Tuesday, July 24, 2012

NCAA Authority Questioned

From a comment I received . . .
I have a bigger question for the author.
It appears to me that Mark Emmert's Q&A this morning (at the presser) revealed terms and conditions on the origins of the $60 million in penalty fines.
Specifically, members of the media asked Mr. Emmert about whether or not the $60 million in fines would be originating from budgets for other sports or academic programs.
According to this report at ESPN, the $60 million fine "will not come from taxpayers". ESPN claims that it will "come from a savings account within the athletic department".

As a donor to collegiate athletics (not Penn state), this is very troubling. I am now questionning the legitimacy of any financial contribution to any Division 1 school for any type of program. After all, why would I release contributions to the university, if the NCAA or other body can effectively seize my contribution and reallocate it per their directive?
Does the NCAA have the legal authority to impose financial damages on a governmental entity like a state funded university like Penn State?
Mark Emmert's decision strips the board of directors of the ability to allocate and control accounted funds. The bank handling Penn State must be quite upset about losing these funds and must be very concerned about where these $60 million are going.
More importantly, the legislature of a sovereign US state government must now allocate taxpayer funds to balance budget at the university. While ESPN may report that the funds are not originating in tax payer accounts, the funds were clearly offsetting and preventing the use of tax payer funds.
Now, the NCAA is virtually guaranteeing that the state of Pennsylvania must come up with the balance regardless of the ability to allocate state funds of $60 million?
If the savings account is funded with proceeds and contributions from donors, then the NCAA has stripped capital from Penn State and effectively that stolen capital comes from the people of Central and Western Pennsylvania.
This is NOT a minor issue as there are only about 300,000 working people around Central Penn. Effectively, the NCAA action creates a tax on the 300,000 working people of Central Penn due to the decision of a NCAA bureaucrat in Indiana.
The NCAA is not a federal tax authority and it is not a federal governmental agency.
The US Congress has given a unique regulatory position to NCAA, but it has not abdicated the role of the US Congress in regulating interstate commerce.
I am not aware of any other instance where the criminal misconduct of one individual and the unproven allegations of NON-conduct by three other individuals equated to a fiscal and fiduciary impact upon tax payers of one state to the benefit of another state.
This situation is now a federal jurisdictional issue with utter failure of the NCAA leadership to appropriately contain the legal impact of this case.
NCAA did not handle this matter correctly because they are acting across state lines and with this action have created an probable unconstitutional violation of law.
The student athlete's have lost due process rights in this action and while the court process would take longer than a transfer of the student, the disruption alone merits consideration of immediate filing of federal objections in the US District of choice (likely Washington DC).
Your thoughts?
You can't handle my thoughts!  Unfortunately, I am not a legal expert nor an accountant.  Dammit Jim, I'm just a doctor. 

But I will ramble on as best I can.

As I see it, the University has a limited number of revenue sources:  Tax dollars, contributions, tuition, interest/dividends on investments, and sale of real property or hard assets. The latter is probably not worth including but land possession, buildings, equipment etc. is certainly of value, but probably not germaine to this discussion, i.e. we're not going to sell off the Berks campus to pay this fine.  The University also makes money on the sale of merchandise, but I do not know that figure, and I don't know where that money is spent in the general budget.

So if the NCAA demands that the money not come from taxpayers, then it must come from the other four sources:  donations, tuition, investment income, or tax dollars.

Each year, the total budget is allocated from monies from these various sources.  Two possibilities then exist.  Penn State will either have to decrease it's operating budget by $12 million dollars a year for five years, or expect a higher contribution from the sources other than taxes, to make up the difference.  It's like the Laws of Thermodynamics--matter cannot be created or destroyed, but it can change form. 

It is not reasonable to suggest a $12 million dollar increase in tuition rates, or to allow enough extra new students to enroll to make up that difference.  Besides, to accommodate that many extra students, the total budget would also have to expend money for more professors, classrooms, etc.

And while the powers that be insist that the money will not come from taxes, that leaves just donations or investment income (interest on money previously donated presumably) to cover the cost.

Now the Nittany Lion club has reported profits of $8-12 million dollars in recent years (income in excess of expenses) so perhaps there is some pool of money in the athletic department to draw this from.  If not, I don't think the athletic department by itself can afford that cash particularly in light of bowl bans and loss of revenue related to the sanctions.

So either Penn State will have to cut other sports programs, or money will have to be diverted from other sources to cover expenses that were previously covered by the athletic department.

But the point you bring up is valid . . . "Does the NCAA have the legal authority to impose financial damages on a governmental entity like a state funded university like Penn State?"

I don't think so, but I am not a lawyer.  I don't think the NCAA had any business in this whatsoever.  I cannot off the top of my head recall the last time a school was penalized financially by the NCAA--i.e. a direct fine.  They have shut programs down (SMU) and they vacate wins, limit scholarships, and bowl appearances etc.  But I think fining a member institution is breaking fairly unexplored ground.  Certainly the dollar amount is extraordinary.  I don't know the NCAA by-laws well enough to know what each member agrees to when they sign on.

What appears quite clear, though, is that our leaders at Penn State have no intention of fighting this battle with the NCAA.  I don't know if some other organization can take up the torch or not.  If it is a violation of state or federal law, then the US Attorney General or State AG will have to handle that.  Here in PA, though, I ain't holding my breath.

At the end of the day, Penn State broke no NCAA rule, the only two people associated with the football team (McQueary and Paterno) both REPORTED the incident, and the penalties do nothing to help the victims that the University hasn't already offered.

As I overheard today . . .

 I think my football team was raped . . . but I don't know who to report it to!


Anonymous said...

I think you sheepishly agree to the NCAA fines... pay some small amount the first year and then stop. Donate millions to a child abuse charity instead.

People have a very short memory... This will be old news in a year and PSU won't have any legal obligation to pay the NCAA fine.

Anonymous said...

"I think my football team was raped . . . but I don't know who to report it to!"

That's right : Equate anal rape of children with losing a few football scholarships. You're a monster.