In an Aug. 12 phone call intercepted by the FBI, and released Tuesday in a series of federal complaints involving the arrest of 10 men in a college basketball fraud case, an Adidas executive named Merl Code and sports agent Christian Dawkins were trying to figure out how to pay a high school basketball recruit $150,000 to attend the University of Miami, which is sponsored by Adidas.
The Adidas slush fund budget was a little tight at the moment and no one was happy that a “rival apparel company” had upped the bidding that high in an effort to send the recruit to one of its schools. One hundred thousand seemed more appropriate. Code’s boss at Adidas, Jim Gatto, wanted to know if the kid could wait until January, when some cash might free up. Code was worried, though, that “by that point, that number might be 200 [$200,000].”
Earlier that summer, Code was on a different call the FBI intercepted, explaining to the family of a top recruit why it needed to take $100,000 for him to play with the University of Louisville, Adidas’ top program. Adidas was about to sign Louisville to a $160 million sponsorship deal, and, as you’d expect, it wasn’t going to just risk it and hope the Cardinals fielded good teams.
Adidas was going to protect its investment, with the willing help of Louisville coaches – an unnamed assistant is mentioned in the report and head coach Rick Pitino was essentially fired after the scandal became public.
“You guys,” Code explained to the family on the call, “are being introduced to … how stuff happens with kids and getting into particular schools. So this is kind of one of those instances where we needed to step up and help one of our flagship schools [Louisville], you know, secure a five-star-caliber kid. Obviously, that helps, you know, our potential business.”
Then there was the conversation between Dawkins and an undercover FBI agent posing as a financial investor trying to secure future NBA players as clients. Dawkins wistfully explained how great it would be if a payout worked and they landed some NBA players as clients.
“You can make millions,” Dawkins said, “off of one kid.”
Does the NCAA still want to claim the proper compensation for all of the players above is tuition, room, board, a small stipend, basketball coaching, health care, tutoring and so on? It’s a decent package, although it varies based on how you value education.
That isn’t their value though.
The market determines everyone’s value and the market for some of the best college basketball recruits (not the best, just one of the best) is clearly laid out in the complaints released by the U.S. Attorney for the Southern District of New York on Tuesday. Following an aggressive FBI investigation, 10 men, including everyone mentioned above, plus four assistant college coaches, among others, were arrested.
One kid is worth $100,000. Another is $150,000, but maybe $200,000, depending on the timing of the bidding war with the other shoe company. Assistant college coaches were getting regular payments just to steer players to agents. Others were getting five-figure, under-the-table payments in exchange for giving out five-figure, under-the-table payments.
That such an underground economy exists is no secret in college athletics. It is a tale generations old. If nothing else though, the specifics picked up on FBI audio and video recordings must be confronted by the NCAA as it deals with a scandal that is already enormous (involving eight major schools) and seemingly growing by the hour.
As long as the NCAA clings to rigid amateurism and tries to stop the tides of capitalism by undervaluing talent, it is ignoring the reality of how business gets done and leaving itself open to this kind of scandal. Like raging floodwaters, the market will go wherever it chooses, NCAA rules or not.
The FBI and the U.S Attorney are hot on this case, but it really isn’t much of a case. They can drum up crimes by labeling things bribes (rather than consulting fees) and stretching anti-corruption laws to find statutes that sort of fit, but there are few, if any, victims here.
It’s just the NCAA system being exposed.
Scandal and college sports are synonymous, so no level of reform will wipe it out completely. But continuing to prevent players from seeking their market value from outside sources just forces everything into the shadows, where even less savory characters thrive.
The players are worth more because Adidas, Louisville, Rick Pitino, the ACC and the NCAA all need them to make their own fortunes. Meanwhile, sports agents, financial advisers and Adidas, again, see additional value in future earnings.
That’s reality. That’s what’s happening. That’s what is in the FBI findings.
Pretending otherwise, pretending that tuition, room and board are enough is naïve and dishonest.
You can’t take Adidas’ $160 million on one side, allow shoe companies to run the grassroots basketball system at the heart of recruiting on the other and then act surprised when the game is treated as a bottom-line business.
“What are they going to do, put the shoe companies on probation?” said Sonny Vaccaro, a former Adidas and Nike executive who signed schools and ran grassroots hoops. “Are they going to give back the money now? Someone gives you $160 million, you better win. And how do you win? You need players. So they got you players. The schools did this to themselves.”
They professionalized the game, yet claimed “amateurism.”
So let the players make their own outside deals by granting them access to name, image and likeness. The school doesn’t have to change its package, it doesn’t have to “pay the players.” It just needs to allow the rules to reflect reality.
If Adidas wants to kick in six figures, let it. It’s happening already. If an agent wants to sign a prospect and sponsor him until the NBA arrives, that’s their business (and money).
If a player wants to make some extra money signing autographs at a college-town car dealership or starring in a local commercial, so what?
The Olympics used to adhere to stringent amateurism before even the IOC saw the folly. That was the mid-1980s. The Games didn’t get less popular because Usain Bolt could get a Nike deal or Michael Phelps sold Subway sandwiches. It allowed them to compete longer. It was fair. It was honest.
Will some schools have an advantage in recruiting because they’ll have favorable companies or boosters willing to pay kids? It’s already happening. Will stars make more than benchwarmers? That’s life in any work place.
Right now, what is dragging college athletics into the mud, what has the potential to change the game dramatically and devastate the competitive order, is not the NCAA granting freedom and rights to the players. It’s that it hasn’t done such a thing.
The status quo is a lie. The status quo isn’t sustainable.
Continuing to believe that these rules can survive capitalism is folly. Everyone, including the athletes and their families, knows the value of a good player far exceeds the NCAA limits.
You can make millions, off of one kid.
True statement. And one that isn’t changing. So let the market run free and in the open, because it sure isn’t ever going to stop running in the dark.
And that isn’t working out so well these days.
Related college basketball coverage from Yahoo Sports:
• FBI probe uncovers massive NCAA corruption scandal
• Louisville fires Pitino, AD in wake of FBI investigation
• Dan Wetzel: This is just the tip of a horrible iceberg for NCAA
• Why those involved in NCAA scandal will flip for FBI
• How the FBI finally caught the NCAA’s biggest cheaters