MONEY College

Would Your Tuition Bills Go Up If College Athletes Got Paid?

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Drake Johnson (#20) of the Michigan scores against Indiana on November 1 , 2014 in Ann Arbor. Leon Halip—Getty Images

As the college football season heats up, the action far from the field could eventually raise the costs of fielding teams.

Wins by college athletes in courtrooms and boardrooms could end up in losses for their non-athlete classmates.

High-profile legal cases and NCAA policy changes are likely to boost the cost of fielding big-time athletics programs. And students—even those who never attend a single college basketball or football game—may have to foot the bill, higher-education finance experts say.

How the Game Is Changing

The most sweeping changes to college sports could come from an antitrust suit against the NCAA pending in New Jersey, in which attorney Jeffrey Kessler contends that college athletes should be paid as much as the market dictates—a salary, essentially. A win for Kessler, who filed the suit on behalf of former Clemson football player Martin Jenkins, likely would spark bidding wars among universities for top recruits by eliminating limits on such payments.

The case is likely to go to trial next fall.

“I do believe that if the Kessler case wins, that could break the bank for the NCAA as we know it today,” says William Kirwan, chancellor of the University of Maryland system and co-chairman of the Knight Commission on Intercollegiate Athletics. “This would become like a mini NFL draft. It would become a free market.”

Other factors also promise to change the rules of the game.

A federal judge in August ruled in favor of former college athletes, led by UCLA star basketball player Ed O’Bannon, in an antitrust suit against the NCAA that could lead to back payments for as many as 100,000 former athletes and additional scholarship money for future ones.

The ruling came less than five months after the National Labor Relations Board concluded Northwestern University football players were, essentially, university employees, and could unionize.

Some schools have already hinted they would pay athletes thousands of dollars more per year after NCAA officials—independent of any lawsuits—said they might allow universities to cover athletes’ entire cost of attendance.

Who Will Foot a Bigger Bill?

Only a handful of NCAA Division I schools have self-sustaining athletics programs—just 20 of the nearly 130 schools in the top-flight Football Bowl Subdivision, for example—so most universities subsidize those departments, even in a pre-Kessler, pre-O’Bannon world. At public institutions in particular, part of that subsidy is drawn from student fees.

According to the Knight Commission, growth in athletics funding at Division I schools outpaced academic spending from 2005 to 2012. Students at some schools pay $1,000 in athletics fees alone.

Changes to how student-athletes are paid could lead some schools, stuck with nowhere else to turn, to raise other students’ fees. Universities and colleges could also scale back their athletics programs to cut costs. That “would be the rational approach,” Kirwan said. “But when it comes to college athletics, rationality doesn’t often prevail,” he said. “There are so many societal pressures.”

Research shows that some students don’t even know their fees are already paying for athletics. At Ohio University, for instance, 41% of revenue from the general fee of $531 per quarter for full-time students in 2010 went to intercollegiate athletics, but 54% of students didn’t know it, according to a survey by the nonprofit Center for College Affordability and Productivity, a Washington, D.C. think tank.

Dividing the $765 per year they paid for athletics through the fee by the number of games the average Ohio University student attended, the center calculated that students were paying the equivalent of more than $130 per athletic event they actually watched in person.

Eighty-one percent said they opposed raising the amount of their fees that went to the athletics program, or wanted it reduced.

If the Kessler lawsuit succeeds, “The institutions that rely primarily on student fees are going to have to make a decision about whether they’re going to try to keep up,” says Amy Perko, executive director of the Knight Commission. “When you have schools with $5 million for their entire athletic budget trying to compete with schools that have $5 million coaches, it’s going to strain at some point.”

The Pressure to Stay in the Game

Even some schools in the “Big 5” conferences—the SEC, ACC, Big 12, Big Ten, and Pac-12—where football and basketball bring in big bucks will have trouble maintaining their programs if bidding for athletes takes off, experts said. Schools on the fringes of big-time sports success, such as UC Berkeley, Rutgers, Northwestern, and Indiana, would have tough decisions to make about whether to pass on costs to students, says Murray Sperber, a UC Berkeley professor who has written several books about the role of college sports.

The most likely outcome, Sperber says, would be for at least some of those universities to drop out of the big-time sports world by eliminating athletics scholarships or otherwise scaling back sports programs rather than risking protests by paying athletes and charging students more. But some colleges in mid-tier conferences will probably choose to stay in the bidding game, he says.

“You think of it as a big poker game where the stakes keep going up,” Sperber says. “The students in trouble potentially are those at schools beyond the Big 5, because they’ll have to decide whether to stay in the poker game.”

No Price Tag on School Spirit

Students at some big-time Division I schools said athletic success is important not just for the campus but also for the community. The University of Kentucky basketball program, for example, is part of the school’s and the state’s identity, says Jacob Ingram, president of that university’s student body.

“One of the things the state of Kentucky identifies with most is the Big Blue Nation,” says Ingram, a senior from Nicholasville, Kentucky. “What a great way to leverage our brand and share the rest of what the university has to offer.”

At Rutgers, which is in its first year in the Big Ten, the athletics department has taken on new importance with its climb into the Big 5 ranks. Few students seem to mind paying for that prominence, says senior Brian Link, and even fewer would want to see the school to roll back the affiliation.

“Given the state of where our athletic program is, I think if we have a de-emphasis on athletics a lot of people wouldn’t be too happy,” says Link, from Sayreville, N.J. “That’s where a lot of our school pride comes from—our athletic program. A lot of people in New Jersey root for Rutgers because there aren’t other big-time programs here.”

This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet affiliated with Teachers College, Columbia University.

TIME Google

Yelp Just Threw a Monkey Wrench Into Google’s Billion-Dollar Antitrust Case

Yelp Opposes Google EU Antitrust Settlement
Joaquin Almunia, competition commissioner for the European Union, speaks during an interview in Washington, D.C., in 2012. Bloomberg via Getty Images

At least 20 complaints in the case investigating if Google search results are anticompetitive by favoring its own products

Yelp has joined those opposed to the European Union’s proposed antitrust settlement with Google, opponents of which believe the American search giant has not been fully prosecuted for its ostensibly self-promoting search engine.

Yelp filed a formal complaint against the E.U.’s proposed settlement on June 1, though it was only recently surfaced. In the complaint, Yelp accuses Google’s search engine of favoring Google Plus Local, according to the New York Times. Google Plus Local directly competes with Yelp, an increasingly popular site where users can discover, rate and review local businesses.

Google avoided a multibillion-dollar antitrust fine when it reached a provisional deal with European regulators in February, in which it agreed to alter its display of search results. The E.U.’s antitrust commissioner, Joaquín Almunia, is expected to finalize the settlement later this year before he leaves office this fall. Yelp, however, says Google is getting off too light.

“I truly fear the landscape for innovation in Europe is infertile, and this is a direct result of the abuses Google has undertaken with its dominant position,” Yelp CEO Jeremy Stoppelman wrote in a letter in May to European Commission President José Manuel Barroso, who oversees Almunia.

The E.U.’s investigation of Google began in November 2010 when several companies, including Microsoft, whose Bing search competes directly with Google search, accused Google of promoting its own services in search results. Google dominates the search engine market in Europe, where nearly 80 percent of Internet searches are made on Google, compared to 65 percent in the U.S., according to comScore.

In the U.S., a parallel two-year antitrust investigation of Google’s search engine closed in 2013, leaving Google relatively unscathed. The U.S. Federal Trade Commission found that Google search did not break antitrust law, inciting anger from FairSearch.org, a group of Google rivals which includes Microsoft and Kayak. FairSearch.org then turned its attention to the ongoing E.U. investigation to “fight to restore truly competitive conditions to the market for search and related online services,” the coalition told the Washington Post. At the time, Yelp had called the FTC’s decision a “missed opportunity,” and also looked to the European case for a fairer settlement.

On June 11, the E.U.’s Almunia expressed his intention to dismiss the case’s 20 formal complaints — it is not yet clear if Yelp’s was one of these — a required step before a finalized settlement can be signed. Still, by procedure, Almunia and the Commission must review Yelp’s complaint. If it is approved, then the antitrust investigation will resume, and Yelp will be granted the right to appeal the eventual settlement.

[NYT]

TIME Apple

There’s a Huge “If” in Apple’s e-Book Settlement

Apple Inc. CEO Tim Cook addresses the crowd during the Apple Worldwide Developers Conference (WWDC) 2013 in San Francisco
Stephen Lam—Reuters

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This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published at Fortune.com.

U.S.A. v. Apple, the e-book antitrust suit that Apple lost so spectacularly last year, is back in the news.

Apple has struck a deal with the states attorneys general who had demanded hundreds of millions of dollars in damages on behalf of book buyers in the their states. By settling, the two sides avoided a jury trial that was set to begin next month.

But there’s a big “if” in the letter the parties submitted to U.S. District Judge Denise Cote Monday — along with a sealed document that outlined the terms of the deal.

No money will change hands until Apple’s appeals of Judge Cote’s controversial ruling – which it has said it will take to the Supreme Court, if necessary — is exhausted.

For the rest of the story, head to Fortune.com.

TIME Antitrust

Comcast-Time Warner Cable Deal Faces Scrutiny From States

Cable Giant Comcast To Acquire Time Warner Cable
Brian Hunt, Director Engineering, South Florida, stands among the cables and routers at a Comcast distribution center where the Comcast regional video, high speed data and voice are piped out to customers on February 13, 2014 in Miramar, Fla. Joe Raedle—Getty Images

More than two dozen state governments are working with the Justice Department to make sure Comcast's $45 billion offer to snatch up Time Warner Cable doesn't violate antitrust laws, as critics warn of increasing media consolidation

More than two dozen states including California, Florida and Connecticut are working with the Justice Department to determine if Comcast’s $45 billion offer to buy Time Warner Cable runs afoul of antitrust laws, sources confirmed to TIME on Wednesday.

The proposed merger of the two largest cable companies in the United States has attracted criticism from public interest groups who say that the deal would concentrate too much market power in the hands of one company.

Along with the Justice Department, which will address antitrust concerns, the merger faces scrutiny from the Federal Communications Commission, which is charged with ensuring that the deal serves the public interest. Comcast maintains that the deal isn’t anticompetitive because the two companies don’t compete in the same markets, and says the merger will result in improved service for consumers.

Some 25 states are currently participating in the multistate group reviewing the proposed transaction, according to a person familiar with the probe.

Connecticut Attorney General George Jepsen’s office is part of the group, a spokesperson for Jepsen confirmed to TIME. Florida Attorney General Pam Bondi’s office is also participating. “We are part of a multistate group reviewing the proposed transaction along with the U.S. DOJ Antitrust Division,” a spokesperson for Bondi said in an emailed statement.

California Attorney General Kamala Harris’s office is also part of the multistate review group, according to a person familiar with the matter. Harris’s office declined to comment. New York is not part of the multistate review group at this time, a spokesperson told TIME. A spokesperson for Texas Attorney General Greg Abbott said he “cannot confirm nor deny the existence or non-existence of an investigation.”

Indiana officials are also examining the deal to determine “the potential impact in Indiana,” a spokesperson told Reuters, which first reported the states probes. Pennsylvania, where Comcast is headquartered, is “reviewing the case independently,” a spokesman for the Pennsylvania attorney general’s office told Reuters. A spokesperson for the Justice Department confirmed the federal antitrust probe, but declined to comment on the multistate review group.

Combining Comcast and Time Warner Cable would create a corporate giant with approximately 33 million pay-TV customers and about one-third of the U.S. broadband Internet market. Comcast already owns NBCUniversal, after buying the media company from industrial conglomerate General Electric. As part of the proposed Time Warner Cable deal, Comcast will extend the commitment it made during the NBCUniversal review to abide by open-Internet principles until 2018.

Major entertainment and content companies that sell programming to cable and satellite companies have expressed concern that the merger could create a powerful gatekeeper with unprecedented buying power in the market. This could give the combined company what economists call “monopsony” power, which is one buyer with many sellers, as opposed to “monopoly” power, which is one seller with many buyers.

Such monopsony power could have benefits for consumers, because the combined company would have increased leverage in contentious negotiations with the TV broadcasters over “retransmission consent fees,” which cable and satellite companies pay for the right to carry popular programming like prime-time shows and sports. That could mean downward pressure on prices for consumers, but only if the combined company chose to pass those savings on to them, which is by no means certain.

Retransmission consent fees were at the heart of last year’s dispute between CBS and Time Warner Cable, which led to an unprecedented, monthlong CBS blackout for more than 3 million Time Warner Cable subscribers in New York City, Los Angeles and Dallas.

Time Warner Cable, which was spun off from TIME parent Time Warner in 2009, is an attractive takeover target because of its major presence in several important markets, including New York City, Los Angeles and Dallas, as well as large portions of Ohio, North Carolina and Maine. In order to help assuage regulators, Comcast has said it’s willing to jettison as many as 3 million subscribers in order to make sure the new company does not exceed 30% of the cable market.

Comcast declined to comment on the state probes, but it’s worth noting that these state attorneys general reviews are typical for a proposed merger of this size, because the deal has the potential to affect millions of consumers across the country. During the review process for Comcast’s acquisition of NBCUniversal, some 14 states participated.

TIME Google

Google Reaches Antitrust Deal With E.U.

A Google logo is seen at the garage where the company was founded on Google's 15th anniversary in Menlo Park, California
Stephen Lam / Reuters

Avoids billions in penalties but must change its continental web model

Google reached a tentative settlement with European Union regulators Wednesday that would require the tech giant to change its search display on the continent, but let the company avoid billions of dollars in antitrust penalties.

The preliminary agreement is the result of three years of high-profile legal wrangling and investigations in Europe, and would exempt Google from antitrust lawsuits as long as the company makes concessions about its search engine’s advertising operation, the Wall Street Journal reports.

The European Commission said in 2012 that Google unfairly promotes its own search results, among other concerns like forcing publishers to sign exclusivity deals and dissuading clients from using other online advertising sites.

The agreement stipulates that Google must feature the services of its competitors on its display in a way that is “comparable” and “clearly visible” next to Google’s links, marking them as “alternatives.”

Microsoft, which owns rival search engine Bing, strongly criticized the deal, saying it still puts the company at a competitive disadvantage to Google.

The deal, which is likely to be finalized later this year, follows Google’s 2013 agreement to change its search practices in the United States, to avoid formal Federal Trade Commission antitrust charges.

[WSJ]

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