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Northwestern football ruling seen changing college sports

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Northwestern University football players were given the right to form college sports’ first labor union in a ruling that could seismically change top-level university athletics.

The decision, which comes as the Indianapolis-based National Collegiate Athletic Association is defending separate lawsuits that challenge its authority, has the potential to force a change to the business model of college sports, which generate $16 billion annually in revenue.

Peter Ohr, the National Labor Relations Board regional director in Chicago, ruled that all scholarship football players at the Evanston, Ill., school who have not exhausted their college eligibility are “employees” and ordered an immediate election to create a union board.

Northwestern said Wednesday it would appeal the 24-page ruling, which for now only affects athletes at private schools and not at public universities, to the full NLRB in Washington.

“Today, college athletes are employees,” said Ramogi Huma, a co-founder and president of the Northwestern players’ group that won the right to unionize. “It’s a first step toward forever changing the balance of power and guaranteeing players have a seat at the table and the right to bargain for basic protections.”

In his ruling, Ohr said the scholarship football players are employees because they are compensated and come under the university’s control. The NLRB governs the rights of private-sector employees, meaning that the ruling only affects athletes who compete at private schools. Public-school players seeking to unionize would have to gain approval from state-run labor boards.

The NCAA, while not a party to the NLRB action, said in a statement that it disagrees with the decision and opposes a move to “completely throw away a system that has helped literally millions of students over the past decade alone to attend college.”

‘Uncharted territory’

“This is totally uncharted territory,” Paul Haagen, a professor of sports and contract law at the Duke University School of Law in Durham, N.C., said, adding that it’s less likely the players will prevail at the national level. Duke, like Northwestern, is a private university.

The Northwestern players submitted a petition to the NLRB in late January, seeking to give 85 scholarship players the right to vote on representation and stating that NCAA rules were unjust.

The group is trying to secure guaranteed coverage of sports-related medical expenses for current and former athletes, as well as compensation for sponsorships. The players also are seeking to create a trust fund to help former players finish their degrees and push for an increase in athletic scholarships.

Eliminating schools?

Henry Bienen, Northwestern’s president emeritus, said this month that giving athletes the right to unionize might chase schools from top-level intercollegiate sports.

“A union means collective bargaining over a whole range of issues,” said Bienen, a member of the Knight Commission whose mission is to ensure athletic programs operate within the educational goals of their schools. “If we got into collective bargaining situations, I would not take for granted that the Northwesterns of the world would continue to play Division I sports.”

Alan Cubbage, vice president for university relations at Northwestern, said in a prepared statement that the school was disappointed by the decision.

“While we respect the NLRB process and the regional director’s opinion, we disagree with it,” Cubbage said. “Northwestern believes strongly that our student-athletes are not employees, but students. Unionization and collective bargaining are not the appropriate methods to address the concerns raised by student-athletes.”

Two lawsuits

Separately, the NCAA and five top conferences were sued twice this month by college players seeking to improve their financial standing.

A group of football and basketball players filed an antitrust suit that called the organizations a “cartel” that generates billions of dollars while illegally capping the pay of student athletes. The suit is seeking to bar the NCAA and the conferences from stopping schools that want to compensate players.

Also this month, the NCAA and five conferences were sued in San Francisco by Shawne Alston, a former West Virginia University football player who claims they conspired to limit the value of scholarships to less than the actual cost of attendance.

The NCAA also is a defendant in a case brought by former UCLA basketball player Ed O’Bannon and other athletes, who seek to profit from the use of their likeness in video games.

NCAA President Mark Emmert has pushed for a $2,000-per-player stipend to help athletes defray some of expenses. Critics say that isn’t nearly enough, considering players help bring in millions of dollars to their schools and conferences.

Further changes

“It’s a very significant move,” James Quinn, a senior partner at New York-based Weil Gotshal & Manges LLP, said. “Given all of the other pressures on the NCAA and member institutions, things are going to change.”

Richard Southall, director of the College Sport Research Institute at the University of South Carolina, said the ruling could lead to further changes.

“If this stands, if the players are employees, the next question is, do they have the right to control the use of their name, likeness and image?” he said. “Can they be forced to sign that over?”

The 123 schools in the NCAA’s Football Bowl Subdivision turned a $1.3 billion profit on $3.2 billion in revenue in the fiscal year ended June 2013, according to data schools submit to the U.S. Department of Education.

NLRB hearing officer Joyce Hofstra took five days of testimony last month from individuals called by the players and the school.

Sacrificing bodies

Northwestern quarterback Kain Colter, a co-founder of the players association who compared the NCAA system to a dictatorship before the hearings, testified that players spend 40 to 50 hours a week on football and have to sacrifice their bodies to do so. He also said that the time commitment kept him from pursuing a plan to enter the school’s pre-med program.

Among people Northwestern called to testify were football coach Pat Fitzgerald, school administrators and three former players who said that football didn’t keep them from succeeding as students.

College athletes, who can receive scholarships but are not paid, help generate more than $16 billion in television contracts, as well as revenue from sponsorships, ticket and merchandise sales, and payouts for championships.

“The Northwestern case will work its way through the court system over the next few years, and we will closely monitor it and maintain a dialogue with our student-athletes about how we can improve,” Pat Haden, athletic director at the University of Southern California, said in a March 6 statement on a university blog. “I have looked at the demands of the Northwestern players, and quite honestly, we provide most of those already at USC.”

The United Steelworkers Union backed the players’ NLRB petition and is paying their legal fees.

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  • Silver Lining
    Hopefully, this spells the end of sports scholarships so that the only people who play sports in college are ones who are primarily interested in being students. The NFL and NBA can form their own farm teams. Northwestern definitely has to go D3.
  • Look to teaching assistants
    For those of you who are still outraged about this, you should consider the case of teaching assistants. Although TAs are usually graduate students (as opposed to athletes who are usually undergrads), they have the following in common: they receive a scholarship, that in many cases goes above the cost of tuition alone by including a living stipend, in exchange for performing a service (i.e., teaching) for the University. They attend the University as students, but they are also treated as employees because the University can recruit them on the basis of teaching ability, fire them if they perform poorly (teaching or in their own studies), can tell them when and where they have to show up to work and how many hours they have to work, etc. At some schools, TAs are even unionized. I happened to work as a TA at a university where TAs were non-union, and we never tried to form a union. However, even though we were non-union, the university recognized us as employees and treated us as such for certain purposes (e.g., we got employer sponsored health insurance). In the players' case, they are trying to form a union in part because the university won't recognize them as employees. So there are really two separate issues here-- the union is really secondary to the question of whether these players are employees or not (and yes, of course they would have to pay taxes on their income as such).
  • Tax considerations
    OK, so let's clear something up. Scholarship income is either qualified or non-qualified. Qualified means that it goes to pay for tuition and fees that are required for attendance at a university. Non-qualified includes any amounts for things that are not required, like room and board, incidentals, etc. Qualified scholarship income is not taxed. Non-qualified scholarship income IS taxed. It doesn't matter whether it's an athletic scholarship, an academic scholarship, or whatever. It doesn't matter whether the student is an employee or not (lots of students work for their university in some capacity). And most importantly, whether or not the students are unionized makes NO difference in the tax treatment of scholarships. The part that pays for tuition and required fees is not taxed, and anything else is taxed. Reference: IRS topic 421. If you want to whine about how awful unions are, go ahead. But please stop this nonsense about taxation. These students should already be paying taxes on the non-qualified part of their scholarship, and that won't change after this ruling.
    • Be Careful
      Last time I checked, most of the D-1 athletic departments were not making money on annual basis. What most don't remember is that all of this money also funds the non-revenue sports. Push far enough and maybe colleges will revert to a true student/athlete model. Story yesterday regarding North Carolina football and basketball players over a several year period indicated that approximately 60% of the players could not read at a 6th grade level. Pretty shameful if accurate. Maybe the union can help solve that issue.
    • Income
      So, if they are considered employees, then will their scholarships become classified as compensation and subject to income taxation?
    • Workers gaining protections
      The players certainly deserve the protections of workers, seeing as how they have making billions for the franchise.
    • Non-Athletes
      So then are those receiving academic scholarships employees as they might participate in research that lands the University major grants etc. that brings a University millions. They are also "managed" by the Professors that head the research which is one of the arguments I read that supports the athletes being employees.
    • Kent is right!
      This smacks of what Kent referred to as "typical Chicago union mentality". Maybe some sanity will be injected as this decision works its way up the NLRB hierarchy. (Just kidding!) On second thought, looks like the courts may have to decide this one. What if my players union bargains better benefits for its revenue-generating male athletes than for the female union members? Interesting Title IX implications!
    • Unbelievable
      The universities should stop providing Athletic scholarships that cover these “student-athletes” full tuition, room and board, food and books. Then they are no longer employees but students at the university. The D-1 programs can use the same athletic standards that are in place at the Division III level where they do not offer athletic scholarships and these students have to PAY for their education and the opportunity to play a college sport.
    • College
      if they want to be a Union, then I say the school should stop giving scholarships. if the kids want to get paid then fine, but then no scholarships and the kids can pay there $100k+ or whatever tuition is. if you don't like it then go play somewhere else. sick of this crap.
    • Re: fired for poor performance
      "Also, if you are an employee of the school, then you can be fired at any time for poor performance." Clearly you've never read a union contract. There are also a certain number of workplace protections (like OSHA laws and workers' comp) that apply to employees regardless of whether they vote to unionize or not.
    • typical Chi'town Politics
      Come on!....this is typical Chicago Union mentality politics! These are kids not adults, and kids do not justify being unionized. What a joke! Let's nanny them and give them unearned adult opportunities while they are supposed to be studying to further their learning, not how to be union thugs and cartel bullies.
    • Slippery Slope
      I would hope that someone will be giving these kids good advice as this proceeds. There could be some ramifications that the kids may not like that will come with this ruling. If they are considered employees, then the scholarship is income and income is taxed. Are the students ready to take on that type of tax burden? Also, if you are an employee of the school, then you can be fired at any time for poor performance. Are they ready to face that fact? What is to be done with the non-revenue sport athletes? Are they included in this or not? If so, to what extent? Also, medical benefits that they receive are now taxable under the new ACA. Again, are they prepared for that burden. While I applaud the intent of this, I am not sure if they looked at all the factors associated with this and unintended consequences that will make this unattractive to some student/athletes.
    • No scholarships no problem
      If the D1 schools agree to no longer offer athletic scholarships wouldn't that make this go awau?

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