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Thursday, November 12, 2009
Boise State Athletic Department Selling Stock

USA Today is reporting today that Boise State has officially formed a non-profit corporation and will begin selling shares to the public at $100 per share in hopes of raising $20 million (Boise State Athletic Department Hopes Stock Offering Raises $20 Million). AD Gene Bleymaier said, "If we are to continue the success we are enjoying now we must generate new revenues to pay for coaches' salaries, scholarships and facilities." The shares will not pay dividends, but shareholders can vote on members of a 12-person board at an annual meeting and the board will determine how money raised through the offering would be spent. Bleymaier also said this fundraising program mirrors the offering made by the Green Bay Packers when they raised $24 million in the sale of more than 105,000 shares back in 1997.

If this is true, needless to say, it's a very interesting development. One would certainly think this has to violate some provision, somewhere, in that 437-page NCAA Bylaw manual. It also raises all kinds of interesting corporate law questions in the context of fiduciary duties, state and federal securities regulations and non-profit corporation laws, just to name a few. The more I think about it, this has to be a joke, right? But perhaps this is no different than what is already taking place in big-time intercollegiate athletics, the only difference is that we call them boosters instead of shareholders.

This new development also relates to the topic of my article I posted on two days ago to the extent the proceeds generated from this stock sale fund coaches' salaries. Boise State along with Cincinnati and TCU are prime candidates to have their successful football coaches solicited by competitor schools, making them soon-to-be victims of both tortious interference and breach of contract. The presidents of these three schools have a choice. They can pay their coaches more money or let them go and then proclaim that they are "powerless" to do anything about rising salaries. Or, they can exercise their legal rights and stand up for all the current and prospective student-athletes who committed to their school in reliance on the fact that their coach was obligated to be there for a period of years....the same student-athletes who, unlike their coach, are prohibited from transferring to another school.


This is amazing, creative, depressing (if you buy into the NCAA "amateur" ideal) and hilarious at the same time. Here's a nice video clip. Note that the media reports that NO MONEY will go to coaches salaries, only to facilities. Oh, and stockholders get NO SAY at all, no dividends, no appreciation, just a piece of paper recognizing their donation!

Anonymous Anonymous -- 11/12/2009 9:41 AM  

This looks a lot like the supporters ownership model that is somewhat common overseas.

Here's a link to Supporters Trust Direct, an organization that promotes so called "fan ownership."

This seems like a good idea to me because it formalizes the situation already at some universities where a boosters organization or just some well-healed boosters have influence in how the department is run. At least this way, anyone could join for a nominal fee and have the same voice as anyone else.

Blogger Emmett -- 11/12/2009 11:43 AM  

So what happens when the football team goes back to it's mediocre ways? When game attendance is 9,000? When people start dumping their shares? All of a sudden, we see an athletic department is serious trouble that may be too deep to climb out of.

Blogger BLAZER PROPHET -- 11/12/2009 4:53 PM  

"this has to be a joke, right?..." - what kind of joke do you mean? If that violates some provisions, that would be not right. We must follow the rules. If everybody else think all provisions is just a joke, then, screw the rules. How to File Bankruptcy

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Anonymous Jason -- 11/15/2009 12:15 AM  

This could actually work, kind of like how the people of Green Bay actually own the Packers. Although the first thing should be to get into a major conference.

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