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NCAA Scholarship Rules Re-written by Joseph Heller

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This is going to be more of a summary than usual editorial harangue, because the legal and accounting specifics are admittedly over his liberal arts-educated head, but an interesting story popped up in USA Today this morning that is news to SMQ: the NCAA's people are meeting in San Francisco today with lawyers for four named plaintiffs to settle a 14-month-old antitrust suit challenging the Association's caps on the amount of money available to players through athletic scholarships. The suit is filed on behalf of football and men's basketball players in 16 of the 31 Division I conferences - which 16 is not specified - and alleges the average scholarship is $2,500 less than the full cost of attending school each year, a figure the story says is acknowledged by the NCAA:

The class-action suit targets the NCAA rule limiting scholarship coverage to room, board, books, tuition and fees. Citing the NCAA's own acknowledgement that, on average, the value is approximately $2,500 less than the full cost of attending school each year, it seeks an injunction preventing enforcement of the cap. And it asks for unspecified damages, which would be tripled if an antitrust violation is found. A jury trial is set in federal court in Los Angeles June 12.

There's virtually no chance of reaching a mediated settlement today, said NCAA general counsel Elsa Kircher Cole.
The stakes in this case could be higher. The suit is filed on behalf of football and men's basketball players in 16 of the 31 Division I conferences who've been on scholarship since February 2002. Damages, at potentially $2,500 a player a year and trebled, would be substantial.

Beyond that would be the impact of raising the NCAA's scholarship cap to allow schools to cover athletes' travel, laundry and other incidental expenses. Federal law would dictate equal treatment in women's sports, and the NCAA probably would be compelled to extend the same to all sports, not just football and basketball.

"We're talking about an issue that could cost schools a lot of money. A lot of money," Big East Conference commissioner Mike Tranghese said.

[Emphasis is SMQ's]

It's a pretty good bet nobody outside the schools themselves particularly cares about how much it will cost a multimillion-dollar operation to fulfill what is ostensibly its obligation to the players from whom it profits (unless fulfilling that obligation means higher ticket prices to the money-making sports, which SMQ guesses would face more vocal resistance than the elimination of less lucrative teams). SMQ, who defends the prohibition against "pay for play" (more on that directly), refers readers to the "Exploitation Index" from late January, which very roughly estimated the average I-A athletic department earns more than $19,700 more per athlete than what it spends per athlete, a number that grows or shrinks dramatically depending on the school. By comparison, as the article suggests, $2,500 per player does not represent the kind of stakes for the big schools the suit could be pursuing (that is not the case for smaller programs).

The NCAA's defense? Exactly the same as SMQ's defense of the status quo in January: it's about protecting competition.

Not all schools could afford the extra expense and could wind up cutting sports, NCAA and other officials fret. Or the schools could choose to stick with the current scholarship limits and not cover the full cost of attendance, a scenario that creates concern about competitive equity if the best athletes were to gravitate to programs that could make better offers.

That competitive equity argument is at the heart of the NCAA's defense, Cole says. The association will point out, too, that athletes are allowed to receive need-based aid on top of their scholarships up to the full cost of attendance and have access to emergency and special-assistance funds.

"It really comes down to competitive balance," says Matt Mitten, who as director of Marquette's National Sports Law Institute teaches a class on antitrust litigation. "Is the rule necessary to further competitive balance? And is there a substantially less restrictive means of achieving competitive balance short of this?"

[Emphasis, again, SMQ's]

That defiant loner would be...Myles Brand?
- - -

No answers here, just an interesting case to watch, in a Catch-22 sort of way: there's not a fundamental difference in a pro salary cap and the college scholarship cap, the goal of both being to facilitate necessary - and profitable - competitiveness by offering more equitable access to free agents/recruits, and an elimination of the cap would likely wreck whatever competitive balance the current limits create (presumably, schools that could afford to would steadily increase their scholarship money until it amounted to "pay for play"). It hardly seems fair, from the player perspective, to ask schools to make up the difference in covering the obligations most of us assumed were already part of a scholarship. But it seems unfair, from an institutional perspective, to ask schools that can't afford that difference to gut their other programs or, cuts likely being restricted by Title IX considerations, to go untenably into the red. So whatcha gonna do?