FEATURE: The Sports Blawg with the Fordham Sports Law Forum
The Fordham Sports Law Forum is dedicated to bringing interesting issues in sports law to the Fordham legal community. Each week, in conjunction with the Intellectual Property, Media & Entertainment Law Journal, members of the Fordham Sports Law Forum write posts about current sports law issues and events.
Can Season Ticket Holders Clean Up College Sports?
For a college sports fan there is nothing better than watching your alma mater win game after game. But, as fans of University of Memphis (U of M) know, there is also nothing worse than having those wins erased from the record books. In May 2009, U of M fans watched in horror as the National Collegiate Athletic Association (NCAA) required the U of M men’s basketball team to vacate its 2007-2008 season record and serve three years probation for violations of NCAA rules. Unfortunately, this is not an uncommon event amidst the rash of scandals in college sports. Although the NCAA is seeking to reign in these scandals through recent reforms, only time will tell if these reforms are successful.
In the meantime, where scandals arise commentators and fans search for scapegoats. After the U of M scandal, some season ticket holders thought former coach John Calipari, former guard Derrick Rose, and athletic director R.C. Johnson should be held liable. The season ticket holders wanted compensation for the alleged devaluation of their tickets. Instead of trying to get the case dismissed, Calipari, Rose, and Johnson settled. This settlement surprised experts who felt the case would be easily dismissed. Although experts questioned whether the settlement would lead to more lawsuits, the more relevant questions are whether we, as fans, want more of these lawsuits and whether they are an effective means of policing college athletics.
Is there a theory of liability under which the season ticket holders can win over NCAA rule breakers? The two most applicable theories of liability are (1) fraud and (2) negligence. They are both legal longshots, but demand a closer look.
In the instance of fraud, it would be difficult to prove prima facie evidence under common law requirements under a run of the mill sports scandal fact pattern. Fraud requires an intentional misstatement of material fact that the victim relied upon. In the University of Memphis example, an intentional misstatement would have to come from a school official that caused someone to purchase tickets. So, if the athletic department, coach or players simply don’t make any comments about the NCAA violations at the time tickets are being purchased, they will not meet the common law fraud standard.
A negligence claim is also unlikely to succeed. Season ticket holders can only claim a purely economic loss (and maybe some wounded school pride), but claims of pure economic loss are generally barred by the economic loss doctrine.
There is one alternative legal theory that could give season ticket holders a better chance at recovery. Since college sports programs could be considered analogous to corporations—in fact, the top college sports programs bring in more than one hundred million in yearly revenue—corporate law may hold the answer. In corporate law, shareholders can file derivative suits against members of the board of directors for damages resulting from violations of law. In these suits, any recovery is paid to the corporation.
The reason for allowing these suits in corporate law is to allow shareholders to police the corporation. College season ticket holders certainly have an interest in policing their college sports programs. But, for this theory to apply: (1) season ticket holders must be equated with shareholders, (2) athletic departments, coaches, and players must be equated with members of a board of directors, and (3) laws must be equated with NCAA rules.
Do any of these analogies make sense? More importantly, is a court going to allow a suit to proceed based on any of these analogies? While it is unlikely such a lawsuit would succeed legally, it would certainly help bring renewed attention to the rights and power of fans in college sports.
However, the NCAA could play judge and jury by creating the ability to bring suits under this theory on its own. It is evident from the incredible power of the NCAA, including its ability to impose the death penalty on a college sports program, that the NCAA has wide ranging powers in policing its member schools.
Creating this liability mechanism for fans to sue their schools under the purview of the NCAA may have substantial benefits. Enforcement of NCAA rules by season ticket holders would decrease the burden on the NCAA of investigating potential violations. Season ticket holders also may be able to recognize potential violations much earlier than the NCAA due to their devotion to and involvement with their team. Season ticket holders also have appropriate incentives to bring these suits. A devoted fan is unlikely to bring a suit that will harm their team; On the other hand, a devoted fan is extremely likely to bring a suit that will help their team.
There are also obvious downsides. The NCAA would not have as much control over investigations as they currently do. This lack of control could lead to frivolous litigation that could interfere with the operation of college sports programs. Even with these downsides, in an era plagued by scandals, private enforcement may be an important tool in redeeming the reputation of college sports.
Despite the NCAA’s recent reforms, scandals are sure to be on the horizon. As long as there are scandals, human nature will make sure there will be people, like season ticket holders, trying to make someone else pay. Only time will tell how, when, and by whom NCAA sports will become free from rules violations, scandal, public strife.