The Cost of Bribery and Corruption in the NCAA

“You guys are being introduced to how stuff happens with kids and getting into particular schools.”

Last week, the U.S. Attorney’s Office, with the help of undercover agents, wiretaps, and a cooperating witness, released three separate complaints charging bribery, corruption, and fraud against 10 people, including NCAA coaches, a sports agent, a financial advisor, a former NCAA and NBA referee turned tailor, the Head of Global Sports Marketing for Adidas, and a director for a high-school basketball program sponsored by Adidas.

Two of the complaints detailed that assistant coaches were bribed approximately $146,500 by financial advisors and agents to abuse their position of trust by steering college basketball players to retain particular advisors, not based on their merits (Footnote 1), but because the coaches were being bribed to do so. As Chuck Person, assistant coach of Auburn, stated about his influence on a player, “He listens to one person…that’s me, yep.”

The other complaint charged two employees of Adidas with conspiring with coaches for schools sponsored by Adidas to make payments totaling at least $250,000 to three high-school basketball players and/or their families in exchange for their commitment to play basketball at a specific school, and to sign with Adidas upon turning professional. Additionally, an agent and a financial advisor facilitated the corrupt payments in exchange for a promise that the players would retain their services upon turning pro.

“You guys are being introduced to … how stuff happens with kids and getting into particular schools,” Merl Code, an Adidas employee, said to financial advisor, Munish Sood, and an assistant coach for Louisville.

You Guys Are Being Introduced to…the NCAA

Even with its non-profit designation, the NCAA and its colleges are money-making machines, highlighted by the NCAA’s annual $771 million March Madness TV contract (and bumping up to $1.1 billion annually in 2025). Much of that $771 million gets distributed to Division 1 schools. The Division 1 schools themselves make a boatload of money, averaging $40 million per year from basketball and football alone. A football school like the University of Texas makes $92 million annually on football.

Sports apparel companies, like Nike and Adidas, compensate colleges and their coaches with incredibly lucrative deals. Rick Pitino, referred to in the complaint as “Coach-2,” received 98% of Louisville’s $39 million deal from 2014 with Adidas. More recently, Louisville signed a 10-year deal worth $160 million. Nike has a 15-year deal with University of Texas for $250 million, and Under Armour signed a $47 million deal with with the University of Cincinnati.

With billions in revenue, the NCAA and its colleges can pay Jim Harbaugh and Urban Meyer $9.0 million and $6.4 million per year as college football coaches. John Calipari and Mike Krzyzewski get paid $7.4 million and $5.5 million per year as college basketball coaches. 72 football coaches and 41 basketball coaches in Division 1 get paid more than $1 million per year.

All the while, college athletes stand on the sideline making nothing. Many may have scholarships, but a study by the National College Players Association showed “full” athletic scholarships leave 85% of college athletes in poverty while the fair market value for the average football and basketball player was approximately $121,048 and $265,027. A recent article in the wake of this scandal detailed some of the attempts made through the legal system to fair scholarships and pay.

For the fortunate ones, the meager scholarship money can be subsidized by their parents and/or families. The unfortunate ones, the ones who came from poverty themselves and have no spare cash, look for money elsewhere.

Charles Barkley was quoted saying, “I got money from agents when I was in college and I went in the ’80s. A bunch of players — most of the players I know — borrowed money from agents. The colleges don’t give us anything. If they give us a pair of sneakers, they get in trouble. Why can’t an agent lend me some money and I’ll pay him back when I graduate? “These agents are well, well known. They’ve been giving college kids money for 30 years,” Barkley said. “And I’ve got no problem with it. I want to visit my family, I want to go see a movie. How in the world can they call it amateur if they pay $11 million to broadcast the NCAA Tournament?”

Pay the Creators of Product

People or corporations can make a ton of money when they have a product that everyone wants. This is how business works, and I have no problem with the NCAA being as lucrative as it is. Where the problem lies, as we all know, is when the creators of the product, the college athletes in this case, are not paid.

Without the ability of a college kid to be paid for what he is creating or to be represented for his best interests, this creates situations where highly-touted kids and their families are enticed into a world where business professionals, colleges, and sports apparel companies, to name a few, will pay cash under the table to get the athlete’s business. This supposed “dark underbelly” of the NCAA, as US Attorney Joon Kim put it, is created because of the NCAA’s fat and bloated white belly.

As Sally Jenkins put it in a devastating putdown of the NCAA’s failure to pay its athletes,

No one ever told Jodie Foster that she couldn’t be paid for acting while she was at Yale. No one tried to prevent Snapchat’s co-founders from profiting on their tech musings while at Stanford. Meanwhile, athletes are economically sequestered and must work 60-hour weeks in exchange for a scholarship that doesn’t begin to cover their real worth. The bureaucrats commandeer their market value and reap billions, all in the name of “tradition.” And it won’t stop until the courts or cops force it to.

Race Against Time

The majority (74% and 70%, respectively) of male athletes moving to the professional levels in basketball and football are black, yet only 1.1% of college basketball players and 1.5% of college football players make it to the NBA or NFL. With these minuscule odds, graduating from college is extremely important for athletes to succeed in life after college athletics. Yet the NCAA fails the most visibly to graduate black athletes.

A 2012 study from Penn University’s Center for the Study of Race and Equity in Education, identified that black athletes in the Power 5 Conferences (ACC, Big 10, Big 12, Pac 10, and SEC) were graduating at drastically lower levels than their peers. As explained by Kevin Blackistone, ESPN panelist and Washington Post columnist:

Young Black men represented only 2.8% of undergraduate students on major college campuses, but 57.1% of the football teams and 64.3% of men’s basketball teams. In other words, the reason they were on college campuses was not as part of the educating class, but as part of a special working class: the massively underpaid, poorly insured laborer called “student- athlete.” More disturbing, Professor Harper showed that their ostensible remuneration of a college degree was realized at rates that paled to other groups of their college classmates. While 50.2% of Black male athletes graduated within six years, 66.9% of all college athletes, 55.5% of all Black undergraduate men, and 72.8% of all undergraduates graduated in the same time.

When you have college athletes, particularly black athletes, who have little chance of making the pros and are provided a scholarship that keeps them under the poverty line with a 50/50 shot at graduating, many are forced to illegally obtain what should be rightfully theirs while making the NCAA and all its sponsors billions. Make no mistake about it, the failure to pay college athletes is an issue that strongly hinges on race.

It’s hard to imagine the impact that paying the average college football player $121,047 a year would make on his and his family’s life. He would be incentivized to stay in school to get a degree, and then that college degree could provide more opportunities after school while helping his family. This alone would substantially change the statistics cited above.

Psyche

I don’t blame the athletes and families who take money from Adidas or Louisville or whoever else because that’s the only way they can get paid during a time where some of these athletes could make the most money of their life if they were compensated fairly. What I worry about is the long-term implications of making children (some of these players were in high school!) implicit in illegal activity and told not to say a word to anyone.

“Don’t say nothing to anybody,” assistant coach Chuck Person said to one of his players, “just you and your mom and your stepfather, if you want to, that’s that’s you and your mom’s decision…but don’t share with your sisters, don’t share with any of the teammates, that’s very important cause this is a violation…of rules, but this is how the NBA players get it done, they get early relationships, and they form partnerships, they form trust…”

So now the player knows what he is doing is illegal and therefore thinks this is how things work in college and the pros. He has family members and handlers around him making decisions for which he will be held responsible. Agent Christian Dawkins was recorded by the FBI saying, “the kids 90% of the time ain’t making they own decisions. They don’t fucking care.”

They don’t care because they’re kids playing the sport they love. They trust unconditionally because they’re kids who fail to understand that money runs everything. As one player said about the coach that was abusing his position of power, “Whatever he’s [Person] good with, I’m with, I trust him 100%.”

Yet being complicit in this illegal activity may be the seed that is planted that results in so many frauds, financial disasters, and legal issues for athletes in the pros. They’re taught that trust is the cost of doing business. What other choice do they have?

Trust but Verify

I started BrightLights because the finances of professional athletes are not being properly protected or monitored. Instead, the power of their finances are given to others while the players have little to no oversight or understanding of what is going on. This provides an opportunity for people to take advantage of athletes. Thankfully, there are good advisors and agents treating their clients in their best interest. There are also the bad ones who I continually write about week after week.

Both of these sides operate on the same principle: trust. Players trusted their coaches, Rick Pitino, Chuck Person, Book Richardson, Tony Bland, Lamont Evans, and others. Players trusted Adidas, agent Christian Dawkins, and financial advisors Munish Sood and Marty Blazer. It was all for naught. We have to understand that trust is not enough anymore, particularly for professional athletes.

The NCAA’s failure to pay its athletes has created the level of corruption and backdoor deals that is now too common (and I am not naive enough to assume that this will stop if college athletes are paid, but it will be drastically reduced). It has helped create a world where bribes are the norm and agents and advisors play in this sandbox to succeed.

The failure to pay athletes leads to a Rashan Michel, a former NBA and NCAA referee turned tailor for athletes, connecting advisors to college kids for money, saying he has “access to the locker room…access to the kids and everything…the fucking basketball guys [get] way more money than these fucking football guys…we can get us god damn 1- basketball players in the next 5 years and we gonna…have to sit back and do absolutely nothing.”

Ironically, we should follow what assistant coach Richardson says, “At the end of the day these kids, and they are kids, my job is to try to put them in the best possible situation so everyone can be solid [and] make as much money as possible.”

If you have the good fortune of making the pros and having your finances managed by others: trust but verify that your investments and flow of money in your accounts is in your best interest. Verify that you are not being taken advantage of by high fees, fraudulent transactions, or bad investments.

To verify what is going on in your accounts, contact BrightLights to review your activity to ensure you are not being taken advantage of. It’s not a fix to the NCAA, but it’s a start.

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This post was published on BrightLights blog on October 13, 2017, at: https://www.brightlightsllc.com/the-cost-of-bribery-and-corruption-on-athletes-in-the-ncaa/

Footnote

1 — If the coaches had done a simple Google search on one advisor, Marty Blazer, they would have found news in May 2016 of allegations of securities fraud against professional athletes. Blazer’s records in FINRA’s BrokerCheck also show a complaint that alleged $4 million was mismanaged and misappropriated. The complaint was settled for $850,000.