Tuesday, March 03, 2009

Who's Paying Brodhead's And The Other's Legal Bills?

Yesterday I posted The Chronicle’s “Recession Strategy” Story & Editorial.

Among other things, I noted TC has not reported on the costs to date of the suits resulting from the Steel/Brodhead administrations disgraceful actions and inactions in response to events which began Crystal Mangum’s and Mike Nifong’s lies.

I asked a number of questions of TC, two of which were:

What’s the effect of those costs – which sources tell me are already in the neighborhood of $50 million on Duke’s current extremely challenging financial situation?

And whose paying those costs?

This morning I heard offline from someone not connected with TC but very familiar with Duke, the suits brought against it, and some of their effects on the university.

Here’s what the source said:

Your comments on The Chronicle story and editorial were, as usual, spot on. In particular, your $ 50 million estimate of the amount Duke has spent to date on settlements and legal fees related to the lacrosse incident is not unreasonable -- and these costs will obviously continue as the civil suits move forward.

In addition to these direct out of pocket costs, there are other lacrosse related costs which may be difficult to measure but which are significant, e.g.

--- the loss in contributions from alumni, parents and others who are dissatisfied with Duke's leadership

--- the time spent by Duke personnel, in particular senior management

--- the damage to Duke's reputation

Regarding the tuition increase, I did some quick calculations and estimate that this increase will add roughly $ 20 million to Duke's annual revenues.

Had Duke behaved honorably in the lacrosse incident, the $ 50 million ( and more ) would have been available to pay for more than two years of tuition increases -- and maybe Duke could have postponed the tuition increase which are a burden to many parents/students in these difficult economic times.

So the answer to your rhetorical question of who will pay for the lacrosse related costs is, at least in part, the parents and students.


Anonymous said...

Thanks for re-focusing on the true value of Steele's and Brodhead's hardheadedness and poor decision-making. What continues to amaze me is the lemming-like behavior of the Duke Board of Trustees. By now, I would have thought that an "exit strategy" for both Bobby Steele and Dickie Brodhead would have been rolled out, and an interim chair-holder, like law professor Coleman, would have begun the rebuilding process.

I hate to believe that the members of the Board have all drunk the "cool aid" and are too embarrassed and/or complicit to act.

Their fiduciary duty is to perpetuate Duke University, not to give safe-harbour to the egomaniacal operating team of Steele and Brodhead. Your source is correct, according to many communications among my generation of alumni(60's and 70's). Unfortunately, the newer grads have not lived long enough to have either perspective or concern for Duke to match their obvious intelligence.

$50 million and counting. Neither Stelle nor Brodhead is worth a fraction of this pile of assets.

Anonymous said...

What I cannot understand, given the economy,is that a university would up its tuition. We have used out stock over the years to foot our childrens' college education. Right now, given the value of our stock (mostly in bank stock - need I say more), we will be hard pressed to pay the tuition for our last child (he is a freshman). Yet we do not qualify for any aid. So, like other parents in our situation, we will tighten our belts further, say our prayers, and make the tuition payments. That Duke (and other institutions) would not take into account that those who foot the bill (the parents) are struggling in this economy (some who have lost their jobs, lost their savings) just underscores the lack of concern for its constituency. No parent wants to uproot their student from a college that they chose because it was the best school for that student. However, it seems that the Duke BOT is all about the Duke brand - thus the actions that they took in the lacrosse case, their funding and hiring of academics of dubious scholarly standards (the more to show how "culturally correct the university is), and the failure to be honest and transparent about their finances are all a part of the same piece of work. Why, today anyone would send their offspring to Duke is beyond belief.

Anonymous said...

I always look forward to your posts, cks. Thank you.

My situation is similiar to yours but our last (of five) is graduating in May. My stock portfolio is down nearly 50% so the recession and Obama have hurt a lot.

Surely, however, you've seen tuition rising for decades at higher than any inflation indicator you can find. It's supply and demand - everyone wants the best education for their kids and the premium for a college degree is large. Tuition will keep rising at beyond CPI rates until students say "enough!" It probably won't happen soon.

Anonymous said...


Thank you for the compliment. You are correct about the rising coss of tuition. I find it hard to believe that the private high school in which I teach will be charging a tuition that is double what my parents paid in the very early seventies for tuition, room and board at the very good Lutheran college which I attended. While my children have attended much more prestigious colleges than my husband and I, I am not sure that the quality of education that they are receiving is superior to that which we obtained and at a much lower cost.
I suppose that you are right in that until the payers of the bills (the cash -strapped parents) rise up en masse and say no more, that college costs will continue to rachet upwards. Unfortunately, it is the rare parent (one forced by no job, little assets, and worries about where the next meal is coming from) who will say to his child "I am sorry, despite your good grades, you will not be able to go back next semester". Instead, the parents do whatever to make college possible.
We have told out children that we believe in a living inheritance - while we are living we will spend your inheritance in insuring you get a good education (private elementary and secondary schools as well as an undergraduate degree - in 4 years) without owing a penny. We always figured that after all was said and done, we would still be able to leave them something. As things now stand, that will not occur - what little is left (after the AMT, the decline in stocks and real estate prices) will, if we are lucky, see us through (if we are lucky enough not to have some chronic or debillitating illness)just barely - definitely not living a lavish lifestyle.
But that is the decision that we have made - one that we are not about to change for the last of our brood. So, we soldier on - like others out there. Hoping that the economy will pick up, theat colleges will get back to their core mission - education rather than providing a luxurious, spa-like existence which has contributed in no small measure to the rising costs of a college tuition.

Anonymous said...

I know that I refused to pay my multi year pledge to Duke which was a substantial one, and I know of more than several alums from my class who also refused to honor their pledges because of the way the students who play lacrosse and the 'travesty" was handled. I also know that Duke has already paid out least $50 million and that does not count the millions being spent on the new civil suit. And they do not publicly acknowledge this. There is no way they can let this go to trial...the damage to Duke will be way too great. Why do they continue to shell out big bucks to their lawyers??? What do they think they can accomplish? Why doesn't Duke attempt to stop the bleeding and settle "under the table"? It is only going to get worse for them. As during the lacrosse fiasco-tragedy-is there one grain of common sense in Duke management?