Penn State’s NCAA Sanctions: The Effects On An Athletics Department

Yesterday, the NCAA levied what many consider to be unprecedented penalties upon Penn State.  Including within the NCAA’s sanctions, was the imposing of a $60 million fine to be paid by Penn State over the next five years.  This $60 million figure is clearly large, leading some to believe that while the NCAA did not impose the “death penalty” upon the football program, it nonetheless intended to decimate it. 

How though, will the $60 million fine actually impact the operations of Penn State’s football program and the Penn State athletics department?  In the grand scheme of Division I athletics, Penn State has posted impressive revenues in recent years.  For 2010-11, the most recent year for which Department of Education data is available, Penn State’s athletics department reported total revenues of $116,118,026.00.  The athletics department also reported expenses of $84,498,339.00.  While many athletics directors will note that the numbers reported to the Department of Education are not inclusive of every cost incurred by an athletics department, these figures at least give some idea as to the type of budget Penn State’s athletics department is operating under.

That being said, it is arguable that at least when considering the Department of Education data, having to shell out on average $12 million per year over the next five years to comply with the NCAA’s sanctions is not going to destroy Penn State athletics.  However, the story is not that simple.  One has to take into consideration the multitude of budgetary factors Penn State’s athletics department is likely now facing as a result of the NCAA sanctions.  Along with losing sponsors like State Farm and facing a possible credit downgrade by Moody’s, Penn State athletics likely now has to rework its budget to determine where the $60 million is going to come from. 

Frank Hardymon is the Associate Athletic Director – CFO at Georgia Tech.  While he can only explain the budget planning process engaged in at Georgia Tech, he notes, “I would guess our methods of planning and budgeting are similar to those utilized by other institutions.”  This planning begins the spring prior to the July 1 start of the fiscal year, when the upcoming year’s budget is completed.  “In our case, nearly every dollar which we project receiving is accounted for in the budget,” Hardymon noted. 

Likely, a similar circumstance exists at Penn State.  While the Department of Education arguably demonstrates that the athletics department is operating with a surplus, many athletics directors are quick to note that is not the case, as not every expense an athletics department incurs is reported to the Department of Education.  As such, Penn State is likely looking towards contingency provisions in its budget to gather the money by which to pay the $60 million fine.  “We build in as much contingency as we can every year; some years we may have close to $5,000,000.00 in contingency factors into the budget, other years that amount is quite a bit less,” Hardymon said.

It is unknown whether Penn State’s athletics department had any contingencies built into its budget.  If so, it is highly unlikely that the contingency amount would allow for the payment of a $60 million fine.  As such, Penn State will likely have to scrape from other areas of its budget to pay the imposed fine.  Areas in which Penn State could cut from its budget would likely be from recruiting expenses, travel costs and future coaching salaries.  However, the most likely area in which Penn State could draw from is facility improvements.  While the department will have to continue paying under the loan terms for already existing improvements, it is unlikely that the athletics department will undertake any new building during the time period in which the fine is being paid.  Hardymon noted, “We also maintain a detailed five-year income projection which we update frequently.  That analysis factors in projected facility improvements needed during those five years.” 

Overall, the financial sanction imposed upon Penn State by the NCAA is indeed a blow to the athletics department.  However, given Penn State’s apparent athletics revenue along with proper budgeting moving forward during the next five years, it is likely that the athletics department will be able to continue to function financially.

The BCS Presidential Oversight Committee Meeting: Questions Presidents Must Ask

Today, the BCS Presidential Oversight Committee is meeting in Washington, D.C.  At the meeting, FBS conference commissioners will present the new post-season model, which they endorsed last week, to 12 university presidents.  The BCS has acknowledged that the proposal involves a four-team seeded playoff.  Other reports indicate that the four teams would be selected by a committee and would face-off in already existing bowl games.  Additional reports indicate that the site of the national championship game would be determined by a bidding system.  While the commissioner’s proposed new post-season model marks clear differences from the current BCS system, university presidents should ask the following questions and require sufficient answers before signing off on the plan. 

1.  Term of the Agreement

The first question presidents must ask, is how long of an agreement must they enter into if they approve the proposed plan?  The current BCS system has been in place since 1998.  While it was adopted to thwart previous criticism of the NCAA football post-season model, the current BCS system has attracted a large amount of criticism. 

Recognizing the amount of criticism that seems to befall any college football post-season model, university presidents should suggest that the term of this agreement be long enough to work any kinks out of the system, but not so long that changes cannot be made if it turns out to be an imperfect system.  In that regard, a five to six-year agreement would likely be the most beneficial term.

The elephant in the room when it comes to the length of the term, is arguably television contracts.  The expiration of the BCS’s current agreement coincides with the expiration of its television agreements.  Thus, there is the possibility that the BCS and conference commissioners believe that a lengthier agreement will benefit network negotiations.   Arguably, the longer that the BCS and conference commissioners can say that the new deal is in place, the more that networks will be willing to spend on deals. 

However, by shortening the term, the conferences and universities take away some of the negotiating power from the networks.  Shortening the term essentially requires networks to re-negotiate their television contracts at the end of the term.  Understandably, this opens up the possibility of conferences and universities obtaining more money from multiple television contracts.

2.  The Selection Committee

As noted above, it appears that conference commissioners propose that the teams that participate in the four-team playoff be selected by a committee.  This is arguably the least controversial proposal brought by the commissioners.  Most notably, a selection committee is used to seed the NCAA Men’s Basketball Tournament.  Although it is an imperfect method, it works.  Nonetheless, the presidents should question how the committee will be made up, and what safeguards will be in place to ensure that the nation’s top-four teams play in the playoff.

3.  Costs

The biggest issue university presidents should have with the proposed system, is its cost.  For all intensive purposes, under the proposed model, a team that makes the national championship game would be playing in two bowl games.  Playing in two bowl games understandably involves significant costs.

Before approving the proposed model, university presidents must rest assured that they understand the extent of these costs and who they will be borne by.  Under the current BCS model, teams playing in BCS bowl games are required to purchase a certain amount of tickets.  If they do not sell these tickets, they eat their cost.  This can cost a school hundreds of thousands of dollars.  Additionally, there are large travel costs associated with playing in bowl games.  Under the proposed model, these costs will now have to be borne twice.  This is because teams will have to travel to a bowl site to play in the playoff and then again to whichever city bid the highest to host the national championship game.

For contractual reasons, it is unlikely that the commissioners will sway away from hosting the playoff at a bowl site.  Thus, university presidents must request that the BCS or conferences pay some portion of their travel costs, in order to make this an economically feasible solution.

Overall, in presenting this proposal, the conference commissioners have answered many questions and addressed many of the criticisms of the current BCS model.  However, it is clear that issues remain that must be addressed before it is adopted as the new college football post-season model.

How the Arizona Wildcats Made the College World Series…and Money

It has been quite a season for the University of Arizona baseball team.  Winning the most games of any Wildcats baseball team for a single season since 1989, the Wildcats punched their ticket to Omaha, NE and the College World Series after beating St. John’s University in the NCAA Super Regional tournament.

While the Wildcats’ road back to Omaha is impressive, perhaps what is more interesting about the team’s season is the increase in revenue enjoyed by the the University of Arizona baseball program.  While the team’s on-field success drove interest in the program, the increase in revenue was largely generated by the team’s move from its previous on-campus home of 44-years, Jerry Kindall Field at Frank Sancet Stadium, to the off-campus location of Hi Corbett Field.

Given the history that the Wildcats created while playing at Jerry Kindall Field, along the field’s convenient on-campus location, there was some initial resistance from Wildcats baseball fans regarding the move.  However, University of Arizona Director of Athletics, Greg Byrne, knew that the move to the former Spring Training facility of the Cleveland Indians and Colorado Rockies would bring great things to the team and the Arizona athletics department.

“When we did this, our thought was that there was a community connection with Hi Corbett.  It was a dramatic facility improvement for our team, as we have a great clubhouse, locker room and training facilities.  We felt that if we could re-engage Tucson with our baseball program, it would have a tremendous impact for us this year and many years to come,” Byrne said.

Byrne’s intuition about the success that moving to Hi Corbett Field could bring the baseball program was correct.  The athletics department invested $350,000.00 to update the field’s clubhouse and provide it with University of Arizona paint and banners.  After those measures, Hi Corbett was open for business and fears that fans may not attend games at an off-campus location were quickly quashed.

For starters, ticket revenue for the baseball team this season was five-times that of what it was last year.  In 2011, Arizona baseball brought in $69,000.00 worth of ticket revenue.  This season, the baseball team brought in just shy of $350,000.00 in ticket revenue, which does not include revenue for tickets sold during the NCAA Regional tournament or NCAA Super Regional tournament.  Arizona baseball games were a hit with fans this season, as the team has brought in an average home attendance of 2,460.  Last season, the average attendance for games was just over 1,000.  The popularity of watching the Arizona baseball team play at Hi Corbett Field is further demonstrated by the fact that during one weekend series against Arizona rival ASU, the baseball team was able to bring in ticket revenues of $98,500.00.  The ticket revenue that Arizona baseball was able to generate during one weekend series was nearly $30,000.00 more than it generated all last season.

Along with obtaining revenue from ticket sales, Arizona’s athletic department also receives revenues from concession sales at the baseball games.  One luxury the athletics department has found in its move to Hi Corbett, is the ability to sell beer at baseball games.  This year, $360,000.00 worth of concessions, including beer, were sold at Arizona baseball games.  Of that gross number, the Arizona athletics department received $160,000.00 from Hi Corbett’s concessionaire.  Although beer sales accounted for a significant portion of the concession gross receipts, Byrne is quick to note that he does not believe beer sales are driving ticket sales.  “The nice thing, is that for our NCAA Regional game, we had 5,400 people at the game and we didn’t sell beer.  They came to support Arizona baseball; not for the amenity of beer,” said Byrne.

Arizona’s move to Hi Corbett has also presented the school’s athletic department with another way to generate revenue:  Hosting NCAA postseason baseball games.  For the first time in 20 years, the Wildcats hosted the NCAA Regional baseball tournament.  Additionally, Arizona hosted its first-ever NCAA Super Regional baseball tournament.  To host these tournaments, the athletics department placed bids with the NCAA.  The starting bid for the NCAA Regional tournament was $35,000.00, while the bid for the NCAA Super Regional is $50,000.00.  Byrne noted that the Arizona athletics department exceeded the bid amount for the NCAA Super Regional tournament.  Although Arizona spent money to bring these tournaments to Tucson, it gets to keep ticket sales revenue exceeding  the bid amount.  Additionally, the athletics department gets to keep all concession revenues from the tournaments.  On the first day of the NCAA Regional tournament, $24,000.00 worth of concessions were sold.

For the first time since 2004, the Arizona Wildcats baseball team took the field in Omaha to compete for the College World Series.  While the team’s success is much to celebrate, the financial turn-around of the program that was sparked by the team’s play and move to Hi Corbett is another cause for celebration.  Last year, the baseball team lost revenues of $816,000.00.  This year, Byrne expects the team’s net loss in revenues to be closer to $650,000.00.  In the next five years, Byrne expects the teams net losses to be under $500,000.00.  Although these numbers still represent net losses, in the grand scheme of things, it is a major win for the University of Arizona baseball program.

A Look Back at Conference Realignment 2004-2005

Conference realignment is nothing new. In 2004 and 2005, 16 schools moved from one FBS conference to another. Earlier this week, I wrote a piece for ESPN detailing how those schools have fared financially (and even academically) since their respective moves. Those who know me know I love Excel spreadsheets, and I had quite a few that we didn’t include in the ESPN.com piece. Below you’ll find a chart for each public school who moved in 2004 and 2005 detailing the growth each school saw in major revenue categories from the year before they moved conferences to the year after. Check out my ESPN.com piece for details on expense growth and overall financial picture for each school.

Virginia Tech

	2003-2004	2010-2011	Growth
Ticket Sales	$12,684,737	$18,979,129	50%
Student Fees	$5,782,195	$7,237,091	25%
Guarantees	$784,257	$2,551,600	225%
Contributions	$8,561,075	$15,849,981	85%
Comp and Benefits by Third Party	$55,000	$185,000	236%
Direct Institutional Support	$408,962	$353,531	-14%
NCAA/Conference Distributions	$4,960,919	$12,467,870	151%
Broadcast, TV, Radio, Internet	$1,907,452	$3,954,669	107%
Royalties/Licensing/Ad/Sponsor	$503,186	$1,384,437	175%

Cincinnati

	2004-2005	2010-2011	Growth
Ticket Sales	$3,889,980	$8,485,966	118%
Student Fees	$0	$0
Guarantees	$1,232,500	$871,905	-29%
Contributions	$4,636,229	$5,848,897	26%
Comp and Benefits by Third Party	$0	$0
Direct Institutional Support	$5,642,852	$14,708,672	161%
NCAA/Conference Distributions	$3,492,095	$7,731,939	121%
Broadcast, TV, Radio, Internet	$0	$0
Royalties/Licensing/Ad/Sponsor	$1,000,000	$1,841,836	84%

Louisville

	2004-2005	2010-2011	Growth
Ticket Sales	$12,767,307	$26,467,598	107%
Student Fees	$1,633,024	$1,861,502	14%
Guarantees	$1,030,000	$1,001,150	-3%
Contributions	$11,507,810	$28,224,908	145%
Comp and Benefits by Third Party	$0	$0
Direct Institutional Support	$1,500,000	$2,152,967	44%
NCAA/Conference Distributions	$2,430,632	$8,629,513	255%
Broadcast, TV, Radio, Internet	$1,643,061	$1,180,000	-28%
Royalties/Licensing/Ad/Sponsor	$2,875,850	$3,527,018	23%

South Florida

	2004-2005	2010-2011	Growth
Ticket Sales	$2,975,011	$5,828,048	96%
Student Fees	$9,183,299	$15,231,708	66%
Guarantees	$1,058,491	$1,704,000	61%
Contributions	$2,675,193	$2,735,003	2%
Comp and Benefits by Third Party	$0	$95,550
Direct Institutional Support	$1,093,589	$1,329,909	22%
NCAA/Conference Distributions	$1,426,973	$8,873,398	522%
Broadcast, TV, Radio, Internet	$400,000	$507,577	27%
Royalties/Licensing/Ad/Sponsor	$1,042,549	$4,885,785	369%

Central Florida

	2004-2005	2010-2011	Growth
Ticket Sales	$1,317,224	$5,167,757	292%
Student Fees	$11,932,441	$18,818,806	58%
Guarantees	$788,430	$663,750	-16%
Contributions	$3,357,302	$6,370,570	90%
Comp and Benefits by Third Party	$0	$0
Direct Institutional Support	$1,474,967	$2,424,099	64%
NCAA/Conference Distributions	$749,684	$3,826,564	410%
Broadcast, TV, Radio, Internet	$65,000	$0	-100%
Royalties/Licensing/Ad/Sponsor	$615,374	$3,684,133	499%

Marshall

	2004-2005	2010-2011	Growth
Ticket Sales	$1,961,713	$3,946,607	101%
Student Fees	$3,667,214	$4,287,724	17%
Guarantees	$966,967	$1,231,653	27%
Contributions	$3,256,311	$3,855,746	18%
Comp and Benefits by Third Party	$0	$0
Direct Institutional Support	$2,430,614	$5,439,689	124%
NCAA/Conference Distributions	$1,087,603	$2,911,073	168%
Broadcast, TV, Radio, Internet	$652,990	$1,231,121	89%
Royalties/Licensing/Ad/Sponsor	$206,704	$176,079	-15%

UTEP

	2004-2005	2010-2011	Growth
Ticket Sales	$3,639,657	$3,308,099	-9%
Student Fees	$2,952,176	$4,219,929	43%
Guarantees	$430,000	$983,700	129%
Contributions	$3,029,606	$3,071,855	1%
Comp and Benefits by Third Party	$0	$109,307
Direct Institutional Support	$4,994,481	$6,424,788	29%
NCAA/Conference Distributions	$1,130,878	$3,124,801	176%
Broadcast, TV, Radio, Internet	$7,828	$337,744	4215%
Royalties/Licensing/Ad/Sponsor	$1,272,179	$1,415,759	11%

Idaho

	2004-2005	2010-2011	Growth
Ticket Sales	$211,352	$1,077,790	410%
Student Fees	$1,851,406	$2,317,147	25%
Guarantees	$894,552	$1,063,980	19%
Contributions	$2,022,954	$2,148,835	6%
Comp and Benefits by Third Party	$179,000	$381,000	113%
Direct Institutional Support	$2,153,302	$2,778,311	29%
NCAA/Conference Distributions	$523,352	$2,004,217	283%
Broadcast, TV, Radio, Internet	$128,042	$50,000	-61%
Royalties/Licensing/Ad/Sponsor	$717,898	$730,462	2%

Utah State

	2004-2005	2010-2011	Growth
Ticket Sales	$1,032,946	$1,965,806	90%
Student Fees	$1,602,768	$3,798,541	137%
Guarantees	$1,430,500	$831,640	-42%
Contributions	$985,783	$1,869,811	90%
Comp and Benefits by Third Party	$0	$140,000
Direct Institutional Support	$2,270,523	$9,109,963	301%
NCAA/Conference Distributions	$436,950	$2,507,973	474%
Broadcast, TV, Radio, Internet	$74,000	$0	-100%
Royalties/Licensing/Ad/Sponsor	$710,719	$564,983	-21%

New Mexico State

	2004-2005	2010-2011	Growth
Ticket Sales	$1,029,077	$1,771,334	72%
Student Fees	$1,776,389	$2,952,320	66%
Guarantees	$861,000	$754,000	-12%
Contributions	$1,409,625	$883,239	-37%
Comp and Benefits by Third Party	$0	$0
Direct Institutional Support	$3,347,148	$9,078,575	171%
NCAA/Conference Distributions	$361,505	$2,118,375	486%
Broadcast, TV, Radio, Internet	$0	$0
Royalties/Licensing/Ad/Sponsor	$711,384	$2,414,076	239%

Keep in mind there are many reasons for fluctuations in revenue, including new stadiums, expansion of stadiums, and sometimes even changes in reporting methods. It’s important to talk to each school before drawing any conclusions about why a specific revenue category has increased or decreased.

New Links – June 20

The latest in college sports business news from around the web:

University of Houston selects architects for new stadiums

Have you heard of the design firms PageSoutherlandPage and DLR Group? Well, they have just both been selected to help construct University of Houston’s new football stadium. Read more about the costs, the dimensions, and the estimated time frame for the project.

Injured student athletes lose bid to revive NCAA suit

What would you do if you were an injured NCAA athlete who lost his or her scholarship due to injury? Two former college football players sued the NCAA when this happened to them back in 2010 claiming that “they were wrongly denied scholarships that would have covered the cost of their bachelor’s degrees despite their injuries.” How did the case turn out? Were these arguments valid?

National Center for Spectator Sports Safety and Security Partners with eVerifile to Improve Security at College Sports Facilities, Entertainment Venues

Did you know that Homeland Security ranks stadium attacks in the top 12 most devastating acts of terrorism? It is obvious precautions must be taken to help protect and secure players and spectators alike at sports facilities and venues around the country. Read more about the pilot security program several big name schools are participating in.

College football: OSU brass spells out pact terms

Urban Meyer is the new coach at Ohio State. Yet, his team is currently under a year one suspension from bowl games due to a NCAA rules violation. Does his new contract do anything to help reduce the possibility of this happening again? What are the compensation terms of this multi-year contract?

New Links – June 15

My Town My Team

Do you eat, live, and breathe Florida State Seminole Spirit? Are you from Northern Florida or Southern Georgia? Well, here’s a competition of a lifetime to fulfill all your Seminole Dreams!

UF aggressive in marketing unsold football tickets

In this tough economy, the amount of season tickets being sold to UF Gators fans is down. What tactics is UF using to get more people to enjoy the game-day experience and is this new marketing campaign effective?

Naval Academy to expand football stadium

The Naval Academy is set to transition into the Big East Conference in 2015. As a result, what renovations is the Naval Academy Athletic Association undertaking to make sure that Navy-Marine Corps Memorial Stadium is ready to compete in a more competitive conference?

Pac-12 Network trailer debuts

Are you ready for the new Pac-12 Network? Check out this trailer promoting the debut, see what’s it’s all about, and find out the debut date!

New Links – June 13

The latest in college sports business news from around the web:

Maryland AD Kevin Anderson explains why ACC TV windfall won’t be enough to spare sports due for elimination

In light of the ACC’s new contract with ESPN, the University of Maryland is looking to cut 8 of its 27 varsity sports in the upcoming year. Even with the added $4 million in TV revenues, the economic times currently do not allow for these teams to stay afloat. But is there anything these teams can do to continue playing at UMD?

 

Perhaps Stony Brook’s College World Series run will make college football’s honchos wake up

Could you ever imagine underdog teams like Stony Brook’s Men’s Baseball or Butler’s Men’s Basketball ever winning in the current set-up of College Football? It will continue to be virtually impossible unless NCAA Football adopts a new playoff schedule that could potentially involve the 11 conference champions plus one at-large team. Will College Football ever be conducive to having the underdog at least be in the running to win it all?

 

Richt’s new deal leaves door open

Mark Richt finally has a new contract at Georgia, a member of the SEC. In the past, SEC teams have proven that they are willing to give coaches a hefty price tag to “resign” or leave when they believe a certain coach isn’t the long-term answer. Does Richt’s new contract therefore have a high buyout-price, or is it more set in reality?

 

Florida State spending big money on football recruiting

The amount spent on football recruiting at FSU is up nearly 86% from the amount spent on recruiting under former Coach Bobby Bowden. Yet, is this increased spending just frivolous or does it come with the new realities of recruiting in the current day?

The Big East’s Lawsuit Against TCU

Today in the United States District Court for the District of Columbia, the Big East filed a lawsuit against TCU.  The lawsuit alleges a cause of action for breach of contract based upon TCU’s decision to not join the Big East, as it agreed to in 2010, and rather, move to the Big 12 by way of the Mountain West Conference.

The brief lawsuit filed by the Big East (the pleading is only six-pages long) notes that on November 29, 2010, the Big East and TCU entered into a membership expansion agreement, whereby TCU was invited to become a full-conference Big East member with all fourteen of its sports beginning on July 1, 2012.  According to the Big East, per the membership expansion agreement, the parties agreed that if TCU did not join the conference on July 1, 2012, the Big East would be damaged.  According to the pleadings, the parties could not specify the exact amount by which the Big East would be damaged if TCU did not join the conference.  However, in the membership expansion agreement, the parties apparently agreed that the Big East would be damaged by a reasonable estimate of $5 million if TCU did not join the conference on July 1, 2012.  Additionally, the Big East claims that in the membership expansion agreement, TCU agreed to pay the Big East this estimated damage amount of $5 million if it failed to join the conference by July 1, 2012.

In the complaint, the Big East alleges that on October 6, 2011, TCU “reneged” on the membership expansion agreement by announcing that it would instead join the Big 12 Conference on July 1, 2012.  Subsequent to this announcement, the Big East asked TCU to pay it the $5 million estimated damages amount per the membership expansion agreement.  According to the Big East’s lawsuit, “. . . TCU has refused to make that payment or acknowledge its obligation to do so.”  As such, the Big East alleges that TCU has breached the membership expansion agreement and the Big East is seeking monetary damages in the amount of $5 million, attorney’s fees, costs and other relief as the court deems appropriate.

It is to be seen whether the Big East’s lawsuit will stand up in court.  However, from the outset, there appears to be several issues with it.  First, TCU will likely argue that a claim is not ripe at this point.  In the legal world, a case must be “ripe” in order for a court to hear it, meaning that an actual controversy exists.  Here, it is arguable that this case is not ripe, as it was filed on June 11, 2012–which is before TCU was set to join the Big East and before it joined the Big 12.  Thus, albeit unlikely, TCU could still join the Big East, which would mean that it did not breach its contract with the Big East.  As such, TCU will likely argue that this lawsuit should be dismissed because it is not ripe.

The Big East has plausible arguments against the dismissal of the case for ripeness.  The Big East can argue that TCU’s actions, such as announcing its intention to join the Big 12 and its athletic director’s acknowledgement that TCU would have to pay the Big East a sum of money for not joining the conference, constitute an anticipatory breach of contract.  While the breach of contract technically has not occurred, since July 1, 2012 has not passed, the Big East can nonetheless assert that it believes TCU will fail to perform its part of the contract.  Under the legal theory of anticipatory breach, the Big East can terminate the contract and sue TCU for damages.  This would counteract TCU’s ripeness argument.

The other glaring issue with the Big East’s lawsuit is its calculation of damages.  In the lawsuit, the Big East first noted that both parties “. . . acknowledged and agreed that. . . damages would be difficult to determine if TCU did not follow through on its agreement to join the Big East on the Effective Date. . . ”  Damages based upon an event that may occur in the future which are “difficult to determine” are called “speculative damages.”  TCU will likely argue that the damages are speculative, because in contract cases like the one at hand here, speculative damages cannot be recovered by a plaintiff.  However, one exception to this rule exists.  That exception provides that plaintiffs can recover damages up to an amount that is reasonably likely to occur if the occurrence causing the speculative damages is reasonably likely to occur.  In this instance, because it appears that the parties agreed upon the $5 million damage amount in the agreement, it is arguable that the reason causing the speculative damages (i.e. TCU not joining the Big East) was reasonably likely to occur and that $5 million was the amount by which the Big East would be reasonably damaged.  Given this, it appears that the Big East can also successfully argue against a defense raised by TCU that the $5 million prayer for relief amounts to speculative damages.

Overall, it is likely that a jury will find in favor of the Big East.  However, the question remains as to whether a jury will award the full $5 million in damages the Big East has requested.  This lawsuit should serve as guidance for other universities testing the conference realignment waters.  Universities seeking to move to a new conference should fully investigate their options, so they do no agree to join one conference only to join another and face the risk of a lawsuit later.

The 2012 Junior College World Series

Is it possible in this day and age to hear about an intercollegiate national championship without also hearing stories of improper recruiting, conference realignment and pay-for-play scandals?

Believe it or not, it is. 

For 55 years, the small western Colorado city of Grand Junction has played host to the Junior College World Series.  From the Friday before Memorial Day until the Saturday after, Grand Junction citizens devote their livelihood to supporting the baseball dreams of young men from across the country.

In 2012, those men represented junior colleges from nine states between South Carolina and Nevada as they competed to win the championship team trophy and the gold medals that are awarded to the members of the championship team.  Winning the JUCO World Series does not bring a school the chance to negotiate with a television network for a greater revenue distribution share.  Nor will it bring a large payout to the team’s school.  However, winning the JUCO World Series binds these young  to the others like them that have come before, that deeply loved baseball and experienced the strong sense of community Grand Junction, CO offers. 

The 2012 JUCO World Series kicked off on Friday, May 25 with a banquet attended by over 1,000 individuals at the Two Rivers Convention Center.  The banquet serves as the tournament’s first warm welcome to players and coaches.  While each team in its entirety attends the banquet, the bulk of the banquet’s attendance is made up by local Grand Junction residents and business owners who purchase tickets and tables to support JUCO.  The room is filled with well-dressed people, who gather around their neighbors with proud smiles on their faces for what their city has accomplished through the JUCO World Series. 

This year, banquet attendees received quite a treat, as the guest speaker was Don Meyer, who at the time he retired as an NCAA basketball coach, led the NCAA in all-time wins for men’s basketball head coaches.  Standing at the podium with a cane in his hand, Meyer served as an inspiration to the young men who would be taking the field the next day along with those present who have dreams of their own to fulfill.  A basketball coach for 38 years, one of Meyer’s legs was partially amputated in 2008 after he was in a car accident.  While recovering from the serious car accident in the hospital, doctors also diagnosed Meyer with inoperable liver and intestinal cancer.

Meyer’s response to recovering from a life-threatening accident and the terminal news of his cancer diagnosis, serves as an inspiration of how the love of something greater than one’s self can help one beat the odds against them, no matter how big the odds may be.  In Meyer’s case, what he loved more than himself was the opportunity to guide young men’s lives as a coach.  The depth to which this love found itself in Meyer’s heart is demonstrated by how Meyer responded to the amputation of his leg and being diagnosed with two forms of inoperable cancer.  At 4:30 a.m.  on the day that he was released from the hospital Meyer got in the car, headed to the gym and went back to work as a college basketball coach.

Don Meyer speaks to banquet attendees.

Leaving the Two Rivers Convention Center on Friday night, it’s safe to say that every young man believed that if he pushed himself just a little bit harder to overcome his personal obstacles, then his team could hoist the JUCO World Series championship trophy come June 2.

At 9 a.m. on May 26, the sun was shining in Grand Junction and the wind was blowing some 40 MPH.  However, a little (albeit strong) wind was not going to put a damper on the event that for 55 years, many Grand Junction residents have centered their Memorial Day weekends around.  Men who have served on the JUCO committee for decades arose early to prepare the field for the day’s games.  Many of these men would take days off of work throughout the following week to ensure that all ran smoothly with the tournament.  Perhaps its childhood dreams that drive these men’s desire to spend one week each summer practically living at a baseball stadium, devoting all of their time during that week to the operations of a baseball tournament.  However, more likely, it is their desire to serve their community and help young men achieve their own dreams that drives them out of bed before the sun rises to organize a baseball tournament.

Walking into the tournament this year, past attendees quickly noticed the grand renovations to the Lincoln Park Stadium, where the tournament is held.  Since fans left the stands after the 2011 tournament, the Tower at Lincoln Park was constructed.  The tower is an eight-story tall building which houses concession stands, media booths and an open space conference room that can be used for entertaining and events during sporting events (on the opposite side of the baseball field there is a football field where Colorado Mesa University plays its games).  The construction of the tower is a further demonstration of the long-standing commitment of Grand Junction and its residents to the JUCO World Series, as it was funded and developed by Grand Junction residents Jamie Hamilton and Bruce Hill, along with the school district, Colorado Mesa University, JUCO and the NJCAA.

The Tower at Lincoln Park stands 80-feet tall.

A view from the Tower at Lincoln Park overlooking Colorado Mesa University’s football field.

While the most notable change this season was the finalization of the Tower at Lincoln Park construction, mention was made during the weekend of the breadth of development to the JUCO World Series that has occurred over the years.  On Sunday, May 27, a pre-game celebration was held honoring the 7th  year of the NJCAA and recognizing former NJCAA Executive Director, George Killian.  In the world of JUCO baseball, Killian is a celebrity of sorts.  Upon his arrival to any game or event, people quickly whisper to one another such things as, “That’s George.  You must meet George.”  At the pre-game celebration, an elderly Killian stood near home plate and recounted how in 1960, he came to Grand Junction to see if it would be fitting to host the JUCO World Series.  He noted that when he arrived to Grand Junction in 1960, all he saw before him was a cow pasture.  Yet, the city and the NJCAA forged a bond which has subsequently resulted in the two pairing to host the tournament over the last 55 years.  The measure of this was not lost on Killian, who as he stood below the new 80-foot state-of-the-art tower, noted, “What you see today, is truly a miracle.”

George Killian comments upon how far the JUCO World Series in Grand Junction, CO has come since 1960.

Perhaps some would call the success of the JUCO World Series over the last 55 years a miracle.  However, from an outsider’s perspective, it appears to be more so the expected outcome from an outpouring of love.  The men and women who call Grand Junction home undoubtedly love their city.  Additionally, it is clear that they recognize the good that comes out of one devoting his time to helping a community and others become better.  It is this mixture of love for a city and service to others that has allowed the JUCO World Series to successfully exist over the last 55 years while also making the dreams of young men and Grand Junction residents alike come true.

Why Basketball Is Driving Conference Realignment For The Atlantic 10 Conference

Yesterday, the Atlantic 10 Conference announced that Butler University would join the conference on July 1, 2012–one  year earlier than anticipated.  Gaining Butler a year ahead of schedule grants the Atlantic 10 Conference the benefit of competing with 16 member institutions during the 2012-13 school year, before Temple and Charlotte depart the conference.  While this is definitely a perk for the conference, perhaps the biggest benefit the conference gains in Butler’s expedited admission is the chance to become a basketball powerhouse.

Although the Atlantic 10 Conference does not receive the same media recognition as BCS AQ conferences, in recent years, the Atlantic 10 has made its name as a conference which is consistently competitive in basketball.  Thus, it is no surprise that in selecting new institution members during the course of conference realignment, that the Atlantic 10 has aligned itself with some of the best-performing basketball schools in recent years:  Butler and VCU.

Much has been said about the roles that football and television contracts played and continue to play in conference realignment decisions.  However, one cannot turn a blind eye to the power of a strong basketball program when it comes to attracting conferences.  Although basketball does not have the monstrously large viewership numbers that football does, it does have a wide enough following to garner billion dollar contracts for the television rights to March Madness.  On top of the television contract negotiation potential strong basketball programs present, there is also the fact that the greatest portion of the revenue distributed by the NCAA is distributed to conferences based upon their team’s March Madness performance.  Given these factors, it is apparent why the Atlantic Ten Conference has based its stake in conference realignment not upon football prowess, but upon basketball.

As noted above, of the revenue distributed by the NCAA to conferences and member institutions, the greatest percentage goes towards something called the “Basketball Distribution Fund.”  Conferences receive payouts from the fund based upon their member institution’s performance in the Division I Men’s Basketball Championship over a six-year rolling period.  A basketball program earns one unit for each March Madness game they compete in, save for the National Championship game.  For the most recent year in which data is available, 2010-11, the NCAA distributed $479 million to conferences and member institutions through the Basketball Distribution Fund.  This amounted to 40.5 percent of all revenue distributed by the NCAA in 2010-11. 

The follow chart shows the number of Basketball Distribution Fund units that the Atlantic 10 Conference has earned over the last three years.  The chart depicts what the conference earned through its actual members’ performances in a given year, and also notes how many additional units that the conference could have earned if Butler and VCU were conference members in a particular year.

2010	Units Earned	2011	Units Earned	2012	Units Earned
Richmond	1	Richmond	3	St. Bonaventure	1
Temple	1	Temple	2	St. Louis	2
Xavier	1	Xavier	1	Temple	1
Butler	5 + NC	Butler	5 + NC	Xavier	3
		VCU	5	VCU	2
	2010 Total:  3		2011 Total:  6		2012 Total:  7
	With Butler and VCU:  8 + NC		With Butler and VCU:  16 + NC		With Butler and VCU:  9

When considering the chart above, the presence of Butler and VCU in the Atlantic 10 clearly generates additional revenue for the conference.  In 2010, three Atlantic 10 schools participated in March Madness:  Richmond, Temple and Xavier.  These schools accumulated three units for the conference.  Had Butler been an Atlantic 10 member in 2010, the conference would have nearly tripled its Basketball Distribution Fund units, while also receiving a payout for Butler’s National Championship game appearance.  If Butler and VCU were Atlantic 10 Conference members in 2011, the conference would have earned an additional ten Basketball Distribution Fund units and again, received a payout for Butler’s National Championship game appearance.  Similarly, in 2012, the Atlantic 10 Conference could have received an additional two Basketball Distribution Fund units had VCU been a member of the conference.

While the amount of revenue generated from basketball contracts and the Basketball Distribution Fund is meager compared to the amount of money football generates, not every conference can woo college football powerhouses to their stables through conference realignment.  Thus, what the Atlantic 10 Conference has accomplished through conference realignment is noteworthy.  Although it will lose a historically sound basketball program in 2014 when Temple leaves for the Big East, it has replaced that leaving member with two noteworthy programs.  Additionally, the Atlantic 10 has attracted two members which in recent years, the general public nationally has been interested in watching.  With young, charismatic coaches that also boast successful track records in Brad Stevens and Shaka Smart, Butler and VCU respectively have garnered Cinderella story followings across the country.  One can expect the Atlantic 10 to capitalize upon this should either team have similarly successful March Madness runs in the future.

Overall, while the Atlantic 10’s conference realignment path was not driven by football, it appears that the conference has been successful in laying a new foundation for its future.