Lebron James Cleared in Hummer Probe

[adios]

Lebron James, the high school basketball phenom, retained his amateur status as a result of an investigation by the Ohio High School Athletic Association (OHSAA) into a gift he received. The gift was a Hummer H2 sports utility vehicle with a base price of $50,000. Supposedly the vehicle is decked out in options such as a killer stereo system, 3 tv's, video game outlets, etc. His mother states that she gave him the vehicle for his 18th birthday. She took out a loan from a Columbus, Ohio bank and provided the documentation for the loan. The OHSAA was shown the business records from the bank and dealership and was satisfied that the financing and acquisition of the vehicle were acquired by James' mother alone. Critics of the OHSAA decision state that James's mother doesn't possess the financial resources to obtain such a loan and suspect that James has an agent. Most experts believe that James will be the number one player selected in the next NBA draft. OHSAA bylaws state that amateur status is forfeited if an athlete capitalizes on athletic fame by receiving money or gifts of monetary value. A violation of James's amateur status would have ended his high school basketball career. Many critics feel that the OHSAA is "white washing" the issue because of the money being made from James's national TV exposure and the potential TV revenues to be gained from the state high school basketball tournament. Ohio High School Athletic Association commissioner Clair Muscaro said,"I'm not in position to question bank officials that infringes on confidentiality with a client. I am satisfied that the loan that was granted did not violate our guidelines and was acquired only by his mother." Muscaro also stated that no violations of the OHSAA amateur bylaws "as currently written" were found and that James is still eligible to play. However, Muscaro thinks the OHSAA should re-examine some of its amateur bylaws. Muscaro was further quoted as saying, "Money, race or gender had nothing to do with the decision. Money is not a factor. Our boys basketball tournament would do well with or without St. Vincent-St. Mary."

[IrishHand]

People need to relax on this one - the moment the 'story' broke, it was pretty well a foregone conclusion that it was in compliance with the rules. His mother got credit based on her son's future earnings. Any banker with a brain would be happy to send $100,000 her way (close to the actual cost of the car - the $50,000 base price the media keeps quoting is a joke) - in the long run, he's a sound investment.

Basically - he's one of very, very few high schoolers in history who's guaranteed to be worth millions. He's got a multi-million insurance policy in case of injury, and he's guaranteed to be drafted in the top 2 or 3 in next June's NBA draft.

Of course...the fact that he hit someone today speaks volumes about the wisdom of both Hummers in general (awful visibility, especially of low cars and motorcycles) and high schoolers owning shiny new cars (or even cars at all).

[pudley4]

</font><blockquote><font class="small">In reply to:</font><hr />
His mother got credit based on her son's future earnings.

[/ QUOTE ]

That's exactly what would make this an issue - it's against the rules for him (or anyone else) to use his future earnings as "collateral" for a loan. If this happened, he would immediately be ineligible for amateur athletics (including the NCAA).

[IrishHand]

Sorry - that's wrong.

The bylaw at issue states that: amateur status is forfeited if an athlete capitalizes on athletic fame by receiving money or gifts of monetary value.

His mother getting a high-interest car loan from a bank is neither "receiving money" nor a "gift of monetary value." The bank is the one making money.

[Clarkmeister]

"it's against the rules for him (or anyone else) to use his future earnings as "collateral" for a loan"

This is not correct. There are now provisions that allow this. It was discussed at length during the analysis of the insurance policy taken out by the Miami running back prior to the BCS title game.


Even if it was against the rules, its a joke. These kids should be paid. Period. Everyone and their brother is making money off James, but god forbid he benefit from it. The NCAA signs a BILLION dollar deal with the NCAA for the mens basketball tourney, but god forbid the kids get any of it. In fact, the kids are essentially forced to be broke.

The system is a joke and needs to be changed.

[pudley4]

So then why don't these kids take out "personal loans" for thousands of dollars while they're still in college?

Why is it illegal for agents to loan these kids money while they're still in college?

[pudley4]

The NCAA allows athletes to borrow against future earnings from an "established, accredited commercial lending institution" to purchase insurance, but they cannot use a third party to secure the loan.

-USA Today 12/10/2002

So the NCAA allows athletes to borrow, but only to purchase the insurance.

I'm not sure how much the system needs to be changed. Look at a player from Duke - he'll get free tuition, room and board. That was $33,000 in 2000-2001. For 4 years that's $133,000. Duke is one of the best universities in the country - how much does it help your chances of getting a job when your diploma says "Duke University"? I'd say "a lot". He'll also get the added benefit of name-recognition, which always helps in the business world.

So while the players aren't directly receiving any monetary compensation, they are definitely being rewarded for their time and effort. How many students would gladly leave their current situation (student loans, working full-time, taking less than full loads, etc) to be exploited like this?

I would actually be in favor of them receiving a small amount of money each month (maybe a couple of hundred dollars) for "living expenses", but when you realize there are 250 or so students on scholarship (between all the mens and womens programs), this "small amount" of money quickly adds up to a half-million dollars a year.

[Clarkmeister]

30k is a joke. And not all schools' tuition has a value as high as Duke.

I quite frankly think that players for a given University should receive a flat % of all television revenue received by their school/conference. This is in addition to scholarship. I don't know exactly what % would be fair, but I would guess something in the 10% range is equitable.

[IrishHand]

So then why don't these kids take out "personal loans" for thousands of dollars while they're still in college?
There is a very small handful of players who are good enough loan risks for a bank to make the loan. Take this year, as an example. Other than LeBron James and Carmelo Anthony, there aren't any players who are guaranteed to be in the lottery. Other guys you might name could go anywhere from 10th overall to not drafted - depends on the rest of the year, injuries, team needs, and the ever-important media perception.

James is just one of the very rare cases where nothing can happen between now and draft day to affect his millions.

Why is it illegal for agents to loan these kids money while they're still in college?
Probably because the NCAA wants to keep out pretty well any outside influences on their players, and agents are easily the biggest potential influence out there on top players. Mostly, it looks sketchy, and the NCAA is hyper image-conscious, especially regarding anything which could be interpreted to infringe on the integrity of the game. (That's my impression - you'd have to ask someone at the NCAA if you want a more complete answer.)

Really, as far as James' mother getting him a car - this is a non-issue. During my 3 years at law school, during which time I was heavily involved in my school's basketball program, I would say there were maybe a half-dozen guys who didn't have cars via their parents. We had one kid with very wealth parents - he was rolling in a $80k car. Most others had midrange SUVs. Most were financed through their parents - and there's absolutely nothing wrong with that, either at the college level or in high school. It's only when there are outside influences that there's a problem.

[IrishHand]

That's ridiculous. I hope you realize that colleges aren't allowed to look at these things in a sport-specific manner. The NCAA applies to all sanctioned athletics. If you wanted to pay athletes, you'd have to give the same amount to water polo players and fencing guys that you give to football players and basketball players - at least that's how it works now. Of course, Title IX requires you to dump the same amount into the chicks no matter how irrational that is.

But let's live in dreamland and say you would apply this 'profit sharing' scheme only to the revenue sports (basketball and football), and only to the men. You would rather quickly render it impossible for low-profile programs (meaning the vast majority of the 100+ D1 basketball programs, for example) to operate. They'd simply be too expensive. The majority of NCAA schools don't make money with any athletic program. Any time there's a proposal to increase the number of scholarships in any sport, most schools freak out because it's going to cost them a pile of money and at a certain point, they'd simply discontinue that sport.

I understand your point, but I think it's important to keep it in perspective. The NCAA and it's member institutions make money off a minute fraction of the athletes that fall under it's wide umbrella - and a huge chunk of that money goes to support the unprofitable sports.

In my view, these players are not being taken advantage of. They're being handed a free university education coupled with free athletic training in exchange for their athletic performace. How much that's worth to a guy who's going to make 100 million in his first 10 years on the job in the NBA or NFL is debatable, but that guy is, again, in a minute minority.

[pudley4]

30k is a joke, but it's the market value.

</font><blockquote><font class="small">In reply to:</font><hr />
I quite frankly think that players for a given University should receive a flat % of all television revenue received by their school/conference

[/ QUOTE ]

But now you're making the rich (schools) get even richer. How many kids who would have chosen a good mid-major school where they could play a lot (like Creighton or Miami OH), will now choose a great school (like Kentucky or Kansas) even though they won't play as much? The difference in money generated by these schools and their conferences is massive. The schools who would benefit the most would be the ones at the bottom of the major conferences (like Northwestern and Baylor). They would see a major influx of talent, solely due to the extra money available.

One of the biggest reasons for the increased parity in college football in recent years was the reduction in the number of scholarships available. Teams like Nebraska could no longer hoard scholarship talent on their 3rd and 4th string on the off chance the player would develop into a starter. Now many of those players are developing and starring at a number of lesser schools.

Giving a % of revenue back to the players would turn college basketball into what college football was.

[pudley4]

But what is to prevent a booster (who owns a small bank, or runs a larger one) from "loaning" money to an athlete, then writing off the loan when the athlete fails to repay it?

</font><blockquote><font class="small">In reply to:</font><hr />
Really, as far as James' mother getting him a car - this is a non-issue. During my 3 years at law school, during which time I was heavily involved in my school's basketball program, I would say there were maybe a half-dozen guys who didn't have cars via their parents. We had one kid with very wealth parents - he was rolling in a $80k car. Most others had midrange SUVs. Most were financed through their parents - and there's absolutely nothing wrong with that, either at the college level or in high school

[/ QUOTE ]

I agree that there is nothing wrong with it - if the parents can afford the car. Obviously most parents who can afford to somehow help/put their kid through law school could somehow figure out a way to furnish a car for them. But you also said "we had one kid...wealthy parents...$80k car" - the rest drove "midrange SUVs". If the wealthy parents were the only ones who could afford the $80k car, how does James' mother afford one? How can she even finance one on her own? This is why there was an investigation.

[IrishHand]

But what is to prevent a booster (who owns a small bank, or runs a larger one) from "loaning" money to an athlete, then writing off the loan when the athlete fails to repay it?
Boosters fall under the same NCAA "axis of evil" that agents do. However, as a practical matter, nothing prevents this except the school's compliance department and the threat of eventual NCAA sanctions. Players are idiots - tough to rely on their discretion.


How can she even finance one on her own? This is why there was an investigation.
There was an investigation because he's an insanely high-profile high school basketball player. How many times have other high school players been investigated for getting a car from their parents? None that I know of. The kid I referred to who was rolling in the 80k car was rolling in it when he was in high school - and he was both a star player and on a state championship team. The difference was that he was white and not on TV every week.

[adios]

"If you wanted to pay athletes, you'd have to give the same amount to water polo players and fencing guys that you give to football players and basketball players - at least that's how it works now. Of course, Title IX requires you to dump the same amount into the chicks no matter how irrational that is."

Agreed about Title IX, however, how come the water polo coach doesn't tend to make as much as the football coach? I mean university administrations scream about how they have to comply with Title IX. Furthermore the administrations state that the mens basketball and football program funds the other programs at a lot of other places but the coaches in mens basketball and football tend to make a lot more money than the coaches of "minor" sports. My point being that there must be money to go around if they can pay the coaches a lot of money. How much do Womens's BB coaches make at schools like UConn and Tennessee?

[IrishHand]

Coaches' salaries aren't controlled by the NCAA, only their number.

And yes, I'd certainly agree that there's a direct relationship to a team's profitability and the salary of the head coach. I'm not sure what that has to do with the discussion though.

[Clarkmeister]

"I hope you realize that colleges aren't allowed to look at these things in a sport-specific manner"

Thats why you make the criteria TV revenue. Mens wrestling gets the same share of wrestling TV revenue as the football guys get from football TV revenue. If the NCAA won't do that now, then they should change the policy. Its certainly not the first grossly incorrect NCAA rule.


"The NCAA and it's member institutions make money off a minute fraction of the athletes that fall under it's wide umbrella - and a huge chunk of that money goes to support the unprofitable sports."

Personally, I don't care. Its not the responsibility of those making money to support the garbage programs. We could use this as impetus to change the ridiculous title IX requirements.

[Clarkmeister]

Its not market value because there is no market. It is a system with fixed prices that is controlled by the Universities, the NCAA and the NBA. None of which have any interest other than cheap labor.

[Clarkmeister]

"Giving a % of revenue back to the players would turn college basketball into what college football was."

No it won't. Do you really think any kids turn down Duke for Creighton as it is? Duke turns them down. There are only, what, 12 hoops scholarships right now? It won't change anything at all.

[adios]

The points are that apparently Title IX doesn't apply to coaches pay why should it have to apply to pay given to atheletes? Second of all the universities that pay coaches mega bucks to coaches and whine about title IX are being disengenous.

[IrishHand]

What does paying coaches have to do with being forced to dump equal money into women's sports??

Coaches are paid however the school values their services. Women athletes are 'paid' because some moron politicians think they're equally interested in sports.

[Ray Zee]

why would anyone think there is someothing wrong with a high school player getting a 100,000 dollar birthday gift. dont most mothers take out bank loans for their sons birthdays.