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| Moody's says an anti-trust lawsuit could damage the NCAA's ability to pay back debt. Aspen Photo / Shutterstock.com |
While the NCAA
currently holds the third highest possible rating from Moody’s Investors
Services, the credit rating agency issued a statement projecting a negative
outlook for the organization. Moody’s
says that an anti-trust lawsuit and bad reputation of enforcement practices
could damage the NCAA’s ability to pay its debt. Moody’s
CEO Ray McDaniels and his team of analysts warn that poor judgment in
handling players will likely lead to poor financial judgment as well.
Former basketball
player at UCLA Ed O’Bannon is leading an anti-trust
charge against the NCAA, game company Electronic Arts, and Collegiate
Licensing Company revolving around compensation for players in collegiate
level football and basketball. Their likeness had been used for video games and
merchandise without compensation. The
suit has potential to render over a billion dollars in damages paid to former
and current athletes. The suit is
currently being weighed on whether or not it can be turned into a class action
suit, which would invite thousands of players to ask for compensation from
licensing. Another reason Moody’s
projects negative outcomes is due to a poor handling of an investigation in
Miami.
Moody’s did not
change the credit rating of NCAA and also cites that the organizations
financial performance is outstanding.
Profits were at a record high last year, and the value of unrestricted
assets have doubled since 2006. A
spokesperson for the NCAA said that it was unconcerned about the report, as
long as the rating remains the same. The
organization is also confident in its abilities to win the suit against
them.
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