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NCAA Restricted Earnings Case Still Not Settled

 SAN ANTONIO - One of the hot topics at the January NCAA Convention was the restricted earnings case, which the NCAA reported was still not settled.

The NCAA News stated that Elsa Kircher Cole, NCAA general counsel, said, "Our last offer to resolve the case was $44 million. The plaintiffs have said they will not settle for less than $58 million or $59 million,"said Cole. "We can't talk with the plaintiffs directly to explain why we think this is a fair number and about the risk that the judgment could be thrown out at the 10th Circuit. "The $44 million more than compensates for the actual injury. This doubles what the jury awarded," Cole said. "We thought this was more than fair."

Another item discussed was how to assess damages to the membership if payment in the case is ultimately required. Also addressed were the reasons the Division I Board of Directors and NCAA Executive Committee decided to put into escrow an expected $10 million revenue distribution rather than distribute those funds to the membership.

A Division I Budget Subcommittee, chaired by V. Lane Rawlins of the University of Memphis, has been appointed to consider restricted-earnings budget implications within the overall budget strategies.

"The true range of settlement numbers is significant," The NCAA News reported Rawlins as saying. "We've decided the worst way to go about this is an ad hoc manner. We need to approach this in a budgetary way. The restricted-earnings settlement cannot happen without some reductions." Equal-share and pro-rata formulas for assessment of Division I members have been discussed if a payment in the case is ultimately required.

As the NCAA prepares financially for a possible settlement, the Board of Directors and Executive Committee in October delayed the return of $10 million in the current budget to institutions and conferences. The funds are being retained in escrow for eventual use in a settlement.

The NCAA office staff and NCAA committee members also will reduce spending, including the elimination of first-class travel. The Board of Directors also took the following expenditure-saving action:

  • Noted that a contract has been received for the sale of the NCAA aircraft. Agreed to support the sale of the NCAA aircraft and the purchase of executive charter service for selected flights either through the use of charter aircraft<BR>or part ownership of a charter aircraft.
  • Agreed that committee members should book airfares at least 30 days in advance of travel to take advantage of zone airfares contracted through airlines and that first-class travel should be eliminated, with the understanding that to ensure the continued willingness of individuals in the membership to serve on NCAA committees, it is important to have the flexibility to change airline tickets when schedules unexpectedly change.
  • Supported the concept that national office staff and committee members should have more flexibility to select meeting sites within cost parameters and that hotel room rates will be held to a maximum of $170 per night, with annual adjustments for inflation.
  • Agreed that these travel policies should be monitored to ensure that adequate cost savings occur and that the business of the Association and the willingness of the membership to serve on committees is not sacrificed as a result of these policies; and authorized the president to make exceptions to these policies for compelling reasons.
  • Approved the use of technology (for example, the Internet, CD ROM) to save money on formal publications, such as guides and brochures, and informal publications, such as minutes, agendas and supplements.