THE SYSTEM IS BROKEN
Inside the NCAA and FBI’s Smearing of Duke Basketball Phenom Zion Williamson
An FBI corruption trial involving the paying of student athletes has ensnared the nation’s top basketball recruit. The whole thing is a travesty, writes Corbin Smith.
Zion Williamson is a goddamn hero. Even though he’s going to Duke this season, truly tragic, the basketball world devours this big ol’ guy’s dunks, windmills, passes, whatever. Please, watch this highlight video of the man making his high school peers look like fetuses.
Dominant. Skilled. Extremely angry at the rim. This dude is NBA catnip. He is also worth a ton of money. Take, for instance, the purveyors of this highlight tape, Ballislife. They show ads during this video of Zion and get revenue so they can make a living traveling to obscure high school gyms around the country. His college sells tickets to his games and solicits donations based on his play. A shoe company supplies them with kicks and gets their image flashed across TVs all over America, chilling on his feet. His coach, Mike Krzyzewski, will make $8.9 million this year, utilizing Zion’s skillset without paying him a red cent of that salary. He will do this with pride, actually, regarding himself as a moral person who follows the rules because he makes money off of Zion’s work without giving him any of it.
This Monday, Zion’s name came up in the Justice Department’s ongoing prosecution of former Adidas executive James Gatto, AAU maven Christian Dawkins, and former Clemson standout Merl Code Jr. for wire fraud related to NCAA recruiting violations, which is consuming the edges of college basketball pre-season attention. “There was a wiretapped phone call that was recorded between one of the Adidas executives and a Kansas assistant coach.” Ricky O’Donnell, a college basketball writer at SB Nation, tells me. “The executive told the Kansas coach that Zion’s father asked the company for housing, some money for Zion’s services as a basketball player, and a job for himself, and apparently the coach said, ‘Yeah sure, whatever.’”
O’Donnell looked up Zion’s name on Twitter. “Most of it was Kentucky fans being like, ‘Suspend him! Give them the death penalty!’ because they missed out on Zion Williamson.” Not the actual death penalty, of course—not even college sports fans would suggest mass execution; rather, it’s the popular term for the NCAA forcing an athletic program to shut down permanently.
“It’s pretty obvious that the only reason this is happening is that as long as the NCAA clings to amateurism, there’s just always gonna be a black market,” O’Donnell argues.
The NCAA, which is, to be clear, not an authorized governmental body at all, conducts investigations constantly, looking for penny-ante recruiting violations so they can strip teams of scholarships and declare glorious moral victory over the forces of impurity invading the sacred world of amateur college sports. Of course, this idea has always been horseshit—athletes find a way to get paid no matter what, and the United States is the only country in the world that has attached high-end athletic development to college (Europe has sports academies, and 17-year-olds are often already minted soccer professionals), a weird and unwieldy system that has entirely too many competing incentives.
But this series of investigations, into the dealings of coaches and boosters and shoe companies involved in paying players, is different. It is not some penny-ante NCAA crap at all. It is, for some reason, a full-blown FBI investigation, with wire-taps, people flipping and cooperating with investigators, everything. “The NCAA are the fake cops, and now they got the real cops involved, which is just a dream come true for the NCAA,” says O’Donnell.
The NCAA being into this makes sense: college sports bureaucrats seem to have no greater purpose in life than making sure swole youths don’t get paid for their labor. But, why does the FBI care? Why is the Justice Department spending heaps of tax dollars to investigate minor cases of wire fraud that are par for the course in day-to-day NCAA operations? No one quite seems to know.
“The things that you do when you’re trying to dodge the NCAA look a lot like the things you do when you’re trying to dodge the federal government.” Andy Schwarz, an economist who works in sports, tells me. “It came out in the trial that there was a hand-off of money in an envelope in a parking lot in New Jersey. It looks like people are acting like criminals, so it must be criminals. And when they went to charge it, they suddenly realized they couldn't quite figure out what to do.”
Andy begins to explain the strange structure of this prosecution to me: “The allegations are fraud and wire fraud. My understanding is that in order to prove those cases, you need to prove an intent by the people involved to financially harm the other side of the transaction. And the other side of the transaction, as alleged in this case, is the University of Louisville, Kansas University, etc. So the idea is that Adidas, a business partner of Louisville and Kansas, is intentionally trying to harm their business partner by delivering to them athletes who will play really well in their shoes.”
This is all to say, the federal government is currently prosecuting the representatives of schools— boosters, shoe companies, assistant coaches—on behalf of schools who are being victimized by being… awarded top recruiting class talent that can, according to Schwarz, be worth somewhere around $900,000 to $3.6 million a prospect for the program. Schwarz’s business partner was scheduled to testify to this fact on behalf of the defense, but the judge didn’t let him testify, citing irrelevance. Schwarz, it should be noted, is deeply irate about the way the judge has fully accepted the NCAA’s definitions of conduct throughout this trial.
“A lot of the defense in this trial has been, ‘We broke rules, we didn’t break laws,’” says O’Donnell, and, although in spirit, this makes a lot of sense, it isn’t strictly true. The fact of the matter is, paying players off the books the way these boosters and shoe company types do does amount to tax evasion, which is what people often commit wire fraud for. But this is not, strictly speaking, an FBI matter, as a matter of course. This is the providence of the IRS. So why aren’t they the people investigating this?
“The thing is, none of the people on trial have that problem; they have the reverse problem, because they failed to claim a deduction, because they were the payers,” Schwarz tells me. “People get punished—and should be punished—for tax evasion all the time. I’m not here to argue that that’s not a problem. But in terms of, like, you and me as taxpayers, maybe we did better because I would suspect that the people who are paying the money make more money than the people receiving the money, so they’re in a higher tax bracket, and so by their failing to take a hundred thousand dollars off of their income they pay twenty-five percent taxes, whereas the guy who didn’t claim would only have paid ten percent—and we get a fifteen percent spread as taxpayers.”
“That wouldn’t stop them from claiming that the guy who didn’t pay taxes, the government doesn’t say, hey, it’s alright, someone else paid it for you. So I’m not saying that they’re not without blame, I’m just saying that to the extent that there is a criminal or civil tax problem, it’s not the people paying the money who have the problem, it’s the people receiving the money, and the government is going after the people paying the money.”
So: if it’s not really about taxable revenue, what is it about? Why does the Justice Department, the prestigious New York office at that, care so much about a relatively low-stakes shadow economy of a private organization that exists to keep players from making money?
Schwarz, ever the economist, thinks that the Justice Department has already invested so much in this thing, and that they are willing to operate on a sunk-cost fallacy until they eventually fail so long as everyone knows they tried. One lawyer I know shrugged his shoulders, said that the NCAA is a powerful organization, and that the law is all-too-willing to do their bidding as a rule, so why would this be any different? Another friend, a defense attorney who doesn’t care for prosecutors, thinks that this is a big-deal case that can net whoever works it heaps of attention, so of course they would go for it.
College sports media, for their part, have done a decidedly mixed job addressing all this. Some people—Jay Bilas, Dan Wetzel, others—choose to see the big picture and observe these payments, this shadow economy, as the product of a corrupt system that incentivizes it. Others, many others, have accepted the NCAA’s vision of things and implement it into their worldview. Dana O’Neil over at The Athletic wrote a column suggesting that this lays bare the world of coaches not doing enough to recruit anymore, outsourcing the work to assistants entirely too much, which completely misses the point of all this: that when there’s an obscene amount of money collected at the top, getting hoarded and stored in giant-ass water towers, only given to people at the bottom in tiny little portions every three months, of course there will be little BBs getting shot at the tower, in service of creating leaks and squirts.
But the Justice Department spent three weeks trying to prove, on behalf of the NCAA, that this is not actually the case, everything is fine, and minor wire fraud in service of subverting a stupid economy is truly evil and people should go to jail for it. And then, when they lose or win, they will continue to argue it in appeals court for years after that until, eventually, some circuit or another decides they don’t care enough to hear about it. Oh, and the American people have been paying the salaries of the people trying to sell this wild untruth for years.