Ponygate: Money in College Sports

Southern Methodist University (SMU) has been one of the South’s most prestigious schools since its founding in 1911. The institution has earned the nickname “The Ivy League of the South” and continues to promote its excellence throughout the nation. In addition to its academic success, SMU has a rich history of athletics. Specifically, SMU became a nationally recognized school for its athletics during the 1980’s. During this period, SMU saw a resurgence of their football program. The team, led by Eric Dickerson, would earn the nickname the Pony Express after steamrolling through Southwestern Conference (SWC) opponents. However, the Pony Express era came to a screeching halt after an NCAA investigation uncovered that the Board of Governors, a booster organization that funded SMU athletics, was paying SMU football players to play for their university. Furthermore, the Board of Governors were enticing players to attend SMU via financial promises. The scandal, coined “Ponygate,” has become one of the most infamous tales of cheating in collegiate sports and its despondent consequences. The infractions were uncovered by investigative journalists who exposed corruption in SMU’s football program. The term, Ponygate, is a satirical reference to Watergate which occurred fifteen years earlier. The press and tireless investigative journalism berated the university of the payment of players. Ironically, approximately thirty-five years later, the NCAA passed a rule that allows collegiate athletes to be compensated for memorabilia, visitations, and several other services that utilize their name or image. This rule is known as Name, Image, and Likeness (NIL). Although NIL was passed to provide equal pay for athletes, NIL deals have become a crucial element for top recruits and their decisions for higher education. In several cases, booster organizations have acted in similar ways to the Board of Governors to entice top recruits to play for their schools. Therefore, booster organizations and their emphasis on funding collegiate athletics opportunities, especially football programs, is undeniable. Yet, as several NIL practices reflect that of Ponygate, the press continues to report positively about NIL. Thus, the national opinion regarding money in collegiate sports has been drastically influenced by the change in reporting.

During the 1981 and 1982 football seasons, SMU had developed into a dominant contender in the Southwestern Conference (SWC). The team surprisingly had acquired several of Texas’ top high school recruits. Eric Dickerson, who later was inducted into the Pro Football Hall of Fame, was among these recruits. Dickerson led his team, nicknamed the Pony Express, to a top ten position in the Associated Press’ polls in both 1981 and 1982. In fact, SMU not only won the SWC, they also defeated the University of Pittsburgh in the Cotton Bowl during the 1982 season. Furthermore, SMU continued to defeat traditional college football powerhouses, such as the University of Texas, Baylor University, and their bitter rivals Texas Christian University. However, all of this unprecedented success resulted in other SWC teams mistrusting SMU’s football program. The skepticism of SWC conference members caused the NCAA to conduct an investigation in 1985. The investigation uncovered payments being provided to football players by members of a boosters’ organization, known as the Board of Governors. These payments violated NCAA rules. The SMU administration responded with apparent shock. Following the discovery, the NCAA barred SMU from participating in postseason play for the next two years. Furthermore, the program lost more than half of its scholarship funds for the following two years. The NCAA stripped SMU of its hard-earned Cotton Bowl victory, too. Ultimately, the NCAA did not discover the full gravity of SMU’s illegal actions which were committed throughout its era of success until 1987.

One of the pivotal moments of discovery occurred in November of 1986. David Stanley, a former player, came forward with allegations against SMU for paying recruits to play for the university. He stated that the Board of Governors was responsible for the continuous payment of players. Furthermore, he asserted that the payments were still being conducted even after the 1985 sanctions were placed on SMU’s football program. Stanley stated these allegations to a Houston news company during their interview with Stanley and several SMU football staff members. Although key members of the SMU football program denied the allegations, Stanley’s claims caused the NCAA and SMU to conduct a joint investigation of the football program’s recruiting practices. Eventually, the Board of Governors was found guilty of continuing to pay football players from a slush fund. SMU was handed a severe punishment due to the repeated offences against NCAA rules and their disregard for the 1985 NCAA sanctions. This severe punishment was termed the “Repeat Violator Rule.” Since it became the harshest NCAA-enforced penalty against any institution, the rule was dubbed, the “Death Penalty.” The ruling caused SMU to cancel their 1987 football season, to forgo recruiting until 1988, and to disregard their visitation fees until 1989. In addition, the NCAA barred SMU football games from being broadcasted on television or being played at SMU for the following two years. Moreover, the NCAA shortened SMU’s season to a seven-game season, making the program ineligible for a conference championship. These penalties resulted in a major loss of revenue for the program. The NCAA also forced SMU to eliminate fifty-five scholarships over the course of four years and to reduce the coaching staff from nine assistant coaches to five assistant coaches. Finally, the NCAA barred the boosters who participated in the illegal activity from supporting any collegiate team or institution. In fact, after the NCAA levied their sanctions on these boosters, SMU dissolved the Board of the Governors completely. These combined penalties severely damaged the reputation and the future of the SMU football program. Currently, SMU has not won a conference title since 1984, a year prior to the original sanctions in 1985. Furthermore, the team did not employ a head coach with a winning record until 2017. Coach Sunny Dykes was the first head coach in thirty years to produce a winning record since the Pony Express era. SMU had 109 wins, 229 losses, and 3 ties after Ponygate and prior to Dykes’ arrival.

Although the NCAA investigation was focused on discovering the source of the illegal payments, the press continued to utilize investigative journalism to uncover the extensive reach that the scandal had on campus, state, and national officials. Specifically, newspaper reporters played a crucial role in uncovering some of the overlooked details by the NCAA. During the 1985 sanctions, mainly local Dallas newspapers, such as The Dallas Morning News, were responsible for covering the scandal. However, the sanctions did not receive significant national attention due to the small size of SMU. Thus, local newspaper reporters became the first individuals who began searching for deeper corruption in the SMU football program in 1987. One of these news sources was The Daily Campus, SMU’s student managed newspaper. The Daily Campus uncovered several scandals that were all linked to Ponygate. For example, the Board of Governors shamefully paid sorority women during the Pony Express era to sexually entice recruits into attending SMU and playing football for the university. The boosters club also paid these women to leak recruitment information from other SWC members. In addition, this lewd method was also engaged to keep SMU’s top football players from transferring to other universities. Originally, the Board of Governors bribed two sorority women into luring star recruits to attend the university. However, the Board of Governors had hired approximately ten women to perform sexual acts with football players by the time Ponygate was unveiled. Besides these payments to sorority women, the boosters club also bribed professor’s secretaries to change football players’ grades prior to submission to the registrar. This action was done without the professors’ knowledge. Of course, it enabled star players to remain academically qualified even though they were performing poorly in the classroom.

In addition to The Daily Campus, local news sources, including newspapers, television shows, and radio programs, led to the further uncovering of Ponygate. The Dallas Morning News was a key news installation in discovering the extensive reach that Ponygate had across Texas. Following the completion of the NCAA investigation and the imposition of the famed Death Penalty, The Dallas Morning News uncovered that Bob Hitch, the former SMU athletic director, had full knowledge of the Board of Governors’ illegal activity and NCAA violations. Hitch resigned from SMU during the investigation to avoid a potential fine. Moreover, The Dallas Morning News identified the primary booster who was responsible for Ponygate. According to The Dallas Morning News, the main donor of Ponygate was Sherwood Blount Jr., a local businessman. Blount was a local real estate agent and major developer of North Dallas. The billionaire is recognized as a key figure in the expansion of the Dallas metropolitan area. Interestingly, Blount was a football player at SMU prior to the Pony Express years. His motivation for paying players correlated with his desire to form the best football program in the SWC. According to The Dallas Morning News, the players received $725 per month while playing for SMU. Blount was one of the boosters who would eventually be barred from financially supporting any college institution. In addition to Blount, the former Mayor of Dallas was found guilty of illegally supporting the SMU football program. This discovery caused news reporters to realize that Ponygate did not involve only campus officials and local business leaders, it involved the political sphere of Texas, too.

A key aspect of Ponygate was the involvement of Bill Clements. Clements acted as the chair of the Board of Governors during the 1985 sanctions. During his tenure, Clements served as a state congressman in Texas’ Senate. However, Clements would step down from chairing the Board of Governors to become the Texas Governor. Thus, when David Stanley came forward with the allegations against SMU and the Board of Governors, Clements’ first year in office was filled with turmoil and controversy. Initially, the governor denied the claims. However, reporters and journalists continued to ask Clements about his actions while he chaired the Board of Governors. Once the NCAA released the information found during their investigation which implicated Clements, he issued an apology. In the statement, Clements admitted that he authorized the continuing of illegal payments to football players. He stated that, “The commitments had been made, and in the interest of the institution, the boys, their families, and to comply with the NCAA, that that program would be phased out”. Not only was the interview published in the local Dallas newspapers and nationally distributed sports magazines, but an excerpt of the apology was also broadcast on the NBC’s Nightly News. The report caused several Democrats in the Texas Senate to file for the impeachment of Clements in 1987. Furthermore, newspapers and sports magazines echoed the call for his impeachment. Ironically, Clements was able to maintain his position as governor.

After Ponygate occurred, several other schools would face similar penalties for financial infractions. For example, during 2012, several Ohio State University football players were found guilty of selling memorabilia with their signatures on the items. This action caused the NCAA to place excessive sanctions on the Buckeyes. These excessive sanctions and the emphasis of profits placed on sports at the professional level caused several key college athletes to push for the opportunity to sell their brand across the nation. However, the NCAA claimed that by earning endorsements, college athletes would lose their “amateur tag” and become professional athletes. Yet, as student athletes continued to fight for NIL to be recognized, the NCAA was forced to change their definition of amateurism. Throughout the thirty-five-year span between Ponygate and NIL, several athletes had filed lawsuits stating that the NCAA’s definition of amateurism was an infraction on the First Amendment. Several other athletes argued that the inability to earn compensation violated the Sherman Anti-Trust Act. Although each of these cases failed, the NCAA began to see cracks in their amateurism clauses. Eventually, in 2021, the NCAA was challenged in court again. Once again, athletes used the argument that the NCAA was violating the Sherman Anti-Trust Act. Yet, instead of being defeated, the athletes were able to succeed in several courts of law. Most notably, the Supreme Court decided on behalf of the athletes in a 9-0 decision. The Supreme Court stated that the NCAA’s regulations of financial compensation infringed on collegiate athletes’ rights. The State of California became the first state to officially permit NIL deals to occur with college athletes. This action created a ripple effect throughout the nation. By 2021, several states already had legislation that permitted NIL deals. The bill was eventually passed in the United States’ Senate in 2023. The bill states the following:

“An institution of higher education or intercollegiate athletic association may not enact or enforce any rule, requirement, standard, or other limitation that prevents college athletes or prospective college athletes, individually or as a group, from marketing the use of their names, images, likenesses, and athletic reputations.”

In the short time that NIL has been permitted by the NCAA, several athletes have taken the opportunity to sell their brand to large corporations. Most notably, several athletes have become endorsed by large clothing brands such as Nike and Under Armor. In 2023, Under Armor debuted a new advertisement that featured Kelsey Plum, a Hall of Fame worthy basketball player, and several members of the South Carolina women’s basketball team. Included in this advertisement was future number one pick of the 2023 WNBA draft, Aliyah Boston. The advertisement was shown on ESPN during March Madness. In addition to Under Armor, Nike has begun to sponsor several collegiate athletes. Nike signed five-star basketball players to NIL deals in 2022. Individuals such as future great Bronny James and JuJu Watkins were included in this deal. Both of these individuals are still in high school. The contract also included several college athletes. Cailin Clark, a breakout basketball player at Iowa and winner of the Naismith Award in 2023, is included in this contract. Caitlin Clark has also promoted several other companies such as H & R Block, Hy-Vee, Topps, and Shoot-a-way.

In addition to large corporations, smaller companies that focus on universities have also profited from these engagements. In fact, several companies have been designed in order to promote the brands of these athletes. Most of these companies are limited liability companies (LLC). Ironically, these companies are managed by alumni of the school the company is associated with. For example, the Gator Collective, which is an NIL LLC, is managed by a former University of Florida baseball player. Furthermore, most of these companies are sponsored through boosters, who also support the school’s athletics. In addition to supporting current collegiate athletes, several of these organizations act on behalf of the school to promote the NIL opportunities that are possible at a specific institution. Thus, these booster-driven NIL properties act as an attractive benefit to attending certain universities. Ironically, these actions reflect the Board of Governors actions during the Ponygate scandal. Both organizations are paying their athletes to stay at the school. Furthermore, by promising payment if they attend that school, the Board of Governors and future NIL organizations are affecting the decision-making abilities of future college athletes.

Although NIL representatives, like the Gator Collective, are acting in similar ways to the Board of Governors, the press continues to praise NIL. In fact, several of the athletes with the largest NIL deals have been elevated in the eyes of several sports analysts. Yet, thirty-five years ago, the press condemned SMU to years of rebuilding after an investigative journalism crusade. The promotion of NIL through advertisements and brand deals, such as Aliyah Boston at South Carolina and Caitlin Clark at Iowa, the media forms an elevated status for these players. Thus, players with less NIL deals receive less media coverage. This action could result in these individuals’ chance to play at professional levels. In addition, the success of NIL opportunities has caused booster organization to utilize NIL as an additional form to recruit star athletes to their institutions. Yet, instead of utilizing their fourth-estate podium, the press has remained quiet on the situation. In fact, the loose interpretations of NIL deals by the NCAA have allowed several of these booster organizations to create their own forms of media to promote their athletic partners and the organization. For example, the Gator Collective has almost ten podcasts that is hosted by their athletes. This distribution of pro-booster media has continued the normalization of NIL in college athletics. Furthermore, it furthers the normalization of boosters affecting recruits through NIL.

Ponygate’s relevance is at the forefront of college athletics. Thirty-five years later, boosters are committing the same actions that took place at SMU. However, instead of sports reporters exclaiming that the situation is a scandal, writers have begun discussing how NIL deals have become the new norm in college athletics. In fact, several sports analysts have praised the new monetary opportunity. The lines between Ponygate and NIL deals have become blurred as NIL deals continue to expand, affect the recruitment of college athletes, and gain the support of sports analysts.

References*

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*The full paper, including all footnotes, cited sources, and bibliography are available upon request.