Sports Law Blog
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Thursday, May 02, 2013
The Economics of College Athletics
As the O'Bannon v NCAA litigation progresses, ever so slowly, through our legal system, there is one defense that gets tossed around quite a bit--very few football or men's basketball programs actually make money. The argument, ergo, is that schools would be unable to compensate these athletes their fair market value without jeopardizing the existence of their entire athletic departments.
Recently, the NCAA released their latest "Division I Intercollegiate Athletics Programs Report on Revenues & Expenses" which can be accessed here. John Infante on the Bylaw Blog, an expert in NCAA issues, summarizes this report as follows:
1. The NCAA's financials are intentionally inaccurate:
2. Athletics departments operate within non-profit universities, thus there is less of an incentive (and mechanism) to show a profit;
3. That "athletic deficits" reflect the accounting practices of universities or the flow of revenues back into expenses rather than the inability of revenues to meet costs.....Within athletic departments it can flow into salaries for athletic staff (coaches, athletic directors, support personnel) or into facilities;
4. And finally a market in which all but a dozen or two programs out of 340-plus are losing money does not experience the sort of entry we have seen in Division I sports since the Board of Regents case ended the NCAA's television cartel in 1984.
Bottom line is we all know the quote "Lies, damn lies, and statistics...."
While we are talking about the never ending legal case of O'Bannon v NCAA, documents were filed in court last week in anticipation of the June 20th class certification hearing. For those of you captivated by the arguments, or writing semester ending analyses of this case, I wanted to provide two important documents for your review.
1. Here is the "Reply Brief of Antitrust Plaintiffs in Support of Motion for Class Certification." This document supports the O'Bannon plaintiff's efforts for class certification. You can download this document here.
2. Please find the "Rebuttal Report of Dr. Robert McCormick in Support of Antitrust Plaintiffs' Motion for Class Certification. You can download this document here.