Last Tuesday, the U.S. Attorney for the Southern District of New York, Joon H. Kim, shined light onto the “dark underbelly of college basketball” by charging a number of individuals with violating federal bribery, fraud, and corruption statutes. Among those charged were James Gatto, Director of Global Sports Marketing for Adidas, and assistant basketball coaches at the University of Arizona, Auburn University, Oklahoma State University, and the University of Southern California. Additional investigations are currently ongoing at the University of Louisville and the University of Miami.
U.S. Attorney Kim outlined two distinct schemes that were uncovered during FBI investigations. The first involved Adidas executive James Gatto, who allegedly bribed high school basketball stars to sign with certain colleges that were sponsored by Adidas. The second scheme involved financial advisers and agents bribing assistant coaches at universities in exchange for convincing their players to hire those advisers when they became professional athletes.
For those who follow college sports, particularly football and basketball, the illicit activity is not surprising. As longtime collegiate sports journalist Pat Forde explained, “Every basketball program in America is running scared right now, because this is how business gets done. A lot of people knew it, but nobody was able to lay it out with proof like the feds did on Tuesday. It’s a dirty sport, and today we know how dirty.”
It’s nevertheless a bit surprising that the Department of Justice decided now was the time to get involved, as if the corruption has not been going on for decades. The recent charges raise two questions: First, given the longstanding history of bribes in college basketball, why did the Department of Justice finally decide to get involved? Second, what does this mean for the future of collegiate athletics?
With respect to the first question, there a few possible explanations as to why the DOJ finally decided to take action against corruption in college basketball:
- First, the evidence is incredibly strong. These cases were brought to the attention of the DOJ and the FBI by a cooperating witness, Martin Blazer, after Blazer was charged by the Securities and Exchange Commission for, among other things, a 14-year-long wire fraud scheme in which he made “made payments and loans to NCAA athletes in order to induce those student-athletes to retain [him] as a financial advisor and/or business manager.” Blazer allowed the FBI to see, record, and document the inside of the basketball world through wiretaps, surveillance video, and undercover agents. During the operation, the FBI documented coaches participating in bribes and steering their players towards certain financial advisors. In one instance, Blazer secretly recorded a meeting with Auburn assistant coach Chuck Person, who introduced one of his players to Blazer. Person told the player “This is a violation of rules, but this how the NBA players get it done, they get early relationships…they form trust, you get to know [the business manager].” When the player left, Blazer took $15,000 in cash and gave it to Person.
- Second, the DOJ is concerned with the exploitation of young athletes, particularly by money managers. Sixty percent of former NBA players are broke within five years of retirement, in large part because of bad investments. Since the NCAA is a private actor, the NCAA does not possess subpoena powers or similar investigatory capabilities, and has struggled at times with governing its member institutions. Pay-for-play schemes similar to the one in the present case have been well documented. Yet even in some of the most high-profile cases over the last fifteen years, including those involving Auburn University’s Cam Newton in 2010 and the University of Southern California’s Reggie Bush in 2005, the NCAA has been unable to sufficiently deter future activity. In fact, both Auburn University and the University of Southern California had assistant basketball coaches that were indicted last Tuesday. Perhaps after viewing the NCAA’s inability to govern, the DOJ decided to take things into their own hands.
These dramatic developments mean that collegiate athletics will never be the same. Some of the likely consequences include:
- In the short term, whatever illegal activity that was occurring behind the scenes has temporarily stopped. The potential punishment that the DOJ can bring down is nothing like the slap on the wrists common for the NCAA; if convicted, the defendants face maximum sentences ranging from 40 to 65 years in prison. All parties involved, whether coaches, money managers, student-athletes, or shoe-representatives, will watch closely as the investigation unfolds.
- As for the longer term impact, this depends in part on how large the investigation becomes. All signs indicate that the indicted coaches are merely the tip of the iceberg. In the press conference, FBI assistant director Bill Sweeney warned other coaches, “We have your playbook. Our investigation is ongoing. We are conducting additional interviews as we speak.” After the investigation was announced on Tuesday, the FBI raided basketball sports agency ASM sports and a Nike division dedicated to high school basketball. A University of Alabama basketball administrator, who previously worked as an assistant director of enforcement at the NCAA, resigned on Wednesday because of direct ties to the FBI investigation.
- More generally, this government investigation is likely to raise even more starkly questions about whether the NCAA is capable of policing corruption in collegiate athletics. It is telling that the NCAA was completely unaware of the FBI investigation that had been ongoing since 2015. Some will demand the NCAA come down hard by imposing the “death penalty”—banning the schools involved in the illegal activity from competing in college basketball for at least one year. As a first step, the NCAA may ban some of the programs mentioned from playing in this year’s NCAA tournament. For particularly egregious offenders, such as the University of Louisville, the NCAA will likely implement the death penalty for the first time since banning the Southern Methodist University from competing in college football for the 1987 season. Yet this punishment has proven to be an insufficient deterrent, and it’s not clear whether even very severe punishments, in the wake of wrongdoing that was uncovered not by the NCAA itself but by the federal government, will do much to inspire confidence that the NCAA has the will or capacity to combat pervasive corruption in college sports.
- More likely, this massive corruption ring will make people question whether amateurism remains a good policy for collegiate athletics. If players are getting paid anyway, it might make more sense to take the payments out of the black market and compensate players for the use of their name, image and likeness.