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Northwestern lawsuit a long time coming

Updated: Thursday, March 27, 2014
Northwestern lawsuit a long time coming story image
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 October 31, 2014 07:28 GMT

WORLD-FINANCIAL MARKETS

SEOUL, South Korea (AP) -- Japan's Nikkei 225 stock average surged 5 percent and the yen slid against the dollar after the Bank of Japan unexpectedly announced new stimulus to boost a flagging economic recovery.

Other Asian stock markets were also higher after the Japanese central bank's announcement Friday. The dollar rose 1.2 percent to 110.64 yen.

The bank said it would increase its asset purchases by between 10 trillion yen and 20 trillion yen ($90.7 billion to $181.3 billion) to about 80 trillion yen ($725 billion) annually.

The Nikkei was up 4.6 percent at 16,380.11 after shedding some of its initial gains. Hong Kong's Hang Seng rose 1.2 percent and Seoul's Kospi was up 0.1 percent.

ECONOMY-THE DAY AHEAD

WASHINGTON (AP) -- Today. the Commerce Department will release its September report on consumer spending, which accounts for 70 percent of economic activity in the U.S.

Also, the University of Michigan will issue its monthly index of consumer sentiment for October. In September, the index reached its highest level since July 2013, led by greater optimism that the economy will grow and incomes will rise.

The Labor Department will also release the third-quarter employment cost index.

Before the market opens, Exxon Mobil will report its quarterly financial results.

CITI-REVISED EARNS

NEW YORK (AP) -- Citigroup is slashing its third-quarter earnings by $600 million, saying that recent investigations by regulators have altered the results it reported earlier this month.

The New York-based bank on Thursday revised its quarterly net income to $2.8 billion from a previously reported $3.4 billion, citing legal expenses.

The bank's operating expenses rose from $12.36 billion to about $13 billion.

The company said in a statement the unexpected increase came from "rapidly-evolving regulatory inquiries and investigations, including very recent communications with certain regulatory agencies related to previously-disclosed matters."

Citi previously reported third-quarter net income of $3.44 billion, or $1.07 per share, on Oct. 14. The results exceeded Wall Street estimates.

Like other major banks, Citigroup has been the target of lawsuits and government investigations for its role in the mortgage meltdown that helped spur the financial crisis of 2008.

SURGICAL GOWNS LAWSUIT

LOS ANGELES (AP) -- A lawsuit says Kimberly-Clark Corp. falsely claimed its surgical gowns met the highest standards for protecting against Ebola and other infectious diseases.

Lead attorney Michael Avenatti says the Texas hospital where two nurses contracted Ebola used to stock the gowns but it's not clear if the nurses had used them.

The $500 million fraud suit was filed Wednesday in federal court in Los Angeles on behalf of a surgeon who wore the gowns.

The lawsuit says Kimberly-Clark knew for a year that the gowns failed industry tests and allowed the transfer of bodily fluids, bacteria and viruses, but the company still promoted them as having the highest level of impermeability.

The maker of Kleenex and other consumer products says it doesn't comment on lawsuits but stands behind its products' safety.

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