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Boise State Athletic Department Selling Stock

By Rick Karcher, Michael McCann, Geoffrey Rapp, Greg Skidmore, and Howard Wasserman

USA Today is reporting today that Boise State has officially formed a non-profit corporation and will begin selling shares to the public at $100 per share in hopes of raising $20 million (Boise State Athletic Department Hopes Stock Offering Raises $20 Million). AD Gene Bleymaier said, "If we are to continue the success we are enjoying now we must generate new revenues to pay for coaches' salaries, scholarships and facilities." The shares will not pay dividends, but shareholders can vote on members of a 12-person board at an annual meeting and the board will determine how money raised through the offering would be spent. Bleymaier also said this fundraising program mirrors the offering made by the Green Bay Packers when they raised $24 million in the sale of more than 105,000 shares back in 1997.

If this is true, needless to say, it's a very interesting development. One would certainly think this has to violate some provision, somewhere, in that 437-page NCAA Bylaw manual. It also raises all kinds of interesting corporate law questions in the context of fiduciary duties, state and federal securities regulations and non-profit corporation laws, just to name a few. The more I think about it, this has to be a joke, right? But perhaps this is no different than what is already taking place in big-time intercollegiate athletics, the only difference is that we call them boosters instead of shareholders.

This new development also relates to the topic of my article I posted on two days ago to the extent the proceeds generated from this stock sale fund coaches' salaries. Boise State along with Cincinnati and TCU are prime candidates to have their successful football coaches solicited by competitor schools, making them soon-to-be victims of both tortious interference and breach of contract. The presidents of these three schools have a choice. They can pay their coaches more money or let them go and then proclaim that they are "powerless" to do anything about rising salaries. Or, they can exercise their legal rights and stand up for all the current and prospective student-athletes who committed to their school in reliance on the fact that their coach was obligated to be there for a period of years....the same student-athletes who, unlike their coach, are prohibited from transferring to another school.

Full post as published by Sports Law Blog on November 12, 2009 (boomark / email).