Northwestern lawsuit a long time coming

Updated: Thursday, March 27, 2014
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KALAMAZOO, Mich. (NEWSCHANNEL 3) - As reported Wednesday, the world of college sports turned upside down when the National Labor Relations Board in Chicago ruled that football players at Northwestern University could be considered employees.

As a result, the ruling said those players had a right to form a union and bargain collectively.

Tonight in Tom's Corner, Tom Van Howe says it was something the NCAA should have seen coming a long time ago.

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There has been a lot of instant--sometimes hysterical--analysis over what this development will mean to college sports programs all across the United States.

If players are paid, does this mean lesser programs like baseball and track will be shut down? Will players have to pay taxes on their scholarships?

Will schools like Western and Central Michigan be able to afford it? Will football at smaller colleges have to cash it in?

Except for the tax question--and the answer to that is no; scholarships are "grants in aid" and therefore not taxable--nobody knows for sure what going to happen.

But man, this has been a long time in coming.

Take a look! Major college basketball and football is a multi-billion dollar industry. This weekend at sports venues around the country, lots of millionaires will be gathering to watch the games of the NCAA Sweet Sixteen. Among them will be coaches, conference administrators, advertisers--they're paying 700 grand for a 30 second spot right now--NCAA execs, video game producers, broadcasters, broadcast executives, the owners of professional teams, and the list goes on.

This is huge. This is an arena where money gets tossed around as casually as a pair of dirty socks.

Basketball and football coaches are regularly among the highest paid people in their states, and at the center of it all, the raw material for all this entertainment, are the players--some of whom will go pro, most of whom will not.

Many of whom don't have an extra dime in their pockets.

Meantime, take a look at the profits. Not revenue, but profits, as reported by some of the biggest  football schools:

  • University of Texas - Nearly $80 million dollars.
  • University of Michigan - More than $60 million dollars.
  • University of Georgia - More than $50 million.
  • University of Alabama - $51 million.

You get the idea.

But if one of the players on any one of those teams gets ten extra bucks for signing a jersey--a jersey sold, for profit, by his own university--it can be ground for dismissal or expulsion.

I know they're getting scholarships. And they are not to be taken lightly. It's a wonderful opportunity. But the NLRB ruling says it is clear the players are recruited for their athletic ability, not because of their achievements in the classroom.

And they spend much more time on the football field than they do in class. It goes to employee status.

Administrators at Northwestern, to the joy of college administrators everywhere, are appealing the NLRB ruling.

The whole thing  could wind up before the U.S. Supreme Court.

But the legal process is grindingly slow. And it'll take time.

But here's the curious  reality to all this. Here's what the suit is actually asking for. And it's not for more money.

The players want financial coverage for former players who suffer from sports-related injuries.
 
They want independent concussion experts on the sidelines during games. And they want the creation of an educational trust fund to help former players graduate.

That's the thrust of it. Measured. Reasonable. Logical. Doesn't seem like too much to ask for.

And the NCAA could have done all of that a long time ago. In addition, the NCAA could have come up with a formula for player stipends, for example, so there would be no need to for one of them to sell an autograph for a little spending money.

The television networks CBS and TBS have paid the NCAA more than a mind-boggling $10 billion for the rights to broadcast the games of the March Madness tournament.

With all that money, you'd think the NCAA might have found a way to loosen its iron grip on all the revenue producing athletes under its control. To achieve a little balance. To make things fair.

If it had, the Northwestern lawsuit may never have been filed. And we wouldn't be speculating on all the ruling's very real universe-rattling ramifications.

But with its eye on profit, the dictatorial NCAA dropped the ball. College sports will never be quite the same.

In this corner...I'm Tom Van Howe.

Business News

Last Update on September 30, 2014 07:20 GMT

HONG KONG DEMOCRACY PROTESTS

HONG KONG (AP) -- Pro-democracy protesters in Hong Kong say they'll initiate new civil disobedience efforts tomorrow unless their demands for genuine democracy and the resignation of the city's unpopular chief executive are met.

The protesters spent another night blocking streets in an already unprecedented show of civil disobedience.

Even larger crowds are expected to flood the streets tomorrow, China's National Day holiday. The government says a holiday fireworks display is canceled.

Chief Executive Leung (lee-ung) Chun-ying urged the Occupy Central group today to take into account the considerations of other residents and stop its disruptive protest. And he says China's communist leaders in Beijing will not back down from an August decision to restrict voting reforms for the first direct elections to pick his successor in 2017.

The crowd, mostly students, continues to occupy a six-lane highway next to the local government headquarters.

CHINA-MANUFACTURING

BEIJING (AP) -- A survey has found China's manufacturing activity in September held steady at the previous month's low level, indicating the world's second-largest economy faces risks to growth.

HSBC Corp. said Tuesday its monthly purchasing managers' index stood at 50.2 on a 100-point scale on which numbers above 50 indicate expansion. It was unchanged from August's 3-month low.

A measure of export orders rose to its highest level since March 2010.

China's economy grew by 7.5 percent over a year earlier in the quarter ending in June but manufacturing, housing sales and other indicators suggest growth might be weakening.

HSBC economist Hongbin Qu said in a statement, "We think risks to growth are still on the downside and warrant more accommodative monetary as well as fiscal policies."

DRUG COMPANIES-DOC PAYMENTS

WASHINGTON (AP) -- The Obama administration is planning to release data Tuesday on drug and medical device company payments to tens of thousands of individual doctors.

The goal is to shine a light on potential ethical conflicts in medicine. Consumer groups say it's overdue, but doctors' groups fear consumers will jump to the wrong conclusions.

President Barack Obama's health care law calls for companies to report payments of $10 or more to physicians. It's a provision that has bipartisan support.

The goal is to allow patients to look up their own doctors online. That functionality won't be ready yet. But the preliminary data being released Tuesday is expected to be useful for researchers.

REVEL SALE

ATLANTIC CITY, N.J. (AP) -- A bankruptcy court auction for Revel, the failed luxury casino-hotel on the Atlantic City Boardwalk, is scheduled to resume today.

The auction that began last Wednesday was suspended due to the approach of the Rosh Hashanah holiday. Revel has refused to reveal details of what has transpired so far.

The former casino's management has received multiple bids for the property. The lone bid made public thus far is $90 million from Florida developer Glenn Straub, who envisions a gathering place for "geniuses" tackling a number of problems, with or without a casino.

The casino cost $2.4 billion to build, and had been open for just over two years before going out of business on Sept. 2.

SUPERVALU-ALBERTSONS-DATA BREACH

NEW YORK (AP) -- Two supermarket companies -- Supervalu and Albertsons -- are reporting that the credit and debit card data of their shoppers may be at risk because of a hack.

The companies say that in late August or early September, malicious software was installed on networks that process card transactions at some of their stores.

Albertsons says the malware may have captured data including account numbers, card expiration dates and the names of cardholders at stores in more than a dozen states. Supervalu says the malware was installed on a network that processes card transactions at several chains, but it believes data was only taken from certain checkout lanes at four Cub Foods stores in Minnesota.

The breach could affect Albertsons stores in California, Idaho, Montana, Nevada, North Dakota, Oregon, Utah, Washington and Wyoming; Acme Markets stores in Delaware, Maryland, New Jersey and Pennsylvania; Jewel-Osco stores in Illinois, Indiana and Iowa; and Shaw's and Star Markets stores in Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. The Boise, Idaho-based company has a total of 1,081 stores.

TOYOTA-PICKUP RECALL

DETROIT (AP) -- Toyota says it is recalling 690,000 Tacoma pickup trucks because the rear leaf springs could break, puncture the gas tank and cause a fire.

The recall covers Tacoma Four-by-Four and Pre-Runner pickups from the 2005 through 2011 model years.

The automaker says the leaf springs can fracture due to stress and corrosion. They can move out of position and come into contact with surrounding components, including the gas tank. Toyota says it's not aware of any fires, crashes or injuries from the problem.

Owners will be notified by mail and Toyota says dealers will fix the problem at no cost.

Owners with questions can call Toyota at (800) 331-4331.

UNPAID TAXES

WASHINGTON (AP) -- A report by federal investigators says IRS workers are often not doing all the research they are supposed to do to track down people with unpaid tax bills.

The study doesn't estimate how much money that costs the government. But it says that in 2012, the IRS declared $6.7 billion in unpaid taxes to be uncollectable because it couldn't find the taxpayer.

The Treasury Inspector General for Tax Administration released the report Monday. That office is the agency that audits the IRS.

The report found that in 57 percent of 250 cases studied, there was no evidence that workers did all required research before declaring taxes uncollectable.

The IRS contested some of the study's findings. It said investigators had significantly overestimated the value of some of the unpaid taxes.

CONSUMER SPENDING

WASHINGTON (AP) -- Americans boosted spending by a healthy amount in August, offering welcome evidence that the economy is on solid footing heading into the final quarter of the year.

The Commerce Department reports that consumer spending in August rose 0.5 percent from the previous month after showing no gain in July. It was the best result since spending also expanded 0.5 percent in June.

Helped by higher wages and salaries, income rose a modest 0.3 percent in August, slightly faster than a 0.2 percent July increase.

The acceleration in spending added to signs that the economy is sustaining strength in the current July-September quarter. Consumer spending accounts for about 70 percent of economic activity, and the lackluster showing in July had raised concerns about whether the economy would retain the momentum it built in the spring after a harsh winter.

ARGENTINA DEFAULT

NEW YORK (AP) -- A New York judge has ruled that Argentina was in contempt of court on Monday for its open defiance of his orders. U.S. District Judge Thomas Griesa had issued an order requiring that U.S. hedge funds holding Argentine bonds be paid the roughly $1.5 billion they are owed if the majority of the South American nation's bondholders are paid interest on their bonds.

Griesa made the announcement after a lawyer for U.S. hedge funds -- led by billionaire hedge fund investor Paul Singer's NML Capital Ltd. -- argued that Argentina has openly defied Griesa's court orders for more than a year. The judge reserved a decision on sanctions pending further proceedings.

The judge said repeated efforts to avoid paying U.S. bondholders was illegal conduct and no longer could be ignored. Griesa said that Argentina in various ways has sought "to not attend to" its financial obligations.

FORD OUTLOOK

DEARBORN, Mich. (AP) -- Ford shares have tumbled after the automaker said that it will fall short of its full-year profit goals.

At a conference for investors, the Dearborn, Michigan-based automaker said it expects a pretax profit of around $6 billion this year, down from the $7 billion to $8 billion it previously forecast.

Chief Financial Officer Bob Shanks said record profits in North America aren't enough to offset trouble in South America, where Ford expects to lose $1 billion this year, and Russia, where falling sales and the rapid deterioration of the ruble took the company by surprise. Warranty costs -- including a $500 million charge for last week's recall of 850,000 vehicles for defective air bags -- are also higher than expected.

Shanks said Ford expects a pretax profit of $8.5 billion to $9.5 billion in 2015, based partly upon an expected recovery in South America and improvement in warranty costs. The company also plans fewer vehicle introductions in 2015, which will cut costs. Ford is introducing 23 vehicles worldwide this year; next year, it plans to introduce 16.

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