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UW, NCAA Settle Lawsuit Over Neuheisel Firing

A settlement was reached March 7 between the University of Washington and the NCAA and former Football Coach Rick Neuheisel regarding his wrongful termination lawsuit against the two organizations.

The agreement provided for a $3-million payment to Neuheisel, of which $2.5 million was paid by the NCAA and $500,000 by the UW. The University also agreed not to seek repayment of a $1.5-million loan made by the UW to Neuheisel in 2002 as part of his compensation package.

The University’s portion was paid out of the Department of Intercollegiate Athletics operating reserve fund, but the entire $500,000 went to the IRS, along with an additional $180,000 that Neuheisel was required to wire to the UW. This is because the IRS regarded the forgiven loan as income; the taxes due for the UW settlement came to $680,000.

The controversy began on June 4, 2003 when NCAA investigators surprised Neuheisel and Athletics Director Barbara Hedges with charges that the coach had participated in high-stakes betting pools on college basketball tournaments. In the initial interviews, Neuheisel denied the charges, but late in the day admitted he had participated.

On June 12, 2003, the UW terminated Neuheisel’s contract. Throughout the proceedings the UW said that the termination was justified because the contract stated Neuheisel could be discharged for an act of dishonesty (see “Bouncing Back,” Sept. 2003).

"The whole episode is a rather sad story," Neuheisel told the press.Attorneys for the former coach maintained that Neuheisel was confused in the initial interviews about the betting pools and that in the third interview that day he admitted participation. They said Neuheisel did not think the betting was a violation since he relied upon a memo issued by former UW Compliance Director Dana Richardson, which incorrectly stated that staff could participate with friends in low-stakes gambling pools.

Neuheisel sued the UW and NCAA for $6.5 million. The civil trial began in late January but the deciding moment came near the end, when the NCAA and its attorneys revealed several errors. NCAA investigators had broken their newly revised bylaws when they surprised Neuheisel and Hedges with the gambling charges in the June 2003 interview. The investigators were supposed to warn them of the charges in advance. Also, during the pre-trial discovery process, NCAA officials gave Neuheisel’s attorneys an out-of-date rulebook that did not have the correct bylaw information.

Once these errors came to light, Superior Court Judge Michael Spearman threatened to call a mistrial.

“During the final days of trial, events outside the University’s control raised the serious threat of a mistrial or reversal,” said the University’s lead counsel, Lou Peterson. “The University is pleased that the NCAA assumed responsibility to help resolve the difficult situation that had developed around changes in its procedural rules.”

“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,” said NCAA President Myles Brand in a statement. “I have complete confidence that the NCAA enforcement staff acted properly and in compliance with NCAA bylaws with regard to Mr. Neuheisel’s interviews. Even so, an independent examination of procedures and processes employed by the national office staff to implement NCAA bylaws will be expanded to review this specific instance.”

“I feel vindicated but the whole episode is a rather sad story,” Neuheisel told the press after the trial. “I have great respect for the NCAA and the University of Washington and filing the lawsuit against both was the hardest decision I have ever made. Ultimately, I had to stand up for myself and I’m glad the matter is over.”

Neuheisel is currently the quarterback coach for the Baltimore Ravens.