McCain-Feingold and Shays-Meehan for College Sports? The NCAA's Hard and Soft Money

Last week, NCAA President Myles Brand wrote a 25-page letter to the House Ways and Means Committee arguing that the NCAA deserves its tax-exempt status. According to Brand, the NCAA is foremost about education. We've examined the validity of this claim on numerous occasions.

Will Li e-mails some great commentary about Brand's letter. Will suggests that we might want to re-conceptualize how we look at NCAA funding through "hard money" and "soft money" lenses:

I wonder how Brand justifies things like 7 figure salaries (Charlie Weis) and/or exorbitant stadium expenditures (Texas/ HDTV Screen)? The article says he does (by saying that coaches are paid commensurate to other highly recruited faculty? Is that true?).

It seems to me that the conflict isn't between federal funding and TV rights, though.

The real problem is that, to use an analogy, there's so much soft money in the system. In that analogy, if college sports and the NCAA are a party or a candidate, the hard money is the money they collect from sponsors and ads and television rights, the amounts of which should theoretically be publicly available. But (correct me if I'm wrong), we have no way of knowing how much boosters are spending on donations, incentives, athlete recruitment and other in-kind contributions to the schools.

I think what the NCAA needs is an equivalent to McCain-Feingold.

While NCAA rules obviously limit boosters (see e.g., Sacrificial Gyro? Pete Carroll's Big Fat Greek Recruiting Methods), do we know how much they actually provide? And to whom? And when? Are boosters a less-detectable way for schools to get what they want, much like, until McCain-Feingold and Shays-Meehan, financial contributions to political parties had been a less-detectable way for politicians to get what they want?

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New Sports Law Scholarship

New this week:

Jonathan C. Benitah, Student article, Anti-scalping laws: should they be forgotten?, 6 TEXAS REVIEW OF ENTERTAINMENT & SPORTS LAW 55 (2005)

Christian Dennie, Is Clarett correct? A glance at the purview of the antitrust labor exemption, 6 TEXAS REVIEW OF ENTERTAINMENT & SPORTS LAW 1 (2005)

Bennett Liebman, Reversing the refs: an argument for limited review in horse racing, 6 TEXAS REVIEW OF ENTERTAINMENT & SPORTS LAW 23 (2005)

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Cubs Sign Alfonso Soriano for 8-Years, $136 Million: Does His Age Matter?

The Chicago Cubs have signed Alfonso Soriano to an 8-year, $136 million contract. The free agent outfielder had what many consider to be an excellent 2006 season, hitting 46 homers, 41 doubles, 95 RBIs, and stealing 41 bases. On the other hand, he batted an uninspiring .277, struck out 160 times, and his OPS of .911, while impressive, was only 13th in the National League. But the Cubs haven't won a World Series since 1908--the 100 year anniversary looms--and fresh off a 66-96 season, it's probably fair to assume that GM Jim Hendry has to make a splash this off season for his own job security.

Soriano's contract is the fifth-largest in MLB history, behind Alex Rodriguez ($252 million for 10 years), Derek Jeter ($189 million for 10 years), Manny Ramirez ($160 million for eight years) and Todd Helton ($141.5 million for 11 years).

But what makes Soriano's contract so interesting is that he'll be 31-years-old when the 2007 season begins, and presumably in the latter portion of his prime. In contrast, when they signed their mega-deals, the players noted above were in, or about to enter, their primes: Alex Rodriguez was 26, Derek Jeter was 27, and both Todd Helton and Manny Ramirez were 28. Granted, their contracts--other than Ramirez's--were for longer terms than Soriano's, but at least their employers were clearly paying for what was to come.

So are the Cubs paying Soriano more for his past accomplishments? That begs the question of when a player's prime occurs. Seattle Mariners GM Bill Bavasi says it begins at age 27. Kevin Whitaker of Between the Lines says it's between ages 26 and 30, with age 27 typically a player's peak year. Ron Cook of the Pittsburgh Post-Gazette says it's between ages 28 and 32.

Economics professor J.C. Bradbury has conducted some empirical research on baseball players' primes and he also links to some other studies (which generally find that players peak between ages 26 and 28). Bradbury finds that most players peak at age 29, although superstars tend to peak between ages 31 and 32.

Regardless of when a player's prime occurs, Soriano's career path will not necessarily follow the typical trajectory. In fact, he'll probably continue to put up excellent numbers for several years to come, and even if he is no longer a 40/40 threat by age 34 or 35, he could still be a very productive player--34-year-old Manny Ramirez is still one of the most feared hitters in baseball and 36-year-old Jim Thome hit 42 homeruns last season.

But an 8-year, $136 million contract for a 31-year-old still seems very risky, especially one whose speed is such a significant portion of his value. Then again, if the Cubs win the World Series with Soriano, there is no doubt the fans will think he was worth every penny.

Update: See Jonathan Weiler's remarks on Sports Media Review.

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WSJ Law Blog on the Michigan-Ohio State Game

The WSJ Law Blog has an amusing post entitled, "Ohio State v. Michigan: The Legal Edition." I must say, here at the border of Michigan and Ohio, it's definitely the event of the month, and it's nice to know people are paying attention even in New York! Law Blogger Peter Lattman has provoked an email exchange and a friendly wager between the deans of Ohio State's and Michigan's law schools (which, if you read it too closely, takes a bit of the fun out of the upcoming game).

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Judge Denies Russian Team's Request for Injunction in Malkin Suit

Here's my monthly update on the Malkin lawsuit. According to USA Today reporter Kevin Allen, in rejecting Metallurg's request for an injunction to prevent Evgeni Malkin from continuing to play for the Pittsburgh Penguins, U.S. District Court Judge Loretta Preska said that the Metallurg would not likely prevail on the merits because she believed that the NHL "would be able to demonstrate" that the league's transfer fee policy was collectively bargained with players, which makes it "immune" from antitrust scrutiny."

HUH??? This is the first time I have ever heard that the league and the union collectively bargained for a transfer fee policy. They can bargain all they want about something, but since when does the non-statutory labor exemption preclude alleged restraints on competition that primarily affect parties outside the collective bargaining relationship? [Oh well, I love reading decisions involving the interplay between antitrust law and sports.]

I am interested in reading whether Judge Preska felt that the Mettalurg is unlikely to prevail on the merits of its tortious interference claim. But in any event, I think denying the injunction is the right result for a completely different reason; that being that the Russian teams "are unlikely to be able to prove that they cannot be compensated by money damages." As the judge properly noted, "These cases are always about money, the only question is how much."

Thus, the Mettalurg will still have its day in court. They just can't stop Malkin from playing right now.

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What's the Proper Role of Unions in Disciplining Agents?

Last January, I discussed the NFLPA's efforts to impose a 2-year suspension on sports agent David Dunn. The NFLPA's suspension was put on hold when Dunn filed for Chapter 11 bankruptcy protection, which automatically stays administrative actions against the debtor. Liz Mullen of Street & Smith's Sports Business Journal has an interesting piece in the Oct. 23-29 issue ("NFLPA's vote to suspend Dunn shows it will take on big agents"). Mullen reports that Dunn's bankruptcy proceeding was dismissed, and Dunn said that he will appeal the suspension to the NFLPA's arbitrator, Roger Kaplan. The NFLPA is hoping that a hearing can be scheduled this month.

Mullen also notes that the NFLPA, which appears to be the only one of the four sports unions that actively investigates and disciplines agents for violating its rules of conduct, has never suspended an agent with as many big-name clients as Dunn has. Two of Dunn's clients spoke out against the suspension:

Drew Bledsoe: "It's ridiculous. There is no reason for the [players association] to be seeking punishment against Dave after so many NFL players freely chose Dave to continue as their representative after he left Leigh Steinberg's firm to start Athletes First."

John Lynch: "The decision to discipline Dave is misguided and completely unjustified. He did nothing wrong, and frankly, I am astounded that the union didn't call me, one of its members, to learn the truth before taking this step."

LaVar Arrington has echoed similar statements as Bledsoe and Lynch in the context of the union's pursuit of his agent, Carl Poston, for malpractice allegedly committed by Poston in the negotiation of Arrington's contract with the Redskins, which I discussed last September here. The NFLPA released in a statement:

"We have six players on our disciplinary committee and a majority of them believe that Dunn's actions violated our agent regulations. The committee is not disciplining Dunn for anything he did in representing Drew Bledsoe, John Lynch, or any of his other active clients. The discipline is, instead, because he, among other things, failed to properly represent a former client and improperly interfered with another agents' clients."

Should the union only get involved when a player (or players) files a grievance against a particular agent? Or should the union also be proactive in disciplining agents even when the players are against it? Mullen notes that many agents have been waiting a long time for Dunn to be suspended. So Dunn's competition is obviously all for it because then there will be a feeding frenzy on all of Dunn's clients, which in and of itself fosters unethical behavior in the form of client solicitation and providing improper inducements. If David Dunn was in fact stealing clients from Leigh Steinberg, should the union be concerned about that behavior or is that something that should just be left for Dunn and Steinberg to resolve between themselves?

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New Study Shows Public Financing of Stadiums Lowers Ticket Prices

A newly released study suggests that, at least the NFL context, public financing of stadiums leads to lower ticket prices. The paper, The Use of Public Funds for Private Benefit: An Examination of the Relationship between Public Stadium Funding and Ticket Prices in the National Football League, by Matthew Brown (South Carolina), Daniel Rascher (USF), and Wesley Ward (Ohio), can be downloaded free of charge from this site. Here's part of the paper's abstract:

The purpose of this study was to examine the relationship between the use of public funds to build stadia and the profit maximizing goals of National Football League (NFL) franchises. A hypothesis was formulated that stated the impact of the public share of the construction cost would have no effect on relative ticket prices for those that consume the product. The cross-sectional data for a ticket price model, which consisted of seasonal data from every NFL team to play from 1991 through 2003, was investigated. The results showed an increase in public funding by 10% lowers ticket prices by 42 cents. As shown, the bulk of the variation in ticket prices was due to a general increase over time and MSA per capita income.

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