The University of Louisville bribery scandal – an organizational

governance issue in college sports

Introduction
There has always been a big debate on American college sports whether the traditional model
is still up to date or if it needs drastic changes. As the NCAA (National Collegiate Athletic
Association) and universities’ athletic programs nationwide grow in revenues each year
(Everhart et al. 2017), the question if student-athletes should be allowed to be paid is still on
focus.

Match-fixing, bribery and other unethical issues have been part of the college sports history
for more than a century (Branch 2011) and they are all related to governance problems not
only at the major governing body level but also at hundreds of athletic departments in the
United States.

In 2017, the FBI (Federal Bureau of Investigation) revealed a complex corrupt bribery scheme
involving six high-class basketball teams that negotiated their recruiting process with third
parties, such as agents and sponsors. Among the people involved, there was Rick Pitino, one of
the top coaches in college basketball (Courier Journal 2017), who, a few years earlier, was able
to lead the University of Louisville to a NCAA title.

This academic work will analyse the governance issues that the University of Louisville faced
after the scandal and the implications for the institution’s relationships with its stakeholders.

The student-athlete issue

NCAA is a business that generates several billion dollars every year (Everhart et al. 2017). In
2016, CBS and Turner announced a renewal of contract for broadcasting the March Madness,
the college basketball playoffs, for 8.8 billion dollars (Huffington Post 2016). Even though
universities have increased their revenue year after year selling merchandising, tickets and
media rights, none of this money is redirected to the main stars of the show: the athletes.

Eitzen (2000) argues that student-athletes make millions for their universities in exchange for
books and tuition. Only a small portion of those players will make it to the professional leagues
and will be recompensed financially eventually. Branch (2011) compares the amateurism of
NCAA to a cynical reality, where universities explore the student-athletes in order to get all the
money benefits.

What is curious on the amateur status of the players in the NCAA is that the coaches, in the
other hand, not only receive salary, but can also make deals with sponsors, endorsement
contracts and they can maintain relationships with personal agents (Eitzen 2000).

There is also a discussion whether collegiate institutions should even promote those big sports
events, since universities should invest time and effort on the academic business. (Lewinter et
al. 2013). Is it possible to affirm that playing sports in college can be considered a job?

This environment of commercial success added to unpaid workers can lead to unethical
behaviours on part of the athletes (Duderstadt 2003). Since the beginning of the
intercollegiate competition in the US, the universities have always tried to attract the best
athletes with other benefits than the college tuition itself (Branch 2011).

In 1948, the NCAA created a “Sanity Code” to limit any kind of profits to the athletes besides
the scholarships (Washington 2004). After this act, match-fixing and bribery became an issue.
The first big scandal in college sports was the University of Kentucky basketball team scheme,
when some of the players were caught selling games to gamblers. The team, led by the
legendary coach Adolph Rupp, was suspended for the entire 1952-1953 season (Branch 2011).

Hundreds of other immoral cases have occurred, and they are usually related to governance
issues on the NCAA system and the relationship among universities, coaches and student-
athletes. Corruption in college sports has gone a long way in history.

The University of Louisville scandal

In 2017, the FBI released an investigation on college basketball that appointed a bribery
scheme involving six powerhouse universities, a few agents and one of the top sports brands in
the world: Adidas (Courier Journal 2017). The University of Louisville Cardinals, the 2013 Men’s
Basketball NCAA champion, was one of the institutions involved and their leaders, coach Rick
Pitino and athletic director Tom Jurich, were key players in the investigation.

That was not the first time that the Cardinals made the headlines with a misconduct. The
University of Louisville had already been involved in a sex scandal among athletes, university
staff and prostitutes. That resulted in a basketball team ban from the NCAA for a couple of
years, a penalty fee of around 600 thousand dollars and the loss of the 2013 title. For the first
time in the college basketball history, a national championship was taken away (USA Today
2018).

The FBI investigation had a huge impact not only for the University of Louisville and the other
colleges involved in the scandal, but it was also an important moment to review some of the
rules at the NCAA level. Condoleezza Rice, former United States Secretary of State during the
George W. Bush administration, was invited to join the Commission on College Basketball (Gay
2018).

One of the main changes was the way NCAA would regulate the relationship between student-
athletes and agents (ESPN 2018). Before, agents were not allowed to represent athletes while
playing in the college level. Now, the major governing body in college sports allows people to
represent and be responsible for minor expenses of the future professional basketball stars.
This is a big step towards a transparency process among its stakeholders and a good way to
start avoiding corruption in college sports.

Hoye and Cuskelly (2007) argue that it is important to control the activities within the
organization to prevent people to act on their own behalf. In the case of the University of
Louisville, not only controlling the activities was a concern, but also lack of accountability
towards the coach and the athletic director actions.

According to Klitgaard (1988), a corruption act is possible when you have not many people in
control of the activities, executing them with full discretion and none accountability by third
parties. Maenning (2005) adds that corruptive activity is a reflex of the desire for advantages
from the person who takes the benefits from the actions.
After the scandal, a member of the U of L board of trustees reported that the real discussions
on the university issues have always been influenced by the team results on the basketball
court (Chronicle 2018). There was a big concern about the governance issues even before the
FBI investigation. Since the Cardinals became one of the powerhouses in college sports, mostly
because of the basketball success, the academic matters were relegated to the second level of
priority.

In 2012, another traditional school, Penn State, went through a scandal that can be compared
to what happened with the Cardinals. The university’s football coach, Jerry Sandusky, was
involved in a sex child abuse on campus (Rapp 2016).

The NCAA punished the institution according to their own regulations that states that
universities are required to have control of their athletics program in compliance with the
organization rules (NCAA 2013). After the penalty, Penn State Board of Trustees recognized
that they lacked institutional control.

Recently, a 19-year-old freshman offensive linemen Jordan McNair from the University of
Maryland suffered a heatstroke and died after American football workout (ESPN 2018).
Following his death several athletes gave testimony about the intimidating and humiliating
coaching style. The athletic director and the board have always been aware of the methods,
but no actions were made by the institution to avoid any possible issue. Coach DJ Durkin and
two trainers of the coaching staff were fired by the University after a long administration
investigation made by the institution board of regents.

The relationship among unpaid student-athletes and paid coaching staff have caused different
governance issues in college sports (Eitzen 2000). It is hard to define how to demand results on
the court within an environment where part of the team earn a decent salary to perform their
best and the other part is held only by a scholarship and maybe a chance to become
professional athletes in the future.

In the U of L case, the FBI reports do not show that Pitino and Jurich were taking advantage of
the situation for making money from the scheme. After all, the basketball leader of the
University of Louisville had just been nominated as the highest paying coach in college
basketball. According to the Courier Journal (2017), Pitino had earned more than 7.7 million
dollars in the 2016/2017 season.

Working at the University of Louisville for 20 years, Jurich did not receive the same amount of
money on pay checks as Pitino, however, he was also one of the most paid athletic directors in
the NCAA (Courier Journal 2018). He was responsible for transforming the Cardinals in one of
the top athletic programs in the country, helping the institution to raise 280 million dollars to
build stadiums, practice facilities and, more importantly, winning teams (ESPN 2017).

Both professionals have been considered superstars within the organization and, for the past
years, they have had freedom hand to take decisions on their own (Chronicle 2018). The
empowerment of few people can be harmful if lacks accountability (Hoye and Cuskelly 2007).

Maennig (2005) defines corruption in sports with two different approaches. The first one,
“competition corruption” is related to every unethical activity that can influence in the results
of a contest. The second one is a “management corruption” which involves immoral decisions
made off the pitch.
It is possible to make a liaison of both types of corruption in the Louisville case. Off the court,
the scheme fitted to attend their main interest of recruiting the best athletes possible (agents
and sponsors offered the most talented athletes to the university). That created an advantage
on the court as well because this illegal approach led the Cardinals to have better teams every
season.

U of L governance issue and the impacts

If the success on the basketball court was driving the University of Louisville, it was not
possible to compare it with the results of the institution academically. The U of L was ranked
number 171st in the nation (US News 2018) and that has always been a concern in terms of
governance by some of the board members (Chronicle 2018). As an academic institution,
should not the scholar issues come first?

In order to re-establish a good image among the stakeholders, the University of Louisville had
to make drastic changes on its governance status. Henry and Lee (2004) define the seven
principles of good governance as: transparency, accountability, democracy, responsibility,
equity, effectiveness and efficiency.

Another important step towards an image reconstruction based on good governance principle
was setting new guidelines for the members of the organization (Hoye and Cuskelly 2007). It
should not be tolerable for a university to have academic issues being interfered by sports
results.

Senaux (2011) brings the concept of pluralistic organizations, when he analyses the
commercialized sport clubs and the professionalism era in the French football. When
commercial issues are added to the complexity of the sport, it is very difficult to manage the
business (Gammelsæter 2010). Sports organizations communicate to several stakeholders and
have different institutional identities.

Stakeholders can be defined as people who have placed something at risk with the institution,
either in a voluntary or professional level (Clarkson 1994 in Senaux 2008).

In the American college business, the concept of pluralistic organization may go even further,
since the institutions and the stakeholders are not only preoccupied with everything that is
related to the athletic performance but also with the educational level. That can lead to many
governance issues, like the interference of sports into academics.

After the bribery scandal, men’s basketball coach Rick Pitino and athletic director Tom Jurich
were immediately fired, and the president James Ramsey was forced to resign. Dr. Greg Postel
was named the interim president on January 2018 (Chronicle 2018).

The Board of Trustees, which is consisted by people appointed by the Governor of the state of
Kentucky (University of Louisville 2018), hired an audit company, which had led an 18-month
investigation. The final report included some questionable policies mostly on financial
administration and mismanagement on their leadership roles.

Conclusion
Even though sports are a big part of the American college tradition, the main responsibility of
an academic institution will always be the students. A scandal like the University of Louisville
faced can destroy the school’s reputation and the relationship with all the stakeholders. The
victorious image created on the basketball court helped the U of L surpass some issues they
had had academically on the past years.

However, a good governance is only possible when the members of the organization are
focused on the same objectives. The academic and athletic correlation must be managed in a
harmonic pace by the members of the institution and passional decisions, which are very
common on sports related companies and it has been reported as a big concern in the
University of Louisville for years, cannot be tolerated.

In order to avoid corruption within the sports organizations, it is important to decrease

monopoly and allow more people to make decisions. Also, it is crucial that the board of
directors can increase accountability, so every important decision can be evaluated properly.

The interim president and the board of trustees at U of L hired an audit company and tried to
rebuild the institutional image as soon as possible. It is not going to be easy nor fast, but
transparent actions will be fundamental for regain the trust of the community.

University of Louisville is just one of the many corruption cases in colleges sports. So, as
mentioned before, it is important that the NCAA also analyses ways to minimize the unethical
practices that have been hurting the college sports’ reputation and even consider if the
student-athlete concept is still something that can be sustained.

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