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Commonwealth v. NCAA and the Alleged Abuse of Power

by on January 02, 2013 5:14 PM

Gov. Tom Corbett, on behalf of the state of Pennsylvania, filed an antitrust lawsuit against the NCAA on Wednesday that petitions the court to overturn all of the sanctions dealt to Penn State in the aftermath of the Jerry Sandusky scandal. 

The 43-page document, released on Wednesday, accuses the NCAA of being overreaching in its powers and wielding the sanctions in an attempt to exploit the Sandusky scandal for its own benefit, or, as the lawsuit states, "to burnish its own often derided public reputation." 

"The NCAA used Penn State's tarnished public image as an opportunity to force the university to endure harsh, unjustified and unprecedented punishments ... These punishments threaten to have a devastating, long-lasting and irreparable effect on the Commonwealth, its citizens, and its economy," the report states. 

The suit was filed as an antitrust because it pertains to the violations allegedly made by the NCAA. According to court documents, the NCAA is a trade association, and therefore, the rules it enforces must directly correlate to the "purpose of promoting intercollegiate athletic competition." 

"The NCAA's sanctions against Penn State fail to meet those requirements. The NCAA has punished Penn State without citing a single concrete NCAA rule that Penn State has broken, for conduct that in no way compromised the NCAA's mission of fair competition, and with a complete disregard for all for the NCAA's own enforcement procedures," the lawsuit stated. 

The Commonwealth "emphatically repudiates" the actions of the former Penn State administrators who allegedly engaged in the concealment of Sandusky's rampant abuse over at least two decades, it does not believe the NCAA should be able to exploit the tragedy, "merely to enhance the NCAA's own reputation," according to court documents. 

During a press conference held to announce the antitrust lawsuit, Jim Schultz, general counsel to the Commonwealth, said the collateral damage the state and the economy could be forced to endure as a result of the sanctions far exceeds the to-be-determined total cost of the case against the NCAA.

There was no specific total provided for either the 'collateral damage' or the cost of the legal proceedings. 

In the document, the NCAA and Division I football is cited as 'big business,' and is said to generate "hundreds of millions of dollars" annually. The NCAA, according to the complaint, amasses $500 million a year in TV revenue alone. 

Penn State football as a monetary asset is also touted. In 2010-11, according to court documents, Penn State earned more than $50 million from its football program, making it the second-most profitable collegiate athletics program in the country. 

"In short, Penn State football has long been a significant economic driver of the university, playing an important role in enabling the university to offer a variety of first-rate programs through resources other than student tuition.

"Moreover, Penn State achieved its football success without compromising the academic performance of its football players," the lawsuit states. 

The suit states that Penn State feeds into the statewide economy as well as the local economy. Studies show that in 2009, Penn State football generated $161.5 million in business volume impact, $90 million of that staying in Centre County. 

"The same study found that Penn State football spent $16 million in Pennsylvania on goods and services with contractors and vendors in 2009 – essentially pumping money back into the Pennsylvania economy during the downturn. 

The Penn State football program also created 2,200 jobs, according to the complaint. 

Once the sanctions were handed down, more problems settled in for Penn State.

"Like children looting a newly broken piñata, competing colleges and universities promptly snapped up the newly available football players, strengthening their own football programs at the expense of the one the NCAA had conspired to decimate," the complaint said. 

The complaint says the sanctions are unprecedented, and, as Corbett said during his press conference, should not have been imposed in the midst of a criminal matter. Instead, the NCAA needed to step back and let the court decide the implications. 

In terms of potential harm to be done to the community, the complaint states that three areas are at the highest risk: post-secondary education, Division I football players and a market for college football-related apparel and memorabilia, each of which "are national in scope." 

Threatened harm to the Commonwealth includes the citizens who depend on Penn State football for their "jobs and livelihoods, ranging from souvenir vendors to hotel and restaurant employees to tuition-paying students," the complaint stated. 

The complaint says there will be harm to the state revenue base, including by: 

  • Diminished football ticket sales. The complaint says ticket sales were down 'substantially' in 2012 as compared to recent years. 
  • Lessened hospitality revenue because less visitors will be traveling in and out of Pennsylvania.
  • Harm to Penn State-related business because the postseason ban means no sales of bowl-game related merchandise.
  • An expected decline in jobs because of the 'diminished' football program.
  • Diminished spending on Penn State capital goods, improvements and supplies.
  • Diminished interest in and attendance at Penn State football events, including camps and coaches clinics.
  • Harm to the Commonwealth from the $60 million fine, which the complaint alleges will be paid via "tuition hikes and appropriations from the Pennsylvania treasury." 

The complaint states that the repercussions of the sanctions will linger longer than they actually last, however, no concrete figures are provided in the lawsuit. 


Laura Nichols is a news reporter and @LC_Nichols on Twitter.
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