Ed O’Bannon

NCAA revenue jumps closer to $1 billion

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Every penny counts, and the NCAA made a lot of them in 2014. In financial numbers released Wednesday, the NCAA showed a revenue of $989 million in 2014. With $908 million in expenses, the NCAA netted a surplus of about $80.5 million.

Compared to the previous fiscal year for the NCAA, the net surplus is about $20 million higher in 2014. As you might suspect, the 2014 surplus is the largest in NCAA history. So where did all of that money come from?

Approximately $753.5 million in revenue came through various television and marketing rights fees. An additional $114.8 millions came from championships and NIT tournaments. It should be noted the College Football Playoff and bowl games are not included under NCAA revenues as the NCAA is not associated with the bowl system or the College Football Playoff beyond sanctioning them as official postseason games and record keeping.

Of the $908.5 million in expenses, $547 million was distributed to Division 1 schools. A total of $34.7 million went to Division 2 distributions, championship expenses and other programs. Division 3 championship expenses and distributions amounted to $28.7 million. The NCAA also set aside $158 million for legal expenses, an astronomical number.

The details regarding large payouts to be made from losing legal battles is also outlined. A $70 million payout from a concussion lawsuit is undergoing negotiations with insurance providers. The settlement amount has not been 100 percent finalized, so there is still time before the NCAA has to commit to the funding for the concussion lawsuit. The NCAA says a “combination of insurance proceeds and settlements with third parties” to settle the $20 million owed as a result of the Sam Keller video game likeness lawsuit.

One notable lawsuit the NCAA has not yet put into a calculator is the impending amount due from the Ed O’Bannon lawsuit. The NCAA is appealing a previous verdict so there is more to the fight before having to worry about the expected loss that could be rather significant.

These numbers come out as the NCAA is about to hold its biggest annual moneymaker, the NCAA Basketball Tournament. Last year’s Final Four was held in Arlington, Texas in AT&T Stadium. This year’s game will be played in Indianapolis, with a smaller venue and fewer seats to fill, and tickets to be sold.

“Great big venue and lots of people attending,” NCAA president Mark Emmert said, per USA Today. “It will be hard to achieve that same result in a somewhat smaller venue this year.”

Just imagine if the NCAA had taken control of the college football postseason years or decades ago. They would be seeing some monster profits from that as well.

Ed O’Bannon case gets tied up in court due to legal fees

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No one expected the NCAA to go out with a whimper after U.S. District Judge Claudia Wilken ruled in favor of a group of plaintiffs led by former UCLA basketball player Ed O’Bannon, which finally granted student-athletes their likeness rights.

Two days after the ruling, the NCAA released a statement that it would appeal the decision.

The next obstacle for the two sides is how much money will be spent on legal fees. The irony isn’t lost on anyone.

The NCAA filed a request Friday to reduce the plaintiffs’ lawyers fees, according to CBSSport.com’s Jon Solomon. The plaintiffs filed papers in October asked for $52 million to cover accrued fees. Obviously, the NCAA is looking to pay a considerably smaller amount.

“The NCAA wants the attorney fees be reduced by at least $36,864,238.59 and the requested costs by at least $4,916,282.68,” Solomon reported. “The NCAA claims the O’Bannon lawyers ‘impermissibly syndicated the case for its own financial gain with an unwieldy network of at least 34 firms. Many of them did very little work and added very little of substance, but padded the lodestar by billing thousands of hours of useless time.’”

Opening arguments for the actual appeal will be heard March 7, while a hearing to determine the fees will held April 1.

NCAA wants Ed O’Bannon appeal resolved by next summer

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The NCAA needs to have its appeal of the Ed O’Bannon case heard before the Ninth Circuit Court of Appeals within the year.

Correction: The NCAA believes it’s “critical” to have its appeal resolved within the year, according to CBSSports.com’s Jon Solomon.

“The NCAA contends that if this appeal is not resolved by that date, then absent a stay the NCAA and its members will, in the NCAA’s words, be forced to make fundamental changes to the administration of collegiate athletics and to their relationship with student-athletes,” the joint filing stated. “Plaintiffs disagree vigorously that the injunction will present a disruption but are nevertheless amenable to a briefing and argument schedule that would permit both to be completed by April or May 2015.”

Whether you side with or against the NCAA in its attempt to retain its amateurism, it is important for the appeal to be heard and resolved by August. Schools will then know how to adjust their approach to running their profitable sports such as football and basketball, which both take place in the fall.

“The NCAA requested that oral arguments be set for a date in April or May 2015,” Solomon reported.

As of now, the NCAA has to prepare for the changes U.S. District Judge Claudia Wilken enacted when she ruled in favor of the players represented in the O’Bannon case.

“The judge’s decision strikes down NCAA rules restricting their compensation and permits reasonable but significant sharing with athletes — both for the costs of education and to establish trust funds — from the billions in revenues that schools earn from their football and basketball players,” attorney who represented the plaintiffs, Bill Isaacson, said in a statement directly after ruling was made.

The NCAA“will not be permitted to set this cap below the cost of attendance, as the term is defined in its current bylaws.” It also prevents the NCAA from making rules to limit schools from“offering to deposit a limited share of licensing revenue in trust for their FBS football and Division I basketball recruits, payable when they leave school or their eligibility expires.”

NCAA may have to pay O’Bannon lawyers $52.4 million

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Everyone knew the moment U.S. District Judge Claudia Wilken ruled in favor a group of plaintiffs led by former UCLA basketball player Ed O’Bannon to give student-athletes their likeness rights, the NCAA would pay.

The second the ruling was made public, conversations began discussing the long-reaching effects of the case on amateurism and how the NCAA would have to adapt.

What wasn’t decided within the ruling was how much the NCAA would have to pay the plaintiffs’ lawyers.

The law firm Hausfeld LLP is seeking $52.4 million in recoverable costs from the NCAA, according to a document obtained by CBSSports.com. The amount will be used to cover attorney fees of $46.8 million and recoverable costs of $5.55 million.

The fees were accumulated during a five-year court battle with the NCAA.

“The resulting injunction will have considerable financial benefits for the class, as it may well amount to tens of millions of dollars each season,” the lawyers wrote. “… Moreover, and of critical importance, this is pioneering litigation — without any precedent and lacking any preceding public enforcement. Plaintiffs’ counsel contributed staggering resources to this litigation despite considerable uncertainty of any recovery.”

The NCAA, which appealed the ruling, was quick to pass the buck in response to the law firm’s request.

“In submitting their request for attorney’s fees, plaintiffs’ counsel notes that they have not thoroughly reviewed the time used to calculate the fees and also concedes that a portion of the amount may be more suitably recovered from the settlement with Electronic Arts Inc. and the Collegiate Licensing Company,” NCAA chief legal officer Donald Remy said in a statement. “We have agreed with plaintiffs’ counsel that both parties should be given additional time to work through the details of a proper fee submission and have requested that time from the court.”

The NCAA has been making money hand over fist for years by using athletes’ likeness rights without their consent. The law firm’s request seems like a small price to pay.

Pac-12 commish ‘fundamentally disagrees’ with O’Bannon ruling

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Pac-12 commissioner Larry Scott wants you to exactly know how he feels about U.S. District Judge Claudia Wilken‘s recent ruling in favor of granting student-athletes their likeness rights.

Hint: Scott isn’t a fan of changing the way the NCAA currently operates.

The Pac-12 released a statement to voice Scott’s displeasure…

“We fundamentally disagree with the O’Bannon court’s ruling that the NCAA and our collegiate model violate anti-trust laws in any way,” Scott stated. “Our system provides untold opportunities and beneficial life experiences for the almost 7,000 Pac-12 student-athletes every year, and we are intent on improving the system to do even more to benefit young people for generations to come. While we plan to support the NCAA on their appeal of this ruling, we will be working with our institutions to develop next steps in the event the appeal is not successful.”

The flaw in Scott’s argument is he’s counting all of the Pac-12’s student-athletes.

Wilken’s ruling wouldn’t necessarily affect athletes that participate in soccer, volleyball, field hockey, etc. The court’s decision specifically cited football and basketball as ways for the NCAA and its members to build a market from which the student-athletes couldn’t previously benefit.

“The court finds that a submarket exists in which television networks seek to acquire group licenses to use FBS football and Division I basketball players’ names, images and likenesses in live game telecasts,” Wilken wrote. “Television networks frequently enter into licensing agreements to use the intellectual property of schools, conferences, and event organizers — such as the NCAA or a bowl committee — in live telecasts of football and basketball games. In these agreements, the network often seeks to acquire the rights to use the names, images and likenesses of the participating student-athletes during the telecast.”

Non-revenue generating sports don’t necessarily fall into this category. Wilken concluded by stating nothing in the ruling “will preclude the NCAA from continuing to enforce all of its other existing rules.”

Most of the Pac-12’s sports will continue to operate as they always have. Scott and the league’s members will simply have to adjust for those programs and players which generate massive income through television, video games and merchandise.