The Sports Law Guru

Anyone who doesn’t think NCAA Basketball is big business should check out this article on ESPN.com. According to ESPN, Indiana University has spent just shy of $500,000 in legal fees relative to the termination of Kelvin Sampson.  Most of that was paid to Ice Miller.  Assuming, for argument’s sake, the average hourly rate was $300, that means approximately 1,600 hours were billed to IU relative to the Sampson matter.  To put it another way, in excess of 40 weeks of attorney time has been spent — and that was just the amount needed to terminate and settle with Sampson.  There will undoubtedly be a lot more fees generated in defending the University from sanctions by the NCAA.

$500,000 in fees to settle a $750,000 claim – isn’t that a bit excessive?  Well, I doubt it.  The issue is not that IU settled for $500,000, it is the reputation of the institution that is at stake.  IU has always prided itself on being a clean program that was transparent. Bobby Knight may have had his fair share of run-ins with the NCAA, but he always did it in a public manner.  There wasn’t the concern that he was doing something underhanded behind everyone’s back.  This is a completely different issue; if it is proven that IU knew about Sampson’s alleged illegal conversations with recruits, the reputation of the program is certainly in jeopardy.  In Indiana, we take reputations seriously.  Ask the Pacers about that one.  They’ve spent the last several years letting a group of thugs become the face of the franchise and not only have they played poorly, but no one comes to watch.  Last season marked their lowest attendance numbers in recent memory.  They’re clearly trying to change their image this year, but it’s going to take some time.

Back to the Hoosiers.  If IU’s reputation is further soiled, not only will they lose out on attendance at games, but they will also lose out on nearly every other revenue source.  Whether its licensed products, sponsorship or media rights – no one wants their name to be associated with such shenanigans.  Then there’s the NCAA sanctions.  If found liable, IU will most likely be banned from post-season play for some time. …and will lose out on all of the revenue that goes along with it.

NCAA basketball is big business.  The players may not be paid (…there’s a topic for another day), but the flow of funds everywhere else is enormous.  To spend $500,000, or even $1,000,000, to save your reputation is just a cost of doing business.

Agree, disagree, or think my writing stinks?  Let me hear about it.