NCAA Settles Coach’s Lawsuit

Former University of Washington football coach Rick Neuheisel will receive $4.7 million from the university and the NCAA to settle a wrongful termination lawsuit, it was announced Monday -- a rare payout that underscores the increasingly complex nature of college sports governance.

Neuheisel, 44, was fired in 2003 after he admitted lying to NCAA investigators about his involvement in two high-stakes NCAA tournament pools in which he won $12,123.

The settlement came after a late bombshell in the case -- the disclosure that the NCAA had been using outdated due-process rules when its investigators questioned Neuheisel in July 2003 about the gambling allegations.

NCAA lawyers said they discovered the April 2003 rule change, and its applicability to the Neuheisel case, only after the trial had been underway for a month. They disclosed their finding late last month to King County Superior Court Judge Michael Spearman, who said he might declare a mistrial.

“It’s a story of just deserts. It’s a story of an organization that is often accused of being hyper-technical in its rules getting caught not knowing what rule is in effect,” said Mark Conrad, associate professor of legal and ethical studies at Fordham University. “I think there will be a lot of people chuckling at that.”

The settlement, reached Saturday, was announced as closing arguments were scheduled to begin after five weeks of testimony.

“I feel fully vindicated,” Neuheisel, a former UCLA quarterback who was recently hired as an assistant coach by the NFL’s Baltimore Ravens, said outside the courtroom. “Obviously they’re going to have their stories, too, but I feel like this is the best scenario. Nobody’s nose gets bloodied.”

An entire front-row bench in the courtroom was occupied by members of Neuheisel’s family, including his parents, his wife and three young sons, his three sisters and a brother-in-law. The group hugged and high-fived after the settlement was announced. Neuheisel spent several minutes in a private room thanking jurors and signing autographs for them.

NCAA President Myles Brand said the association had acted properly, but was denied the chance to defend its position because of rulings by the judge. “The settlement in this case is the result of restrictions placed on the NCAA by the court about how the association could explain the bylaw and defend its rightful interpretation,” Brand said in a statement.

But Bob Sulkin, Neuheisel’s lawyer, called the bylaw issue “a fig leaf the NCAA is hiding behind. That was the 18th nail in the coffin. There was so much more evidence.”

The university argued that it had the right to fire Neuheisel if he committed “a serious act” of dishonesty. School officials said he initially lied to NCAA investigators about his involvement in the basketball pools, and, before that, lied publicly about an interview to become head coach of the San Francisco 49ers.

Neuheisel countered that Barbara Hedges, then Washington’s athletic director, knew about the 49er interview beforehand, and that in June 2003 he was blindsided by NCAA investigators who disguised their interest in questioning him.

He said they had told him they were interested in potential recruiting violations, and -- in violation of their own bylaw -- never mentioned the gambling allegations. Neuheisel later said he at first lied to investigators in order to get out of the room and to speak to an attorney.

Neuheisel, who holds a law degree, had long contended the school tacked on the rationale about firing him for lying only after a compliance e-mail surfaced that mistakenly permitted participation in such betting pools.

“I’m not a perfect person, I’ve never portrayed myself as one,” he said Monday. “I’ve made mistakes. I just didn’t think the mistakes were the kind that were being portrayed against me, so I had to stand up and take a stand.”

Neuheisel’s contract had five years to run, worth $1.5 million a year. The NCAA will pay him $2.5 million; the university will pay him $500,000 and forgive a $1.5-million loan. Neuheisel’s lawyers said the school also will forgive $200,000 in interest accrued on the loan, though university officials did not include the interest payment in their description of the settlement.

In a written statement, Lou Peterson, the university’s lead counsel, said that the school settled because there was a “serious threat of a mistrial or reversal.

“The University is pleased that the NCAA assumed responsibility to help resolve the difficult situation that had developed around changes in its procedural rules.”

Hedges, formerly an associate athletic director at USC, retired in January 2004 after 12 1/2 years at Washington. Her career there was bracketed by football scandals, the first of which led the resignation of longtime coach Don James.

When it was sanctioned in 2004, Washington became the only NCAA member in the previous 10 years to be sanctioned twice for “lack of institutional control.”

The nonprofit NCAA has paid a settlement of this size to an individual coach at least once before: In 1998, basketball coach Jerry Tarkanian received $2.5 million to end a legal dispute that lasted 26 years. Experts say that settlement payments by the NCAA are rare.

The NCAA has long been known for its labyrinthine rulebook. This academic year, the manual for Division I schools runs more than 450 pages and deals with issues ranging from recruiting to amateurism to gender equity. These bylaws are so numerous and complex that athletic departments employ compliance officers to help interpret rules and advise coaches.

Further complicating matters, the association is continually updating its rules. There has been a particularly active reform movement, mostly dealing with academic issues, since Brand took office in 2003.

For schools, the compliance process has become “a muddied mess and a source of great frustration,” said Paul Swangard, managing director of the Warsaw Sports Marketing Center at the University of Oregon. “A lot of these athletic departments are spending a lot of money just to comply, rather than spending their money on the intended target: the student athlete,” he said. “While it’s critically important for the NCAA to play its role of the watchdog, the leash is so tight that a lot of these schools are getting strangled because of the minutiae of compliance.”

In its most recent membership report, the NCAA cited total revenues of $471 million for the 2003-04 academic year, approximately $404 million of that coming from television and marketing rights. Much of the money was distributed to member schools or used to stage championships.

NCAA spokesman Erik Christianson said the settlement money “comes out of other budgeted resources” and would not affect future financial distributions to members.

Athletic officials at other schools said that settling lawsuits is sometimes the best course of action, even if it can sting.

“People don’t realize that you don’t go manufacture a $2.5-million check. It comes from somewhere,” said Loyola Marymount Athletic Director Bill Husak. “Somebody ends up paying in the long run and in this case, it is the NCAA membership. Having said that, sometimes that’s the risk of doing business.”

Neuheisel had run afoul of NCAA regulations before. He was investigated for alleged recruiting violations at Washington a month after taking the job, and, in 2002, was found to have committed several violations while he was head coach at Colorado from 1995 to 1998.

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Times staff writers David Wharton, Eric Stephens and Gary Klein contributed to this report.