Alert
11.01.23
In 2023, the name image and likeness (NIL) allowance, the transfer portal, conference realignment and the NCAA’s overall governance structure attracted a significant amount of media attention. But one of the most important issues in industry of collegiate athletics rules enforcement and collegiate sports law continues to be what, precisely, constitutes a “representative of [a university program’s] athletics interests,” colloquially known as a “booster.” That is, because, under long-standing NCAA legislation, member institutions are held responsible for the actions of their boosters under the very low evidentiary standard of “known or should have known.”
On this issue, the NCAA's alternative adjudicative body, the Independent Accountability Resolution Process (IARP), recently issued an emphatic ruling—delivering significant wins to Pillsbury clients the University of Kansas and head men’s basketball coach Bill E. Self—that resoundingly rejected the NCAA’s assertion that an athletics sponsorship agreement between adidas and KU converted adidas and its representatives into “boosters” of the school, which would have rendered the school (and Coach Self) liable for surreptitious actions taken by certain adidas representatives (deliberately concealed from KU, Coach Self and the men’s basketball staff) that were in violation of multiple NCAA rules.
The IARP’s ruling—delivered through an exhaustive report issued on October 11, 2023, by the Independent Resolution Panel (IRP) assigned to the matter—arose out of the multi-year FBI investigation into corruption and bribery in college basketball recruiting and the subsequent SDNY criminal prosecutions of adidas representatives and sports agency affiliates. Despite uncontroverted testimony in the criminal trials establishing that neither KU nor its basketball coaches were aware of any illicit payments made by adidas representatives to the families of prospective student-athletes, the NCAA’s enforcement staff alleged that KU, Coach Self and assistant men’s basketball coach Kurtis Townsend, collectively, committed five Level I NCAA violations.
Central to the NCAA enforcement staff’s case (and, after its transfer to the newly created IARP in 2020, the prosecutorial Complex Case Unit's (CCU) theory) was the assertion that adidas and its representatives became boosters of KU by virtue of the adidas-KU sponsorship agreement and the provision of funds by adidas to KU. Thus, when those adidas representatives made concealed illicit payments (and undertook other actions) in violation of NCAA rules, their transgressions were transmutable to KU and Coach Self, warranting severe penalties.
NCAA Constitution 6.4.2 defines what constitutes a “representative of athletics interest,” or, “booster.” Boosters can include individuals, organizations (such as a “booster club”) and “a corporate entity” (e.g., apparel or equipment manufacturer). While booster status can attach through several ways (such as donating money to an athletics department), of relevance to the KU case (and several others arising out of the SDNY prosecutions) is Constitution 6.4.2(e), where an individual or entity “[i]s otherwise involved in promoting the institution’s athletics program.” Booster status is of particular importance in the context of NCAA rules enforcement because, while the member institution and/or its coaches are not strictly liable for the actions of its boosters, they are held to the relatively low standard of “known or should have known” about the activity in question.
In the KU proceeding, the CCU—the entity which undertook prosecutorial authority after the matter was transferred to the IARP—advanced the position that, inter alia, adidas and its representatives became boosters simply by virtue of adidas’ apparel sponsorship agreement itself, as well as funds adidas provided to KU in connection with its annual midnight madness event, Late Night in the Phog, and for a celebration of Coach Self, a former NBA player and another individual associated with adidas being inducted into the Naismith Basketball Hall of Fame in 2017.
Although NCAA Constitution 6.4.2 was amended in 1999 to reference apparel entities, the CCU’s theory of liability was novel: that a sponsorship agreement with a member institution automatically converted the apparel company and its employees into boosters. Taken literally, endorsing this theory would have profound implications for collegiate sports—and basketball in particular—given that nearly every Division I football and basketball program has a sponsorship agreement with one of the three dominant apparel companies, Nike, Under Armour or adidas, and that apparel company representatives and affiliates are interwoven throughout amateur grassroots basketball.
The IRP, however, resoundingly rejected the CCU’s theory, finding instead that KU’s agreement was: (1) “materially indistinguishable” compared to similar agreements with other institutions; and (2) designed through a series of incentives to promote the apparel company, not KU. The IRP also rejected the arguments that adidas’ provision of funds to obtain a musical artist for 2017’s Late Night in the Phog and for the 2017 Naismith Basketball Hall of Fame induction celebration, gave rise to booster status. Instead, the IRP found that these funds promoted adidas and the adidas brand; they did not promote KU’s athletics interests.
Ultimately, the IRP did conclude that a single adidas outside consultant became a booster in August 2017 under the “promoting the institution’s athletics program” prong of 6.4.2. However, it did so under a traditional fact-specific analysis that turned on a series of communications between the outside consultant, members of the men’s basketball coaching staff and the guardian of a potential student-athlete, who was also independently involved in grassroots basketball. The communications in question concerned the guardian’s efforts to obtain used apparel to send back to Angola for use by an amateur men’s basketball team. The IRP ultimately found the underlying actions only constitute a Level III rule violation—the most minor infraction.
Conclusion
The IRP’s rejection of the CCU’s booster theory is an important development in NCAA rules enforcement. Moving forward, it appears unlikely that the Committee on Infractions will find that an apparel sponsorship agreement and funds from the apparel manufacturer in line with the spirit of the agreement are sufficient to trigger booster status for the apparel company and its representatives.
However, the ruling as to the adidas outside consultant is also important for continuing NCAA rules compliance education. Communications between collegiate men’s basketball coaches and third-party affiliates of apparel companies—such as adidas’ outside consultant—are ubiquitous, permissible under NCAA rules, and have occurred for decades with the knowledge and tacit approval of the NCAA. Nevertheless, under certain circumstances, those benign and permissible communications can still give rise to booster status under the traditional fact-specific inquiry. NCAA member institutions should supplement existing rules compliance education materials to specifically address communications with third-party apparel company affiliates and grassroots basketball representatives to avoid future liability.
Pillsbury’s Corporate Investigations & White Collar Defense chair William M. Sullivan and counsel Alex G. Anderson represented KU as a victim of fraudulent conduct in the SDNY criminal prosecutions. Sullivan and Anderson represented head men’s basketball coach Bill E. Self, along with co-counsel Scott Tompsett, of Tompsett Collegiate Sports Law, in the ensuing NCAA infractions proceeding.
The complete NCAA IARP Report may be found here.
A link to Pillsbury’s press release may be found here.
Pillsbury is closely monitoring NCAA-related legislative and regulatory developments. Our nationally ranked White-Collar team helps institutions and individuals navigate the ever-changing NCAA regulatory landscape. For insights on these rapidly evolving topics, please visit our Corporate Investigations & White Collar Defense practice page.
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