They say money can be the root of all evil.
In the United States, college sports are extremely important for young athletes trying to make it to the highest level. College sports are also important for leaders of large companies from various spheres of business: sportswear brands, legal practices, financial management firms— just to name a few.
Young adults can get free education at a university in exchange for taking their talents to that respective sports program. Every student-basketball player dreams to break into the NBA, objectively the best basketball league in the world. For this, young athletes are ready to sacrifice a lot, if not all.
When it’s time for a player to decide who will represent them in the NBA, lack of knowledge in terms of financial management plays a big role. Many times, the more compensation that the player is offered the more likely they will sign with specific agents or advisers. As we have seen recently, sometimes this is even coordinated before they attend college. Large sums of money at a young age can become extremely complicated and overwhelming; asking for help here is absolutely justified.
College basketball in the U.S. is regulated by the National Collegiate Athletic Association (NCAA), headquartered in Indianapolis, Indiana. Competitions under the NCAA umbrella are divided into three divisions, depending on the size and level of University.
The year 2017 became a watershed in the history of US college sport and, perhaps, the first among the last in the life of the existing structure of the competition. This is a story about how money becomes the root of all evil, this time particularly with college sports.
In late September, the FBI arrested 10 people that were involved in a two-year investigation into corruption of the college basketball industry. Four of those people arrested were NCAA Division I Assistant basketball coaches. The other six included financial managers and advisors in addition to global sportswear executives.
The FBI investigation, which has been ongoing since early 2016, revealed several situations in which coaches have gone outside the rules, inciting basketball players and their families to enter contracts with certain advisers to get a kickback of cash on the back end.
A top basketball player in the NCAA can bring his University millions of dollars of revenue. The players and teams can also bring shoe companies extravagant amount of exposure. A player’s future potential salary in the NBA can provide a wealthy future for agents and financial advisers.
Even real estate agents and car dealers can count on a solid commission at the expense of a young athlete. The federal documents indicate the sportswear brand, now known as Adidas, and financial advisors broke off the amounts of $13,000 and $9,000 to coaches that brought in specific players to their program; in this situation to “University 6.” This same University is associated with payments of $100,000 and $150,000 to the families of various future student athletes for committing to the school.
In the past few weeks, this “University” has pointed to the University of Louisville, where Hall of Fame coach Rick Pitino has subsequently been relieved of his duties.
During the investigation, it became clear that Merle Code and Jim Gatto, who held senior positions in Adidas, deliberately remained in the shadows but ultimately executed all transactions. Both businessmen have happy families, their reputation is crystal clear and the news of this involvement was a shock to their entire communities.
Charges of bribery and money laundering today are given consequences of up to 80 years in federal prison. They have been given the right to cooperate with the investigation, which in this case means snitch on other people involved in similar dealings. Code and Gatto will be asked to give information that the government will be able to link to addition people directly involved.
Among the ten detainees, no one has such a wide range of connections within the entire basketball and sports marketing industry than Merle Code and Jim Gatto; agents, coaches, AAU organizations, financial advisors, scouts, etc.
“He was responsible for budgeting, recruiting teams, dealing with coaches in colleges,” says a man who worked with Code. “He controlled everything and nothing could happen without his knowledge. That’s why absolutely everyone is now in awe. ”
Analyst ESPN Fran Fraschilla, who once worked as a coach in one of the colleges in New Mexico, commented on the situation: “Coaches who worked with shoe companies, now sleep in a cold sweat. I imagine myself in the place of Jim and Merle and understand that I like these coaches, but I love my family more. If I knew something that would reduce my time, I would certainly have told it. It’s not about the war with North Korea, we’re talking about student basketball. ”
While NCAA employees consider this a “dark day,” several coaches claim that this is a great day for all of them. It seems to be a step in the direction of making the playing field a bit fairer.
Jay Williams, a former NBA player and now a basketball analyst, said: “This is the beginning of the end for the NCAA. This whole situation depicts middle-level employees, whether they are a trainer or an employee of a shoe company, in a bad light. But this is just the tip of the iceberg. This is only a small part of all the problems of college basketball, which begin at the highest positions. This fully reveals the fact that ‘amateur’ sport has always been primarily a very profitable business. ”
In this regard, in the basketball circles of the United States arise reasonable questions:
- Will Jim Gatto and Merl Code snitch on other people involved to mitigate their sentence?
- Is it possible that their knowledge leads to other accusations and layoffs?
- What does this mean for the future of college basketball?
I connected with former NCAA player, Kevin Tarca to get some more insight on the topic.
AG: What are your initial thoughts of this?
KT: I would be lying if I said I was completely shocked. There has clearly been a fundamental change in recruiting for several years, starting from the grassroots level. The AAU circuit and major shoe companies have been a huge part of kid’s college decisions for the past 15 years. Unfortunately, it seems like their involvement has grown exponentially the past 5 years. Of course, it was very surprising when the FBI got involved. That’s a whole different ball game than an NCAA investigation.
AG: What could have been done to avoid everything?
KT: The very simple answer? Ethics and following the rules! But as I mentioned previously, it all starts with the grassroots level. These athletes are getting pulled in so many different directions. Family, friends, shoe companies, AAU coaches, scouts, agents, etc. When this much money is involved, it is hard to avoid foul play somewhere along the lines. Someone is more than likely going to break the rules to try and make money. It’s sad, but true.
AG: What does this mean for the future of college basketball?
KT: I honestly believe that it is the beginning of the end for the NCAA. We have finally reached a turning point. If the NCAA doesn’t make drastic changes in regards to compensating “student athletes,” than you will start to see a very big change. Will it be a demolition of the NCAA? Maybe not in the short term. It will take time for sure. Maybe even 10 years. But without a question it is definitely a turning point.
AG: Do you have any suggestions for solutions to this amateurism problem?
KT: I wish I had an exact solution to fix this mess. But I don’t. I think it is so deep and complicated that there is really no formula right now. With that being said, here are a few thoughts that could be one step in the right direction:
- Find a way to compensate players, no questions asked. If it doesn’t happen soon then I believe the NCAA will quickly put themselves at risk for destruction. One of the most reasonable ways is to let players realize true market value for their likeness and image. Even if this money is put into a financial account for deferment, it needs to be theirs. They earned it. We must allow players to retain money for sponsorships, uniform sales, appearances, etc.
- Adopt a similar system to the NCAA baseball model. Allow players to hire an agent to be more informed. This would give “student-athletes” more reliable information and a chance for legitimate advisement. But don’t take away their eligibility if they hire an agent and decide to return to another season of NCAA play. That advisement is the exact reason we need to make this available.
- Trickle down interest from the NBA. Maybe the NBA G-League allows players to come in after high school. If they are ready to play, then they should be allowed to get paid for that talent. If they think they are good enough to skip college and they end up being a bust, well that’s on them. And that leads to an entirely different conversation of who they are surrounding themselves with and the people advising them (refer to suggestion #2).
- Straight up pay athletes. Right now, we have a model that pays coaches up to several millions of dollars, but athletes are worth a “free tuition.” Let’s get real. That is absurd.
AG: What if nothing changes and the NCAA keeps all the money?
KT: I don’t think they are that dumb. But if that happens, then it’s the beginning to the end for that association. Either way, I think you will start to see 1 of 2 things happen more often.
- Kids will stay at home and train for 1 year to better prepare themselves for the draft.
- Similar to what Mitchell Robinson decided to do this year. This might take away some of the exposure and competition of college basketball, but it will allow them to stay focused and eliminate risk of injury. More importantly, they won’t have to worry about being disqualified if they decide to take advantage of money making opportunities in the free market (sponsorship deals).
- Or… kids will go play professionally overseas for 1 year
- This will not only help them develop their game and compete against other professionals, but give them an opportunity to be paid for their talent. Emmanuel Mudiay made $1 million in China and then got selected No. 7 overall by Denver Nuggets. Brandon Jennings made $1.65 million in Italy instead of going to the University of Arizona to play. You are going to start to see more teams overseas offering the nation’s top recruits a contract before they graduate high school. It happened once last year for Kevin Knox, who turned it down to attend Kentucky this fall.
- Of course, this path is not for everyone. You will have to take into consideration how they would handle the potential language barrier, the economic/political situation, being a teenager in a foreign country, etc. But it’s a valid option and absolutely worth a thought.
AG: Would you say this could be the right time for smaller European clubs to turn their heads towards young prospect in the US?
KT: I think its something that some clubs have already begun to do. In some cases it could be a good situation for all parties involved. Growth, development and a paycheck for a young player; and top young talent for a European club.
Again, it is not all going to happen overnight. And don’t forget… it takes the right mindset of a teenager to be able to go from a high school student to spending a year in a new country playing professional basketball.
AG: Do you think the clubs will be interested to hire a player who would still want to play in the NBA and not get stuck in Europe far from home at that age?
KT: Yes, I think all clubs will be interested. It will just be important from the players side of it to include a clause in the contract that allows them to opt-out for NBA opportunities.
AG: What advice would you give to the clubs on how to approach these kids?
KT: This is going to be similar to telling an agent how to approach the player. I think they need to begin by finding the right people. Trustworthy and responsible people that have the players’ best interests in mind. That could be an agent, a family member, an advisor, etc. At the end of the day, you need to find the person that is inside their circle.
AG: Any last thoughts?
KT: It’s time that the NCAA looks in the mirror. They need to recognize the value of the “student-athletes” and find a way to compensate them appropriately. We must revisit the entire conversation around amateurism.
You can contact the author here and the interviewee here