Throwing in the Towel: How to Build Reputation in a No-Win Scenario

By | April 4, 2014

Last week, while most fans of college athletics were glued to their television screens as the March Madness Tournament pressed into the Sweet Sixteen, a much more dramatic event with long-term impacts for college athletics occurred in Chicago.

On March 26, a National Labor Relations Board regional office recognized Northwestern University football players as university employees capable of forming a union – not student-athletes who are exempt from organizing rights. This ruling sent chills down the spine of athletic directors and NCAA officials across the nation, and may be looked upon years from now as a seminal moment in amateur sports, comparable to Curtis Flood’s suit against the MLB’s reserve clause in 1969 which set the foundation for free agency in professional sports.

While a formal ruling that would allow college athletes to form a national union and collectively bargain for all college athletes is likely years off due to extensive appeals and litigation, between this instance, the ongoing O’Bannon caseagainst the NCAA that is scheduled to see the inside of a courtroom this summer, and the recent anti-trust suit against the NCAA by star sports lawyer Jeffrey Kessler, the fundamental business model in college athletics is headed towards dramatic change over the next decade barring a dramatic collapse in momentum of the student-athlete rights movement.

On its face, the requests of these Northwestern college athletes who were recognized by the NLRB are exceedingly reasonable. These include: no loss of scholarship as a result of injury, healthcare coverage for injuries in practice and games, independent experts on sidelines to assess concussions, forming an educational trust to help former players graduate once their eligibility has expired, and “due process” for students who are removed from scholarship by coaches. Notably, the only talk around compensation is a nominal per-game stipend to cover reasonable expenses – something that most major conferences and even the NCAA’s President already support.

Furthermore, aside from this assault by litigation on all fronts, in the court of public opinion, we’ve reached a tipping point. Just this past week, major institutional media figures ranging from legendary sports writer Frank DeFord to New York Times business columnist Joe Nocera have celebrated the NLRB ruling and unionization for athletes. A year earlier saw a blistering cover story in the Atlantic Monthly that accused the NCAA of being a “colonial” institution and aPBS Frontline investigative report that exposed the double-standards and hypocrisy of the March Madness tournament with impoverish athletes enriching outlandishly paid coaches and administrators. Even President Obama has remarked that he’d like to see the NCAA do more to protect the health of athletes.

While the NCAA and universities are still aggressively trying to make their case – as the President of the University of Delaware attempted to on The New York Times op-ed page on Wednesday – the die has been cast. The remaining holdouts against NCAA reform are sentimentalists and those whose paychecks are tied to the current business model. The latest round of opposition – the idea that a union for college athletes is impossible to administer and impractical – has been dismissed by prominent labor law experts in academia like Peter Frampton of UC-Berkley. If there were strong and credible arguments left, one would think they would have been articulated by now.

While it may not happen today or tomorrow, change is coming, and from the NCAA and university perspective, none of the options are good ones. So, what to do when confronted with this type of no-win scenario?

In many cases – and this instance is no exception – opportunity in a no-win situation may be found through building reputation and good will in the long-term. Presently, the question that the NCAA and major universities are asking themselves is just how much negative press and litigation they are willing to endure to maintain the status quo. Do they proactively change and earn some good will, or do they hang on as long as they can until they’re forced to change by regulators or legislation?

Since the core of the NCAA’s business model is at stake, it’s likely they will fight aggressively to the very end to preserve revenue streams and keep their business model in place. After all, organizations that no longer exist have no further reputation to lose.

But major universities themselves will exist long after a decision is made. At a certain point, they will need to choose: do they proactively offer concessions to athletes? Or will they continue to pursue the status quo despite the writing on the wall?

The obvious, but painful decision is for universities to announce their support for making concessions proactively, and to make these pronouncements soon. While athletic departments will resist change aggressively, ripping the band-aid now prevents the long, slow drip of criticism and litigation. Furthermore, they have a seat at the table in making the rules, rather than leaving it to regulators or legislators.

Finally, I would be remiss not to mention the first-mover’s advantage. It does not apply in this instance because first-mover schools that act on their own could be punished by the NCAA and excluded from their sanctioned events. However, when an entire industry is faced with a no-win scenario and the path forward is apparent, being the first to break from the pack can have substantial reputational benefits. If you ever find yourself in a situation that’s seemingly without hope, consider your long-term reputation as a way to find opportunity and a light at the end of the tunnel. And if you have the chance, act before your competitors to earn the greatest amount of reputational benefit.

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