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Think Twice Before Supporting the Idea of College Athlete ‘Employees’

By Donna A. Lopiano, Ph.D and President of Sports Management Resources

“We should pay NCAA college football and basketball players because it is totally unfair that their coaches get millions in compensation while athlete compensation is capped at the value of a full athletic scholarship!”

This statement summarizes media and public sentiments currently in vogue. If Division I men’s basketball and football programs move in that direction, they will also have to leave their “motherships” (their non-profit educational institutions) because they can’t afford the Title IX obligation of having to equally compensate female athletes. Currently, only 20 institutions bring in more revenues than they spend. Before sport managers support any effort to professionalize college athletes by making them paid employees, they might want to consider what would happen if Division I college football and men’s basketball created professional leagues.

Because the professional sport league would have to be constructed as a for-profit business operated outside the institution, the resources of the non-profit higher education institution legally could not be used to subsidize the for-profit business.

No longer under the not-for-profit umbrella of the educational institution, the new professional basketball and football programs would no longer benefit from tax preferences (i.e., the 80percent tax deductible donations driving season ticket and seating preference sales, use of tax-free bonds to construct athletic facilities, etc.). Thus, it is not clear whether the financial viability of a new league would be assured.

The new professional football and men’s basketball team and league revenues would be fully taxable at the federal and state levels and in some cities, salaries and wages may be subject to employee payroll taxes, unlike the college programs.

Athlete employee salaries would be fully taxable at the federal and state level and athlete employees would have to pay unemployment taxes and social security. Rather than accepting less than their current non-taxed athletic scholarship compensation, players would form a players’ association/union and demand $100,000 annual minimum salaries — the equivalent of the non-taxable athletic scholarship they would be giving up. While these athletes would not have to attend classes in season, removing the current pressure and conflict with academic demands, athlete employees wishing to attend college in the off-season would have to pay for their own housing and food and the cost of tuition, required fees and books. Tuition and fees would not be tax deductible if the athlete earned more than $80,000 per year.

Instead of carrying squads of 85 players, all receiving full scholarships, squad sizes would be close to NFL limits (53) and include a smaller, lower cost taxi squad. Fewer players would benefit as employees than being a student under the college scholarship system.

Gate receipt income and attendance would suffer a decline if watching paid professional players, a product of lesser quality than the NFL, is not as attractive a sport product to viewers as amateur students playing for their alma maters.

The institution would have to charge the new professional football and basketball teams fees to lease their stadia, weight rooms, locker rooms and meeting spaces and obtain the rights to use the institutions’ names and marks. These fees would have to be substantial since the professional teams would be taking all earned revenues in those sports (gate receipts, media rights, advertising and sponsorship fees, concessions, parking, etc.) for their own support The institution would need to set these fees at a substantial level to include paying off existing capital debt that would be retained and to offset the anticipated decline of donated funds to the institution’s athletic program if the institution wants to continue supporting the retained non-revenue extracurricular athletic program. These substantial costs may reduce the attractiveness of the new professional college league to investors.

The new football and basketball professional sport businesses would have to incur the considerable costs of providing full athletic injury and disability benefits for all players, benefits institutions do not currently provide to college athletes.

Given the fact that only 50percent of Division I FBS football and basketball programs pay for themselves with no institutional or student fee subsidies and the fact that this statistic does not include capital costs, it is doubtful that all 128 NCAA FBS members would risk operation of an independent professional football and basketball business on financial feasibility grounds. Depending on how many and the quality of the institutions willing to give up their extracurricular amateur teams, the programs that remain in the NCAA intercollegiate athletics system may represent competition with the new professional league.

Scholarships and operating budgets for Division I women’s sports and other men’s non-revenue sports remaining at institutions moving their football and basketball programs to the professional model, would need to be eliminated or substantially reduced to the extent that former football and basketball revenues would now flow to the new taxable professional leagues. These scholarships represent college degree opportunities. Moving these remaining intercollegiate programs to lower competitive divisions may have to be considered.

The college or university would have to pay off multimillion dollar collegiate long-term coaching agreements while the new professional league would have to negotiate new coaching agreements. The professional league coaching salaries would most likely be less lucrative once athlete labor and other costs mentioned above are factored into the financial equation.

The value of the NCAA’s Final Four Division I basketball championship, which currently generates $770 million that annually supports all 488,000 NCAA athletes in all three competitive divisions would most likely decline considerably, probably to the level of the NIT, if the great majority of top FBS basketball programs choose the professional model.

The $440 million College Football Playoff, currently owned by the ten FBS conferences (with the top five conferences taking home 75percent of revenues and the remaining 25percent to the bottom five) would probably revert to the new professional league. Instead of these funds funding athletic programs serving athletes attending the 128 FBS schools, these revenues would most likely be diverted to providing salaries and benefits to the new league’s professional athletes, further diminishing the resources currently available for the remaining intercollegiate sports.

In short, sports managers should think twice before succumbing to the prospect of athlete employees. These new professional basketball and football leagues would primarily benefit those basketball and football players going on to play in the NBA, NFL or international professional basketball and football leagues each year — an estimated 582 football and 471 basketball players each year (NCAA data based on the 2014 NBA and NFL drafts) while diminishing significant resources currently used to support college educations of the remaining 488,000 NCAA athletes. Is this a justifiable step for collegiate athletics?

Gil Fried on The Baseball Rule Redux

(Editor”s note: In a recent article that appeared in Professional Sports and the Law, noted expert andUniversity of New Haven Professor Gil Fried, and Takao Ohashi, wrote an article about the baseball rule. What follows is an excerpt of that article)

Most of those familiar with sport law, especially the liability side, know about the “baseball rule.” The rule as applied by many courts for almost 100 years is that an owner or operator of a ballpark should not be held liable if a patron is hit by a projectile leaving the field if the owner/operator has provided enough screened seats for those who might demand such protected seats and if the most dangerous part(s) of the ballparks are protected. The law has faced challenges over the past couple years with some courts refusing to adopt the principal and using a basic negligence approach (such as assumption of risk). There currently is a class action suit against Major League Baseball (MLB), which faced a summary judgement decision in California last month based on jurisdictional issues with teams outside of California. The suit, examining what MLB is doing to protect fans, was also impacted by a recommendation by MLB before the start of the 2015-16 season to encourage teams to expand the amount of netting at ballparks.

Regardless of how that case will conclude, it is important to examine where we stand with the baseball rule in light of how the game has changed over the years. When the rule was first developed by courts- it was in the early 1900’s with some cases before 1920- the game was a lot different back then. People came to the games in suits and top hats. There were no mascots, scoreboards, Ferris wheels, outdoor pools, kid zones, and other distractions at the game. Nowadays, the players are stronger, the bats are better, the pitchers are stronger, fans are closer to the action, and some claim the ball is a lot livelier. Also, the fans have changed in terms of their viewing habits. Years ago fans were not burdened by live streaming, social media updates, and surfing the web. Yes, some fans kept score in the program, but were able to really watch the game and notice foul balls entering the stands. Teams/stadiums are enabling this activity and encouraging fans to be as engaged as possible with content and the team. Thus, the viewing patterns have changed and fans need enough protection to reflect the current state of the industry.

What do these changes mean? It means that maybe the baseball rule is not as appropriate as in years past. As an expert witness in probably 20 batted ball cases over the past 20 plus years, I have been a strong advocate, believe it or not, of a modified baseball rule. I feel that in certain areas of a stadium a fan should not be able to recover for being hit by a foul ball. However, there are locations where injured fans should recover- if the area was not safe. That is what I want to focus on in this article. The baseball rule requires a team/stadium to protect the most dangerous part of the stadium, but where is that?

As a college professor, we rely on research to identify possible concerns and solutions. Many teams/stadiums track incidents through their incident management software system. These systems track everything from broken seats to fan complaints and fan injuries. The data can be used to identify where fans are most likely to be injured and where the most frequent locations are for foul balls. Medical treatment records can also help shed light on such incidents. One of my peer reviewed articles several years ago examined data from fan injury reports at an MLB stadium, foul balls tracked at an MLB stadium, and foul ball locations at a minor league park. From these studies, as well as other research, we identified … .

Expert Writes about Former Coach and Lawsuit Against Auburn

(What follows is an excerpt from a piece written by Bill Robers of Sparks Willson Borges Brandt & Johnson, P.C.)

Sunny Golloway, former head baseball coach at Auburn University (Auburn), has sued the university’s Board of Trustees and a number of athletics department personnel for breach of contract and other claims related to his firing from Auburn after just two seasons.

Golloway, who is being represented by Birmingham attorney John D. Saxon, claims that he was fired “without cause” by Auburn, entitling him to a buyout of $1,000,000. Auburn did not make such a payment, however, after claiming his firing was “for cause” pursuant to his contract.

Golloway alleges that he and the university executed a written contract on June 14, 2013, which was to expire on June 30, 2019. He also claims to have had a “permanent employment” contract when the Auburn Athletic Director, Jay Jacobs, allegedly verbally agreed to hire Golloway for “as many [years] as you want.”

Auburn alleged that it terminated Golloway for cause, specifically for eleven various breaches of the contract and NCAA rules, including encouraging participation by student-athletes who had not been medically cleared, deleting video of such offense, permitting an all-star game at a baseball camp that was not open to all campers, endangering the health and safety of campers by failing to remove them from the playing field after confirmed lightning strikes in the area, exceeding the number of permissible coaches by allowing a non-coaching staff volunteer to participate in coaching activities, and misleading the administration about NCAA violations and failing to report such violations.

Golloway claims (for the entire story, visit www.sportslitigationalert.com)

Expert on Assumption of the Risk Picks Up Another Victory

Carla Varriale of Havkins Rosenfeld Ritzert & Varriale recently represented several defendants in securing a legal victory in a case involving to wrestlers in New York state.

In two separate actions, the high school wrestlers alleged that they contracted herpes gladiatorum and MRSA from another wrestler while participating/competing in a 2011 wrestling tournament, which was sponsored and coordinated by Section VI of the NYSPHSAA. The plaintiffs brought the lawsuit against Section VI of the NYSPHSAA and NYSPHSAA, Inc., as well as several school districts, a tournament physician, the high school wrestler from whom the plaintiffs allege they contracted the communicable skin diseases from, as well as the wrestler’s parents and his primary general practitioner.CarlaVarriale

In support of their motion for summary judgment, the defendants argued that the plaintiffs’ assumption of the inherent, obvious risks of contracting communicable skin diseases including herpes gladiatorum and MRSA while wrestling, notwithstanding their awareness that could generally contract communicable skin diseases (but deny being aware the risk of contracting herpes), negated the defendants’ putative duty of care.

They also argued that the National Federation of High Schools Rules for Wrestling were abided by by all the defendants, in that the suspected student wrestler ruled out a contagious skin disease by using the mandatory Communicable Skin Disease Form, completed by a medical practitioner and reviewed by an on-site physician at a wrestling tournament. This permitted him to wrestle.

The full case summary for Biondo and Candino v. NYSPHSAA, Inc. and Section VI of the NYSPHSAA, et. al. (Supreme Ct. Erie County; Index No.: 1443/12; 5/19/16) appeared in Sports Litigation Alert.

Evans and TJSL To Host Discussion on ‘The Future of America’s Pastime’

Sports law attorney Jeremy Evans and the Thomas Jefferson School of Law will host a discussion on the “Past and Future of America’s Pastime” next month, featuring former Los Angeles Dodgers Vice President and General Manager Fred Claire as the guest speaker.

When: Monday, July 11, 2016, 12:00-1:30 p.m., PST

Where: Thomas Jefferson School of Law, Room 225, 1155 Island Avenue
San Diego, CA 92101 (Just three blocks from Petco Park, the 2016 MLB Home Run Derby, and All-Star Game). The event prior to the 2016 MLB Home Run Derby and All-Star Game at Petco Park

RSVP: uyeharjp@tjsl.edu

Sponsored by: The Center for Sports Law & Policy at Thomas Jefferson School of Law and the Federalist Society-San Diego Chapter.