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October 27, 2008 - Knight Commission Criticizes Commercialization of College Athletes in Fantasy Sports, New Media

Commission will study economics of college sports in year-long program

October 27, 2008—FOR IMMEDIATE RELEASE
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WASHINGTON, D.C. – The Knight Commission on Intercollegiate Athletics met on October 27 to discuss the emerging conflict between new forms of media and long-standing NCAA rules designed to protect athletes from commercial exploitation. The Commission also announced it would pursue a year-long series of meetings and research on the economics of college sports, with a particular focus on why expenses are rising faster than revenues at virtually all Division I athletics programs.

“College athletes in fantasy games and video games may seem trivial to some, but these and other forms of new media pose new challenges to the long-held distinction between commercial activity featuring teams and that which focuses on individual athletes,” said R. Gerald Turner, co-chairman of the Commission and president of Southern Methodist University. “We continue to believe that universities need to treat athletes fairly and equitably, and for third parties to use them in commercial products and advertisements violates that principle.”

Knight Commission member Len Elmore, ESPN analyst and partner at Dreier, LLP, added that “many observers believe this invasion of commercialism appears to be inevitable given new technologies that are intersecting with consumer demand for interactivity and reality-based gaming. If college athletes’ names and likenesses are to be used in commercial products, advertisements or fantasy sports games, there must be a way to balance the inequities by providing some sort of benefit to athletes through mechanisms other than ‘pay for play.’”

The Commission heard from a panel of lawyers and media experts, who said that colleges and athletes could have a case to prevent media companies from creating fantasy leagues using athlete names and likenesses. Following that, a panel of recent student-athletes—including University of Colorado football player Jeremy Bloom, Lafayette College basketball player Kerry Kenny, Ohio State University quarterback Craig Krenzel and Georgia Tech basketball player Marvin Lewis—generally agreed that college athletes should not be paid like professionals, but that it might be possible to examine other ways of supporting athletes such as providing graduate scholarships. The NCAA has established several funds to support athlete needs, and funding for such may increase as streams of revenue do. They also all agreed that third parties should not be allowed to profit from the images and likenesses of college athletes.

To inaugurate its examination of the economics and finance of college sports, the Commission also received a report on college sports finances that showed only 19 Division I institutions recorded more revenue than expenses in the most recent reporting cycle, and that the median net deficit for the majority of Division I institutions increased more than 20 percent since 2004. Additionally, data presented show that institutions in the Football Bowl Subdivision (FBS) receive half of their revenues from alumni donations and ticket sales.

“It’s clear that college sports has a spending problem that must be addressed,” said William E. Kirwan, Knight Commission co-chairman and chancellor of the University System of Maryland. “In the aggregate, athletics spending continues to escalate while instructional spending has remained stagnant and has even decreased at many institutions. The current economic climate and the needs of our universities require a change in this imbalance.”

The Commission’s year-long examination of financial issues will continue in January in a meeting in Miami to commemorate the 20th anniversary of the Commission’s founding. Complete bios and pictures of Commission members can be found here. Photographs from the meeting are accessible at www.flickr.com/photos/kcia. The meeting sessions will be accessible via podcast on the Commission’s website on Oct. 29.

 

Multimedia Files
Copy of Mishkin Testimony (PDF) in the first session. Audio podcast (mp3, rss podcast), “Commercialism in Sports and Athletes’ Rights in the 21st Century: How the new media landscape and fan interactivity is impacting traditional amateurism principles (Part I).” Featuring panelists: Robert Corn-Revere, Partner, Davis Wright Tremaine; Jeffrey Mishkin, Partner, Skadden, Arps, and former Executive Vice President and Chief Legal Officer, National Basketball Association; Wallace Renfro, Vice President and Senior Advisor to the President, NCAA; Clay Walker, Executive Vice President and General Manager, Fantasy Sports Ventures; Glenn Wong, Professor and Attorney, Isenberg School of Management, University of Massachusetts Amherst, and Faculty Athletics Representative.

Audio podcast of the second session (mp3, rss podcast), “Commercialism in Sports and Athletes’ Rights in the 21st Century (Part II).” Featuring panelists: Jeremy Bloom, former football player, University of Colorado, and World Champion and Olympic snow skier; Kerry Kenny, Chairman, NCAA Division I Student-Athlete Advisory Committee; former basketball player, Lafayette College; Craig Krenzel, former football player, The Ohio State University; Marvin Lewis, Associate Athletics Director, Georgia State University; former basketball athlete, Georgia Institute of Technology.

Powerpoint of the third session. Audio podcast (mp3, rss podcast), “College Sports Finances: An Update on Efforts to Improve Accuracy of Financial Data reported by Division I Athletics Programs and a Report on the Financial Health of Division I Athletics Programs.” Featuring panelists: Dan Fulks, Author, 2004-06 NCAA Revenues and Expenses of Division I Intercollegiate Athletics Programs Report and Accounting Program Director, Transylvania University; Jim Isch, Chief Financial Officer, NCAA; Andrew Zimbalist, Professor of Economics, Smith College; Ron Wellman, Athletics Director, Wake Forest University.

 

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