The Plot To Put Amateurism And The NCAA In The Past

Amateurism is beaten and bloodied. Still it stands.

Andy Schwarz and Ricky Volante want to deliver the coup de grâce.

Michigan and Villanova are playing tonight for the NCAA’s men’s college basketball championship. A lot of people will make money off this game, and none of them will be anyone who played in it. The NCAA, the television networks, the universities, the coaches and corporate sponsors — they’ll all get some piece of the millions of dollars raked in annually by the tournament. The actual attraction, the players on the court, won’t receive a dime.

Over the last five years, the NCAA “amateurism” model that keeps players from truly sharing in the massive amount of money they create has faced significant challenges. Former UCLA basketball player Ed O’Bannon sued the NCAA in 2009 over the use of college athletes’ names, images and likenesses in video games and won a victory in federal court. Members of Northwestern University’s football squad fought for and won the right to form the first players’ union in college sports history.

But each time, the celebrations that accompanied those victories proved premature: A key provision of the O’Bannon ruling that would’ve lifted the NCAA’s ban on compensation was tossed out on appeal; the National Labor Relations Board ruled that Northwestern’s players couldn’t, in fact, form a union.

In 2017, Schwarz, an economist and frequent critic of the NCAA, and Volante, a lawyer, announced the creation of the Historical Basketball League, an alternative to the NCAA that would pay the players on teams at historically black colleges and universities, or HBCUs.

The HBL hasn’t launched yet, but the proposal arrives at an important juncture in the war on the NCAA. Last fall, word came down of an FBI investigation into how major college basketball programs managed to pay their best players, a dubious and destructive exercise in federalizing the NCAA rulebook. The likely immediate outcome will be an entrenchment of the NCAA’s power to police its amateurism ideal, what with the G-Men now working in concert with the governing body’s rent-a-cops.

But other effects likely will be less friendly to the NCAA. For one thing, the possibility of federal criminal charges will surely change the risk calculus for people connected to the bootleg economy of big-time college sports — the assistant coaches, the sneaker company reps, the bagmen. At some point, you figure, they’re going to start looking for alternatives to the current model.

Into this uncertain moment comes the HBL. The proposal is an extension of the argument against the NCAA being heard in the courts and from certain corners of the media. The HBL wants to test the notion, frequently offered by NCAA dead-enders, that people will stop caring about college sports if the athletes are compensated in something other than company scrip. And the league’s focus on black colleges is a reminder that the NCAA’s ruinous attachment to the amateurism ideal creates racist outcomes in which revenue generated by black athletes is redistributed among predominantly white coaches, white administrators, white executives.

But Schwarz and Volante want to do more than just mount an argument; they’re trying to build a real basketball league. Last week, HuffPost sat down with them to talk about their proposal, how it would work and who has expressed interest thus far.

The following is a transcript of the discussion, edited for length and clarity.

HuffPost: What exactly is the HBL?

Schwarz: The HBL, it stands for Historical Basketball League, and the “H” is doing double-duty. One is because we’re going to be partnering with historically black colleges and universities. The other thing is, in the formative years of college sports, there were no NCAA rules against pay, and many of those athletes were paid.

So we’re returning college basketball to the historic roots of college sports played by college students, but by paid college students. We are a professional college sports league. All of our athletes will be full-time students at HBCUs. Our season is in the summer to make sure it minimizes the conflict between athletics and academics.

The idea here is to essentially put on a great college basketball program, played at great colleges with deep history, with three future NBA or European basketball stars on the court playing each other. The only thing that’s going to be different from what people are used to is that the athletes will be sharing. It’ll be like fair trade basketball the workers will be getting a fair share of the revenue that we’re generating.

HuffPost: How did the idea come about?

Schwarz: So, the two precipitating events were our success and I say our because I worked on the case in the O’Bannon case, where a judge found that what the NCAA does when it sets a maximum scholarship is price-fixing, and the success of the unionization effort at Northwestern, where a local administrator acknowledged that the duties of a college football player met the definition of an employee under federal labor law. And then the consequent rollback by appeals courts of both of those decisions.

It felt like years of effort to get real change and succeeding and convincing two finders of fact and law were gone in a heartbeat because of older, less-informed people one step up the chain. It was frustrating.

So, if you can’t unionize and you can’t sue them, the other way to beat a cartel is to out-compete them. And the idea here is that by depressing the salary of college athletes, you create an opportunity for entry. Sort of like how by being a horrible taxi company, you create the ability for Lyft or Uber to start grabbing customers. It’s the same thing here, and what we want to do is effectively force the industry to recognize the value of the talent by paying them more. Either they will compete with us, or they won’t.

Volante: Our mission has three different prongs: First and foremost, to create a sports economy that the athletes actually get to participate in. Number two is empowering these schools that historically have considerable significance, especially in the South. And number three is disrupting the concept of amateurism and proving that the concept of amateurism isn’t necessary for college sports to be successful, and furthermore, that amateurism is not necessary for people to tune in and watch, as the NCAA repeatedly claims.

HuffPost: Is this a real plan with a chance to come to fruition, or is it an effort to say, “This is possible for the NCAA to do”?

Volante: This is definitely a real plan. We already have several investors from Silicon Valley. We have an investor from the New York tech community. They certainly see the value from a monetization standpoint.

For me, this is a full-time job. We have a team. We have at least 30 people across the country that contribute in some way, shape or form. We have Keith Sparks, who is our chief development officer and was formerly an associate athletic director at Stanford University. And he was able to bring us our CMO, Ralph Greene, who used to head Nike Football and also started Nike Basketball’s international pipeline. This is absolutely a real thing.

HuffPost: Why HBCUs? What makes, say, Howard or Grambling the right place to do this?

Schwarz: The schools within the NCAA cartel who are getting the short end of the deal are the HBCUs. A Division I HBCU gets less than a million dollars from the NCAA and its conference combined. A [Southeastern Conference] school can get over $40 million. That’s a huge disparity. So what they are getting for the exploitation of black labor is a small amount. And they are, of the people receiving some of these profits, the ones that most recognize that a system in which black labor was more valued would be mission-consistent with their raison d’etre, in a way that some other small schools might think about but not care about. That’s my theory.

Volante: Beyond the economic piece of it, historically, these universities have been involved in a number of selfless efforts to offer educational opportunities and further the economic opportunities for African Americans as a whole. A lot of these schools started right after the Civil War during the Reconstruction Era, so there’s the opportunity there that taking these brands which are very strong within the HBCU community and the African-American community and breathing new life into them and showing to the rest of the U.S. how great of institutions they truly are, and how well they prepare individuals for life after college, whether they’re an athlete or not.

We think there’s significant upside for the schools to get involved, but also significant upside for these players to go onto campuses where they will be welcomed with open arms and there will be a holistic approach to preparing for life after basketball, or getting all the tools they need to go to the NBA.

HuffPost: Do you worry about the perception of white guys creating a business model that’s, for lack of a better word, experimenting on HBCUs and black athletes?

Schwarz: I know people are wary about it because that’s almost always the first question that Ricky and I get when we go in and talk to university presidents. There’s a suspicion of a carpetbagger coming in here and feeding us a line. The good news is, if you go to our website and look at the seven or so people who are really leading the charge here, it’s not a majority white organization at this point. It was my idea, Ricky wrote the original business plan, but we have expanded so that some of that problem has gone away. And when we go to these meetings, generally we’re a mixed group.

I think it’s a perfectly valid question to ask: “Why do I care about HBCUs? Isn’t this just me trying to prove a point?” But I hope that anybody who goes to our website thinks about who’s investing in us we have an important executive in Silicon Valley who is black and is involved with programs connecting the tech community with HBCUs, we have people who’ve done their Ph.D.’s on the experience of black athletes at predominately white institutions.

HuffPost: Time for the classic question: Where does the money come from to pay these guys, and how much would they make?

Volante: We are not asking for a single dime from any school that’s participating in this. The way the plan’s been structured ... it’s club teams on these campuses. That’s done with the sole purpose in mind of protecting the universities. It’s not a fork in the road. It’s not, I turn right and stay with the NCAA, I turn left and go with HBL. This is very much a parallel path that we are going to be operating this club team on the campuses of these HBCUs and the varsity teams will continue to exist. They’ll still get their distributions from the NCAA for March Madness every year. This is complementary revenue, not replacement revenue.

The salaries and all the costs of the league are going to be covered initially by private investors. It will shift at a point, hopefully within the first season or two, that our revenues will cover any and all costs and there will be excess left over to not only provide additional payments and grow the salaries of our players, but also ensure that the financial incentive is there for the schools to want to continue to participate.

As to determining who gets paid what, much like in professional basketball, it will be driven by talent. Right now, the salaries will range from $50,000 to $100,000 per season. But that’s just a piece of what they get. If you’re Zion Williamson you’re going to get the maximum amount because you’re an elite talent. If you’re a guy who’s a very good basketball player but doesn’t have NBA potential, in that first season he might get $50,000 with the opportunity to grow his salary. The salary is determined year to year.

Schwarz: But to be clear, the scholarship piece is completely unconditional on quality of play. You get a five-year scholarship even if you go to the NBA after one season — you can come back and use that scholarship.

HuffPost: So you’re guaranteeing a full scholarship plus at least $50,000 a year?

Volante: The thing that gets the headlines is the compensation. Number two is the five-year guaranteed scholarship. Number three is where we start to get into the fringe benefits that any other employee at any place has: having a 401(k) set up, having an appropriate insurance plan, so these guys are going to be protected for injury. We’re going to help them monetize their social media accounts. So a player might walk out of college with a degree a real degree and also with savings that might be $300,000 to $500,000 or more.

HuffPost: Who are you targeting on the recruiting trail? The one-and-dones superstars of the world, or more of the mid-tier college basketball player whose NBA hopes are a little less real?

Volante: The shortest answer is both. We want all of them.

Schwarz: It’s not just a one-and-done. For that very next tier of folks who are really the bread and butter of what makes March Madness exciting to people we want to get that player. And we think, there, [that] the contrast in earnings is the greatest, between what that guy will earn maybe playing in the G-League for a couple years, or playing in Australia or wherever, and losing out on not just the best four years of his earnings but maybe the best six years of his earnings. We think our package is really superior in that spot.

HuffPost: What’s been the level of interest from the HBCUs?

Volante: We’ve spoken with between 12 and 15, including some of the biggest ones out there. We have a couple of schools that have told us that they would like to be involved, they would like to participate, however they do not want to be the first school to say yes. So finding that first-mover has definitely proven challenging for us.

HuffPost: There are 102 HBCUs across the United States. Are you trying to get all of them to join?

Volante: No. There’s a reason why, at least in the U.S., every sports league ends up hovering between 20 and 35 or so teams. Once you go beyond that, the overall cost of a single-entity operation becomes a net-negative as opposed to finding that optimal place. We’re hoping to reach that within five seasons. But the actual profile of the schools we’re trying to get falls into three buckets. Bucket one is an HBCU that you generally know, even the average person, so a Howard or a Hampton. [Number two is] schools that once upon a time, pre-desegregation, were athletic powerhouses, so examples there would be like Florida A&M or Texas Southern. And number three would be smaller institutions that unless you’re in that niche community you probably wouldn’t know, but the school is situated in a major metropolitan area. An example might be Xavier in New Orleans or Fisk in Nashville.

In year one, we want 12 or 16. Once we hit 12, the green light goes, we start recruiting players rapidly, and ramping things up.

Schwarz: I think the audience is ready for it. People your age, people Ricky’s age, are ready for it sooner than it feels like legislators would be ready for it. This is a situation where maybe democracy is lagging behind capitalism, in some sense. We don’t need every person in America to tune into our product to be successful. We just need a solid fan base that can cover the cost of a solid league, and we can grow from there. The idea that if some college programs paid their athletes, college sports will die is so silly. And we, among other things, are going to prove that.

HuffPost: Has the FBI investigation into college basketball changed your calculus? It seems to me that, say, an Adidas executive or an AAU coach might look around and say, “Why participate in a system that could get me thrown in jail, if there’s another league where all this is legal?”

Volante: That’s part of the pitch, at least to certain audiences.

Apparel company conversations have started. Adidas and some of the other bigger ones are going to be forced to change their business model soon if this DOJ investigation really does result in people going to prison. Because otherwise every time you send a representative out, you risk them being arrested. Those companies, sooner rather than later, are going to have to realize that either they continue going down the path they’re on with the NCAA, and don’t change the model and risk people and their lives or they align themselves with a model that doesn’t care, that realizes what they’re doing are everyday business practices in every other industry. So Adidas and Nike are primary targets of ours, but they’re certainly not the only ones out there.

Schwarz: One of the things we’re offering our athletes is that they can make their own shoe deal.

Volante: What has been the end goal of Adidas’ business model? It’s to eventually have those elite players who have gone to Louisville and other schools, that once they go to the NBA, they’re wearing Adidas shoes. Here you don’t have to have all those intermediate steps. Adidas or Nike can sign those players while they’re in the HBL, and they already have their shoe deal, and those companies can start building their brand around these guys. There’s a lot of potential value here, to Adidas or Nike or whatever company, to the players, and the schools will be getting the benefit the entire time. If the next Zion Williamson is playing for Grambling or Hampton or Howard, that school is going to constantly be in the forefront of peoples’ minds when they’re watching college basketball. You’re not going to think about Duke or Kentucky. You’re going to think about them.

HuffPost: So when’s the first game?

Volante: There are a ton of chicken-and-egg things going on. Every group of stakeholders is looking at each other and saying, “Are you in? Are you in? Are you in?” However, we are starting to break through those. We’ve been most successful on the investment front, and when you have more money, you’re able to do more things. So I think we’ll be able to ramp up our school recruitment effort significantly in the next couple months. And I would say realistically, the HBL’s inaugural season will tip off on Juneteenth 2020.