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 October 22, 2014 07:28 GMT

ECONOMY-THE DAY AHEAD

WASHINGTON (AP) -- The pace of corporate earnings reports eases today.

Boeing will have its numbers out before the market opens this morning, while AT&T is scheduled to release earnings after the market closes.

This morning, the Labor Department releases its Consumer Price Index for September. There's been little sign of inflation in recent months. Prices actually dropped two-tenths of a percent in August, with gasoline, airline tickets and clothing prices all falling. It was the first decline since a similar drop in April or 2013.

APEC-FINANCE MINISTERS

BEIJING (AP) -- Asia Pacific finance ministers are meeting today in Beijing to consider coordinated responses amid concerns over a slowdown in the regional economy highlighted by lower Chinese growth figures.

Opening the meeting of 21 ministers from Asia-Pacific Economic Cooperation economies, Chinese Vice Premier Zhang Gaoli said recovery from the global economic downturn had been tepid.

But he said China was on track to meet its loose goal of 7.5 percent growth for the year, with inflation stable and the economy set to produce more than 10 million new jobs.

Meeting participants, including those from the International Monetary Fund and World Bank, will discuss the regional economic outlook and discuss possible coordinated action to respond. An APEC news release said ensuring financing for infrastructure was among the issues to be discussed.

OBIT-NELSON BUNKER HUNT

DALLAS (AP) -- Nelson Bunker Hunt, a Texas oilman who once tried to corner the silver market with one of his brothers only to see the move end in financial disaster, has died. He was 88.

His brother, W. Herbert Hunt, says Nelson died Tuesday at a Dallas assisted-living center after a long battle with Alzheimer's disease.

Hunt was among the world's wealthiest men. His father was legendary Texas oilman H.L. Hunt, who left behind a multibillion-dollar fortune and Placid Oil Co., once one of the biggest independent oil companies.

But a huge, soured bet on the silver market by Hunt and his brother, Herbert, led to legal problems and bankruptcy after the price of silver collapsed.

The brothers agreed to lifetime bans from trading in commodities futures and a $10 million penalty.

Nelson Bunker Hunt filed for bankruptcy in 1988, and much of his remaining fortune was liquidated to pay creditors and the IRS.

A funeral is scheduled Friday.

EARNS-YAHOO

SUNNYVALE, Calif. (AP) -- A huge windfall from Alibaba's recent IPO has sent Yahoo's earnings soaring.

The Internet company earned $6.8 billion in the third quarter, or $6.70 per share. That compares with income of $297 million, or 28 cents per share, last year.

While Alibaba accounted for most of the difference, Yahoo's revenue also rose slightly, after posting quarterly declines for most of the past five years.

Yahoo's third-quarter revenue totaled $1.15 billion, up 1 percent increase from last year. The uptick included more than $200 million in revenue from mobile devices. That represented 17 percent of Yahoo's total revenue for the three months that ended in September, an indication that CEO Marissa Mayer's emphasis on designing sleeker applications for smartphones and tablets is starting to pay off.

EARNS-DISCOVER FINANCIAL

RIVERWOODS, Ill. (AP) -- Discover Financial Services says its third-quarter net income increased nearly 9 percent to beat market expectations.

The credit card issuer and lender's gains were made on increased credit card spending and overall lending.

Discover says its net income after preferred dividends rose to $630 million, or $1.37 per share. That compares with $579 million, or $1.20 per share, a year earlier. Revenue net of interest expense rose to $2.19 billion from $2.06 billion.

Analysts polled by FactSet expected earnings of $1.34 per share on revenue of $2.2 billion.

Shares of the Riverwoods, Illinois-based company ended regular trading up $1.68 to $64.38 and added 13 cents in extended trading following the report.

INSURER-EBOLA

UNDATED (AP) -- Global property and casualty insurer Ace Ltd. says it may exclude Ebola coverage from some of its general liability policies.

The Swiss company says it's making the decision on a "case by case" basis for new and renewal policies for U.S.-based companies and organizations that travel or have operations outside the U.S.

Ace says it's evaluating the risk for clients that might be present in select African countries with higher exposure to the Ebola virus.

While Ace may be the first to disclose such a move, Robert Hartwig, president of the Insurance Information Institute, says it is standard practice for insurers to regularly reevaluate the risk to their policies.

AMGEN-THIRD POINT

UNDATED (AP) -- A hedge fund run by a famed investor says it has taken a large stake in Amgen and now wants the biotech drugmaker to consider splitting up into two.

In a letter to investors, Third Point, a hedge fund run by Daniel Loeb, says it has recently increased its stake by an unspecified amount, making it one of the drugmaker's top shareholders. According to FactSet, Third Point already owned about 450,000 Amgen shares, a stake worth roughly $64.8 million.

In response, Amgen says its board and management are continually assessing the company's business.

JAPAN-TRADE

Japan's exports up in September; deficit persists

TOKYO (AP) -- Japan's trade deficit edged higher in September though exports rose more than expected as the yen weakened to a near six-year low.

Japan's Finance Ministry says exports jumped 6.9 percent from a year earlier in September to 6.38 trillion yen ($59.6 billion) while imports rose 6.2 percent to 7.34 trillion yen ($68.6 billion). That left a deficit of 958.3 billion yen ($8.96 billion), compared to a shortfall of 943.2 billion yen a year earlier.

Japan's currency dropped to nearly 110 yen to the U.S. dollar in September, potentially helping to make Japanese products cheaper abroad. Today, it was trading near 107 yen to the dollar.

Economists expect the U.S. economic recovery to give Japan's exports a long-awaited boost -- despite a weaker yen, demand had remained weak and the trade deficit has remained a drag on growth, thanks partly to imports of oil and gas to compensate for the country's loss of generating capacity after reactors were idled following the March 2011 disaster at the Fukushima Dai-Ichi nuclear plant.

DETROIT BANKRUPTCY-SCRAPPED METAL

DETROIT (AP) -- The city of Detroit plans to sell 13 million pounds of copper wire from its public lighting operation.

Financial consultant Gaurav Malhotra testified Tuesday in Detroit's bankruptcy trial that the city is budgeting for $25 million over six years from such a sale, but the scrapped metal could bring in about $40 million.

Detroit is phasing its electricity service over to DTE Energy Co.

Thieves have targeted below-ground and overhead wires, which they sell to scrap metal operations. They also have contributed to widespread blight in Detroit by stealing wire, copper pipes, fixtures, air conditioners and anything else of value from vacant houses.

Federal Judge Steven Rhodes has said he expects to make a ruling in early November on the city's plan to get out of bankruptcy.

SPORTS BETTING

TRENTON, N.J. (AP) -- The four major U.S. pro sports leagues and the NCAA have made another court filing in their efforts to stop New Jersey from allowing legalized sports betting.

The order to show cause was filed Tuesday in federal court in Trenton. The NFL, the NBA, the NHL, Major League Baseball and the NCAA want a judge to temporarily prevent New Jersey's casinos and racetracks from taking sports wagers.

Republican Gov. Chris Christie on Friday signed a law that effectively repeals the state's ban on sports wagering. Monmouth Park racetrack says it plans to accept bets starting Sunday.

A federal judge is expected to rule this week.

The two sides have been fighting in court since 2012, when Christie signed a law authorizing sports betting. Only Nevada offers single-game betting, and three other states are allowed to sell sports parlay pools.

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