Friday, March 28, 2014

The Real House of Cards


If ever there was a doubt there can be no more. The house of cards that is the NCAA and the satellites that orbit around it are on the verge of collapse.

A money-printing operation, their very existence these days is wholly dependent on the revenue streams from a few key functions they sponsor, like March Madness and football as played in the bowl subdivision. There are television and radio fees, jersey sales, sponsorships, you name it and the NCAA, the major conferences and the member schools have found a way to make money off it. Boy have they, to the tune of billions, a year.

The reason this house of cards is now closer to collapsing than ever stems from the foundation on which its existence is built—the myth of the so-called student/athlete. Without the thousands of students working in the service of these the two big revenue sports, football and men’s basketball, for a pittance of the revenue they generate, these groups could not muster enough revenue opportunities on their own accord to sustain a corner grocery let alone the hierarchy it has built for itself. Indeed their raison d’etre would cease.

The latest blow came in a case in which the NCAA wasn’t even a party. A couple of those wiseacre football players at Northwestern found enough time away from their football obligations to use the student part of the student-athlete equation to take their grievances to the National Labor Relations Board in a quest to unionize. Their hope, I guess, is that if successful Northwestern officials will be forced to bargain with them over what, exactly? Better food? Less work hours? Beer Pong tables in the players’ lounge?

I give those Northwestern kids a lot of credit. This is a war they can’t win but because they’re kids they’re just dumb enough to believe otherwise. What their lawyers, or more accurately, their sponsors at the United Steelworks probably didn’t tell them is that the NLRB’s decision finding them to be “employees” as defined under the National Labor Relations Act and hence eligible to unionize likely won’t survive all the years of appeal it will take to bring the case to an end. The Board’s regional director in Chicago issued an incredibly flawed decision, speaking legally. Speaking practically, however, the regional director’s decision is another hard wind threatening to tumble the NCAA for the sin of exploiting the concept of student-athlete for their own financial gain.

To summarize what happened without getting into all of the legalese, senior Northwestern quarterback Kain Colter got the bright idea (or had it implanted in him, more likely) to go about trying to unionize his fellow teammates. The theory was that given all the time and trouble they go to in the service of Northwestern’s football team and the “compensation” they receive from that service in the form of scholarships makes them employees under the law and thus eligible to form a union, their scholarship serving as an employment contract and their showing up for practice and games being the work performed in exchange. What exactly they’d do once they became a union hasn’t exactly been clear but that’s beside the point. The quest is for a recognition of their status as a key cog in the NCAA’s sports machine.

The NLRB regional office in Chicago agreed. In a 24-page ruling, Regional Director Peter Sung Ohr essentially agreed with the argument, at least as it pertained to scholarship players, that they function as employees of the university. The walk ons that dot the back end of Northwestern’s roster, on the other hand, are out of luck. Ohr said that they play “for the love of the game” and not the compensation that the scholarship players get. That makes them more in the nature of volunteers and not employees. No union for them.

Here’s where it gets tricky for the student/athlete/employees. The appeals process in labor actions like this is almost unending. There’s a long history in this country of employers using labor laws to avoid having to collectively bargain and the way those laws are set up, the appeal process can and usually does take years.

For example, the first step is for the NCAA to appeal the regional director’s decision to the full NLRB in Washington, D.C. That’s simple enough. But if they’re unsuccessful there, Northwestern has no immediate appeal to court. Instead, the convoluted process requires first that an election be held among the players. Rare is the union election that goes off without a hitch, which means that Northwestern will object to some aspect of it. That’s just more grist for the mill.

If the union wins the election, it will require Northwestern officials sit down and bargain with them. The university can and will refuse, setting up the inevitable court battle. Once the university refuses to bargain, complaining that the student/athletes aren’t employees and/or that the election process was flawed, that same regional director in Chicago will issue an unfair labor practice complaint. That will lead to a trial which then will get further appealed landing, eventually, in front of a Federal court of appeals. Once a decision has been reached by that court, the losing party can appeal to the U.S. Supreme Court.

If you have the sense that this process I just described might takes years or, stated differently, another 6 or 7 years of losing seasons for Northwestern football, you’d be correct. If you have the sense that at least the process has an end point, you’d be wrong.

Let’s say that after all this time and all these trials and appeals and elections that the determination that the Northwestern football players are indeed employees under the National Labor Relations Act, the university has more cards to play. Given how long that initial determination ultimately will take, every person who originally voted for the union will long since have graduated and left the university. This will give the university the opportunity to next argue that the original vote is no longer valid because it doesn’t reflect the desires of the current group of students and that a new one should be held. They’ll take that complaint to the NLRB And on and on it will go.

Maybe this gets resolved in a decade, maybe not.

Then of course is an entirely different issue to contend with: the application of this decision to other schools. This decision is specific to Northwestern, a private college. It has no application to, for example, public institutions like Ohio State, which aren’t even covered by the National Labor Relations Act. Student-athlete/employees at those schools will have to resort to a patchwork of state labor laws to try and form a union. Let’s just say that public schools in the south have nothing to worry about. Those states have a distinguished history of being unfair to organized labor. Just check out what’s been taking place in Tennessee and the United Auto Workers if you don’t believe me.

In other words, this decision has no impact if the goal of these players at Northwestern at this moment have any realistic hope of sitting down with the president of the university and hammering out a collective bargaining agreement.

Where the decision does have impact is further exposing the fraud of big time college athletics. Again, though not a party to the NLRB action, Ohr’s decision spells out in rather dry but stark words the enormous commitment the NCAA allows schools to impose on a college football player, particularly one at a FBS school, in order to keep the NCAA’s money machine going.

During the season, playing football even at Northwestern, is a full time job requiring somewhere between 50-60 hours commitment per week. Academics consume about 13-18 hours of class time per week plus whatever homework or labs are required. That’s a pretty taxing schedule for anyone, let alone a young adult. It was this disparity, more than anything, which seemed to catch the eye of Ohr in his decision.

On the surface that does look like the work dominates the academics so to that extent Ohr has it right when football is in season. But one of the flaws in the decision is that Ohr only considered the time commitment during the football season. These so-called employees are on campus for the rest of the school year, indeed the majority of the school year, when their time commitment to the sport is significantly less. Eventually the balance between what they provide to the university trends back toward the rather mundane existence of just being students.

No matter. The real issue is not these players anyway. This comes down to the gross inequity between what those who control the system receive and what those who fuel the engine get. The student-athletes, a term the NCAA simply made up to avoid other legal consequences decades ago, are starting to get the rather uppity idea that a free four year education is hardly enough. There are millions of damning examples but just consider one from last week: Ohio State athletic director Gene Smith got an $18,000 bonus because one of the wrestlers at the school won a national championship. The wrestler got nothing except the glory of having achieved a goal.

Wherever you come out on that issue is bound to change because the disparity literally grows every day and until there is a meaningful way to address it, the disparity will continue to grow and the protests will grow even louder.

The NLRB case, in truth, is a loud but minor distraction at the moment. The real case threatening the financial underpinnings of the NCAA and hence its very existence is that which is heading to trial filed by former UCLA basketball player Ed O’Bannon. It seeks a cut of the money the NCAA is getting from exploiting the likenesses of former players on such things as video games. It’s a massive class action lawsuit that also includes as its defined class current players. It’s what we call in the legal business “bet the company” litigation because if the company doesn’t prevail in court it doesn’t prevail at all. If the NCAA loses it will owe almost everything it has to pay for damages. Beyond that, though, the NCAA will find that it can no longer exist.

What’s fascinating to me in this whole debate is how utterly helpless the NCAA and the member schools seem to act as if they have no choice but to conduct business the way they do right now. They further that narrative under the guise that their most important guiding principle is preserving the myth of the student-athlete.

For the NCAA to actually reform will require that it and its member schools face the more complicated reality of all the intended and unintended consequences flowing from the system they cherish. In business terms, the NCAA needs a new paradigm and they’re the only ones that don’t seem to accept that reality. A key tenant of that new paradigm has to be the recognition, financially, of the players that keep this train running. A great education is worth plenty but it is hardly enough.

The system is headed for collapse if it remains on its current course. The NCAA can spend literally millions in legal fees to fight every skirmish like this one but doing so only threatens its ability to survive even further. Far better now to confront the damning unfairness of the system and fix it. That may not be easy but it is, after all, only money and there's enough of it to go around and make everyone happy instead of just a relative few. If they can't find to work through this most high class of problems themselves then someone, a court, maybe Congress, will do it for them. And if that happens then the house of cards is unlikely to ever rise again.



1 comment:

Anonymous said...

Excellent, well-considered piece GB!