NCAA might face damages in hundreds of millions

Updated: February 21, 2006, 3:01 PM ET
By Tom Farrey | ESPN The Magazine

LOS ANGELES -- As a UCLA linebacker in the late 1990s, Ramogi Huma left college after four years with $6,000 in credit card debt. His scholarship paid for tuition, room, board and required books but not incidentals such as phone bills and travel expenses. Coming from a lower-income family, he lacked the funds to cover the difference.

"That's where MBNA came in and cleaned house," Huma said of his high-interest credit card.

After graduation, Huma lobbied for a bona fide full ride for NCAA athletes, whose standard scholarship package, called a grant-in-aid, is equal to an amount about $2,500 a year less than the official cost of attendance. The NCAA wouldn't budge, despite supportive statements made by association president Myles Brand about raising the cap.

Now it has come to this: A federal antitrust lawsuit filed late Friday in Los Angeles seeks to prohibit the NCAA from telling member colleges they cannot offer athletic scholarships up to the full cost of attendance -- and could expose the NCAA to hundreds of millions of dollars in damages for past wrongs.

The class-action claim was brought on behalf of Division I-A football players and major-college basketball players, whose programs generate the overwhelming amount of revenue that flows into college athletic departments. Under antitrust law, any current scholarship athlete, as well as any player in the past four years, qualifies as a plaintiff.

The suit does not list a damage amount but is structured in a way that suggests the NCAA pay a heavy price should the court find that the association acted illegally in its capping of scholarship costs. The lawsuit applies to 144 colleges, so the 20,000 or so affected athletes would have been shorted a potential $117 million, an aggregate figure that represents the gap between the grant-in-aid and the official cost of attendance over the past four years.

Damages get trebled under antitrust law, pushing the potential penalty to $351 million.

NCAA's Most Profitable Basketball Programs (In Millions)
  Revenue Profit
Louisville $18.5 $13.1
Arizona $16.6 $12.5
North Carolina $15.0 $10.2
NC State $11.4 $9.0
Illinois $11.3 $8.1
Indiana $11.9 $8.1
Wisconsin $12.0 $8.1
Minnesota $10.4 $7.6
Ohio State $11.4 $7.4
Kentucky $12.9 $7.2
Source: U.S. Dept. of Education from 2004-05 academic year

Huma is not a plaintiff, as his college career ended in 1998. But as chairman and founder of the Collegiate Athletes Coalition, an advocacy group, he helped line up the athletes whose names are on the lawsuit -- Stanford's Jason White and UCLA's Brian Polak, both former football players, and former University of San Francisco basketball player Jovan Harris.

Contacted by ESPN, the legal team bringing the claim declined to make any of the athletes available for interviews. The lead lawyers, Stephen E. Morrissey and Maxwell M. Blecher, offered no comment on the case.

"While big-time college sports have become a huge commercial enterprise generating billions in annual revenues, the NCAA and its member institutions do not allow student athletes the share of the revenues that they would obtain in a more competitive market," the lawsuit states. It alleges that "by denying athletes the benefits of competition, the [grant-in-aid] cap has imposed a lower standard of living and significant hardships on many student athletes."

NCAA spokesman Erik Christiansen said the NCAA would not comment until it had a chance to read the lawsuit.

In the past, the NCAA has taken the position that it needs to control all terms of the athletic scholarship in order to preserve its notions of amateurism and what it calls "the unique character" of college sports. Some universities also claim they cannot afford to give an extra $2,500 to athletes.

In 2003, though, Brand came out in favor of the proposal, suggesting that the additional funds could be drawn from the NCAA's 11-year, $6 billion television contract with CBS.

"We should provide student-athletes with the full cost of attendance," he said at the time.

The NCAA membership subsequently declined to move on his recommendation.

NCAA's Most Profitable Football Programs (In Millions)
  Revenue Profit
Texas $53.2 $38.7
Georgia $50.9 $38.3
Michigan $46.4 $35.7
Alabama $42.9 $28.9
LSU $39.7 $27.5
Florida $43.3 $27.1
Notre Dame $41.8 $26.7
Ohio State $51.8 $26.1
Texas A&M $37.3 $25.2
Auburn $40.6 $24.2
Source: U.S. Dept. of Education from 2004-05 academic year

Unlike under Brand's idea, the plaintiffs do not ask that colleges be required to pay the cost of attendance, only that universities be given the option to do so with their revenue-producing athletes. They say most programs can easily afford to pay the additional $245,000 a year that would bring the 85 football and 13 men's basketball players up to the desired level, even if the NCAA does not step up to cover the costs. For schools with a basketball team, but no Division I-A football team, the increase would be $32,500.

Rodney Fort, a Washington State University economics professor who has worked as a consultant for the Pacific-10 Conference, expects the NCAA to fight the lawsuit aggressively.

"The NCAA will argue that losing this will mean the end of college sports as we know it," said Fort, author of the 2004 textbook "Economics of College Sports." "They'll say that paying up to the cost of attendance will be the death knell of non-revenue men's sports, that it will deny some kid a chance to play NCAA golf."

Fort doubts the veracity of that claim. But he does not doubt the NCAA could be persuasive before a jury.

"There's all sorts of emotional mumbo-jumbo not based on fact that the NCAA has been using for 100 years to support its model," he said.

Nearly all of the top 60 football and top 75 basketball programs are profitable. University of Texas football set the pace in the 2004-05 academic year by taking in $53.2 million in revenue, with expenses of $14.5 million, according to a report filed by the school with the U.S. Department of Education. Expenses are limited in part because schools cannot bid on players in the same way they do coaches. After leading the Longhorns to the national championship last season, Mack Brown got a raise to $2.55 million per year.

The total cost of athletic scholarships at Texas, including those for football and all other sports, male and female, came to $5.8 million.

On college campuses, athletes are the only students subject to aid restrictions imposed by an agreement among universities. Talented students in music, chemistry or any other area can be bid upon by individual colleges, without limits on the total value of their scholarship packages. Some, often graduate students, receive the full cost of attendance plus cash payments.

Huma, though, said that the lawsuit does not ask that athletes be treated in the manner of professional athletes with free-agent rights. Instead, it asks for the restoration of funds for incidental expenses, which the NCAA eliminated in 1973 in a cost-cutting move.

"We're not trying to open the floodgates," he said. "We're just trying to raise the bar a little bit in terms of the limits of what athletes are getting."

The courts have often deferred to the NCAA in matters in which the association has argued that amateurism is at stake, although scholars consider this the first antitrust action brought on behalf of athletes challenging scholarship aid restrictions. Their lawyers are applying arguments similar to those made in 1998, when the NCAA was found to have colluded to set the salaries of assistant coaches. The NCAA was hit with a $66.9 million judgment and ultimately settled the case for $54.5 million.

The new lawsuit, White vs. NCAA, asks that damages be paid to athletes in the graduating classes of 2002 through 2010, an amount that could mean several thousand dollars or more to each person, depending in part on how long they were on scholarship. Huma said the lawsuit also ultimately could benefit athletes in sports beyond football and basketball, as he suspects the NCAA, if it loses, would begin to permit cost-of-attendance scholarships in other sports to avoid formalizing distinctions between revenue- and non-revenue athletes.

Currently, athletes are permitted to receive Pell Grants that provide money beyond the athletic grant-in-aid cap. They can also apply to an NCAA special assistance fund for clothes and some incidentals. But only the most indigent athletes have access to those funds, according to Huma, who said he didn't qualify for either resource while at UCLA.

"Student-athletes are grateful for where they're at," Huma said. "But given that football and basketball players are generating billions of dollars, they should be able to afford basics like toilet paper, soap and deodorant. Most of these athletes are from low-income backgrounds, and it's a constant struggle."

Tom Farrey is a senior writer at ESPN the Magazine. He can be reached at tom.farrey@espn3.com.

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