people would just get behind it and force the changes.

        (a) end the NFL’s cartel exemption and see if football minor leagues spring up to pay the kids who don’t care about school $30k a year to prove they’ve got NFL-caliber skills and (b) require that kids who play sports for a college meet the same entrance requirements as the other students, BUT also get to do whatever the hell they want to make money, too, LIKE the other students. Including an endorsement deal.

        The market would sort out exactly the right value (both monetary and otherwise) for, say, a football scholarship for a starting center at University of X versus University of Y versus the exhibition league, a 2nd string player’s autograph, Todd Gurley’s picture, etc.

        I couldn’t care less if somebody wants to pay Todd Gurley on the side to go play for Georgia, either. That’s between them, none of our business or the NCAA or the government’s either So long as Todd meets the entrance requirements, welcome aboard, son.

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        • Got Cowdog

          Cosmo, you talk sense. But I can’t help getting a Soprano’s vibe from the last paragraph, extrapolating your thought into a suitcase full of cash to a player that flunks out or gets kicked off the team.

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        • Southernlawyer11

          To play devil’s advocate: aren’t the talent factory junior colleges an indicator that a minor league would probably fail pretty spectacularly ? Otherwise, I think they would have more of a following and demand for their product.

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          • Got Cowdog

            I think you can attribute the junior college fan base following on size of student body, alumnus and brand recognition. Take away the student body and alumnus and what do you have?
            High schools will have better and larger fan bases.

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          • Cosmic Dawg

            If they did, we would have our answer through an organic process. But the minors would include a lot of current D1 athletes who could not / didn’t want to go to school, and there would hardly have to be as many minor league teams as there are junior colleges. And NFL teams would be signing kids out of high school and planting them there.

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  6. AusDawg85

    Let’s be clear…Kessler’s priorities are #1: the fees he and his firm will earn in any settlement, then #2: Something better for the kids, like maybe a coupon book or discount at the bookstore for non-essential items if that’s all he can get in a class action settlement. Changing the landscape for college sports to the economic betterment of the athletes would just be a happy accident.

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  7. 69Dawg

    Ok I have some questions and comments. As I understand it before the case that UGA and Oklahoma brought against the NCAA for TV rights, the NCAA made the money from football. Once the case was won, for some reason the schools voluntarily(?) gave their broadcast rights to their conferences. A notable exception was the Independents, Notre Dame being the biggest. Prior to the Conferences getting the rights in the late 70’s and early 80’s some of the bigger schools actually had their own TV networks that mimicked their radio networks. Alabama, LSU come to mind. Georgia even broadcast some of it’s games with Lewis Grizzard as part of the broadcast team. ESPN was in it infancy as was cable. The results of this conference move was that all the members of the conference shared equally (University’s being the last bastion of pure communism). Thus the teams that could not get any money for their individual broadcast (Vandy) rights got an equal share with Alabama, LSU etc. This help bring in regional broadcasts (think Jefferson Pilot). Once ESPN got big enough to play the money took off.

    Enough history, why would the NCAA be anything other than a cartel? Webster’s “an alliance of individual businesses, formed to fix prices and production; any coalition for a common cause”. The two things at issue are use of likeness and compensation. I think that the use of likeness issue is a slam dunk. If the judge in the EA case hadn’t tried to split the baby it should have been settled. The NCAA has no right to control a players likeness without compensation. If the schools don’t want the players making money signing autographs or working auto dealership grand openings then pay them not to. But but what about the scholarships. The schools are between a rock and a hard place. They are using the Federal scholarship tax exemption laws to pay their help but because of the NCAA rules they must not equate what they pay to the players worth or else the dreaded impermissible benefit strikes. The fact that athletes are the only scholarship students that can’t make money off of their abilities is laughable. A music major on full scholarship plays professionally in a rock band, does he lose his scholarship? eh no.

    The fact is the compensation of the players is easy to calculate in an open market. What is Clemson willing to pay over and above its cost of attendance to Dashun Watson? What is Alabama willing to pay etc. Many player are not worth the scholarship FMV so they will be more than happy to sign for the scholarship. Walkons play for the mere perks that they get. This system will no more ruin college football than it ruins any other endeavor where different members of the same team are paid different amounts (see the armed forces and professional sports).

    The old beat up excuse that a University even cares about sports outside of it’s bottom line is a joke. The University has always used sports to get the alumni money but as times have changed and TV has brought more and more to the University, the average alumni is just an after thought. Soon if ESPN grows weary of empty stadiums they will either us special effects to make them look full or they will begin to treat the fans as they do for fans of the Price Is Right and give away tickets.

    Here’s hoping Kessler beats the crap out of the NCAA and end the economic hypocrisy of the Student Athlete.

    Liked by 1 person

  8. 80dawg

    The “trends” are not driven by the fans that think college football is unique!!! It is driven by those who make the $$$$$ & want to win by whatever means possible ( & therefore max marketability/income). College football has become a $$$ race competing to buy the best players either indirectly (Bama with facilities & NFL development promises) or directly (Ole Miss cash & materials ; Auburn bogus cost of attendance stipends).

    Like

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