Now a fight is brewing over how to divide the settlement’s cost among Division I members
The National Collegiate Athletic Association’s biggest nightmare, as Charles T. Wethington described it, is over.
The association agreed last week to pay $54.5-million to settle a six-year court battle with a group of former assistant coaches whose salaries were capped by the N.C.A.A. from 1991 to 1995.
Mr. Wethington is chairman of the N.C.A.A.'s Division I executive committee, which approved the settlement after two weeks of negotiations with the plaintiffs’ lawyers.
Now, a fight is brewing over how the cost of the settlement should be divided among the 310 institutions in the N.C.A.A.'s Division I, which approved the $16,000 salary cap in 1991 as a cost-cutting measure. The organization’s smaller members say that the big institutions, which receive the most money from N.C.A.A. distributions, should shoulder the largest share of the settlement costs. The big institutions say the burden should be borne equally by all Division I members.
Divided equally, the settlement would cost each institution $176,000, roughly the expense of operating a Division I soccer team for one year. While that sum is a small proportion of the athletics budget at big institutions, smaller universities may find the cost daunting.
The N.C.A.A. has formed a committee under the direction of V. Lane Rawlins, president of the University of Memphis, to come up with a payment plan.
The most likely solution is a compromise. Each institution will probably pay a flat amount toward the total settlement, reflecting the fact that the entire division imposed the salary cap on “restricted-earnings coaches,” as they were known.
On top of that, each institution will probably pay a share based on how much money it receives from the N.C.A.A.'s annual payouts. Last year, the N.C.A.A. paid $148-million to Division I members. Most of the money comes from the association’s contract with CBS Sports to broadcast the men’s basketball tournament, which, ironically, began last week. Money is distributed to colleges and universities based on how many games their teams win in the men’s tournament, how many scholarships they offer to athletes, and other factors.
The 112 institutions in Division I-A, which have the most prominent sports programs in the N.C.A.A., want to minimize the amount that they would be required to pay.
“The I-A members have been consistent in their claim that basketball moneys should not and cannot be used to pay for the judgment,” said Karl H. Benson, commissioner of the Western Athletic Conference. “It has to be across-the-board, equal payments. Ten million has already been taken out of the basketball fund for this year -- it’s being held in escrow -- and even that has caused a lot of heartburn over the past several months.”
Jeffrey H. Orleans, commissioner of the Ivy League, whose teams play in Division I-AA, said that the N.C.A.A. should find a compromise between a flat-payment structure and one that is proportional to the payouts that colleges receive.
“The discussions we’ve had at the commissioner level are not at those extremes,” Mr. Orleans said. “The way to work this is part [should be shared] equally, part pro rata.”
Robert G. Lawless, president of the University of Tulsa and a member of the committee that is drawing up the payment plan, said he was not sure how the debate would shake out.
“I think the only thing that is for sure is that different payment methodologies will be used,” he said.
The third source of funds is the N.C.A.A.'s national office. In January, Cedric W. Dempsey, the association’s president, promised to cut spending to save $22-million over three years. Some of those savings could be used to pay the damage award, he said.
The N.C.A.A. also may take out a loan or secure a line of credit that would spread the cost out over time. The N.C.A.A. probably will be forced to do that, because the full settlement is due by May 8 and the organization does not have $54.5-million in cash reserves.
“The timetable for determining the allocation is rather short,” Mr. Dempsey said. “We’d like to have the issue settled before the beginning of the next fiscal year,” in August.
In the six-year saga of the case, the N.C.A.A. has lost one federal-court battle after another. Kathryn H. Vratil, a U.S. District Court judge in Kansas City, Kan., ruled in summary judgment against the association in 1996.
The U.S. Court of Appeals for the 10th Circuit upheld her ruling, and the Supreme Court declined to hear the N.C.A.A.'s appeal.
A jury in Judge Vratil’s court awarded the plaintiffs $22.3-million in April 1998. Under antitrust laws, the damage figure was tripled, to $67-million. Since then, court costs, interest, and legal fees have pushed the total expense of paying the jury award to more than $100-million, according to Mr. Wethington, chairman of the Division I Executive Committee, who is also president of the University of Kentucky.
While the N.C.A.A. thought it had grounds to win an appeal of the damage award, the association wanted to put the case behind it, he said.
“We believe that errors were made by courts in the damage assessments, and that factors in this case have been misconstrued,” Mr. Wethington said. “But there comes a time when you must weigh your opinions and judgment of the law against the common good.”
The two sides were far apart on the amount of a possible settlement as late as January. But when the N.C.A.A. appealed the damage award to the 10th Circuit last month, the appellate court’s mediation office offered to help the two sides come to terms. The sides met on February 24 and were in talks until March 8, when they reached an agreement.
“I originally filed this case in November 1993,” said Robert G. Wilson, a lawyer for the coaches. “It’s been a very long road, and I’m just pleased that this has come to some conclusion.”
Roughly 2,000 to 3,000 coaches will get a piece of the settlement. The money will be divided according to a formula that considers the number of years that each coach served under the salary cap, and the salaries of other coaches in the same sport at the same institution. Coaches at larger institutions, who might have been paid more than coaches at smaller institutions if the earnings cap had not been in place, will receive more under the settlement, said Gerald I. Roth, another lawyer for the plaintiffs.
The settlement raises questions about the N.C.A.A.'s vulnerability in other antitrust cases. Adidas America, the shoe and apparel manufacturer, is suing the association over its restrictions on the size of uniform logos.
Easton Sports, the bat manufacturer, is suing the N.C.A.A. over changes in baseball-bat specifications.
And the size of last week’s settlement could prompt other potential plaintiffs to sue the N.C.A.A. Some legal experts have noted, for example, that the N.C.A.A. could be vulnerable for limiting the amount of money that athletes may earn during the academic year.
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Section: Athletics
Page: A47