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NCAA’s credit outlook revised to ‘negative’
Posted By HOOPSWORLD On June 24, 2013 @ 8:12 pm In Wirenews | Comments Disabled
by Steve Berkowitz, USA TODAY Sports
The NCAA’s credit outlook is taking a hit from the ongoing anti-trust suit it faces about the use of athletes’ names, images and likenesses, as well as the damaged reputation of its enforcement unit.
Moody’s Investors Service issued a statement Monday saying it has revised the NCAA’s ratings outlook to negative due to the potential for future financial judgments against the organization. The move by Moody’s was first reported by The Wall Street Journal and Bloomberg News.
However, Moody’s affirmed the NCAA’s Aa2 credit rating, the investor service’s third-highest rating. The credit outlook is a long-range projection separate from the current credit rating.
Last Thursday, U.S. District Judge Claudia Wilken held a hearing on whether the lawsuit against the NCAA, video game manufacturer Electronic Arts and the nation’s leading collegiate trademark licensing and marketing firm, Collegiate Licensing Co., should be certified as a class action.
Wilken did not immediately rule on the matter. If the suit is granted class-action status, thousands of former and current football and men’s basketball players could join a case that now is confined to roughly a dozen plaintiffs, led by former UCLA basketball star Ed O’Bannon.
A large class would create the possibility of a damages award in the billions of dollars, as well as the establishment of an entirely new compensation arrangement for current NCAA Bowl Subdivision football players and Division I men’s basketball players. If the plaintiffs prevail, the athletes would share in huge broadcast and other revenues, with the money being held in trust until their end of their college playing careers.
The NCAA, in a statement released by spokeswoman Stacey Osburn, did not express great concern about the move by Moody’s.
“Although the outlook change is a long-range projection, the NCAA’s financial rating did not change,” the NCAA statement said. “As a result, we do not anticipate any substantive issues based on the Moody report.”
The NCAA also remains under pressure for its enforcement staff’s handling of an investigation of alleged rules violations by the Miami (Fla.) athletics program, a concern Moody’s noted in its analysis.
A little more than six months ago, in the notes accompanying its most recent … [For more on Moody's revises NCAA's credit outlook to 'negative', click here.]
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