Court strikes down payment plan; agrees NCAA violates antitrust laws

30 Sep 2015 | Author: | No comments yet »

Court fails to fully endorse NCAA payments for college athletes.

The U.S. SAN FRANCISCO — A federal appeals court agreed Wednesday that the NCAA’s use of college athletes’ names, images and likenesses in video games and TV broadcasts violated antitrust laws, but struck down a plan to allow schools to pay players up to $5,000. Court of Appeals for the Ninth Circuit on Wednesday affirmed Ed O’Bannon’s central thesis that certain NCAA amateurism rules violate federal antitrust law. The court, however, limited the scope of O’Bannon’s victory by holding that member schools only need to provide up to the cost of attendance to their student athletes. The NCAA had appealed US District Judge Claudia Wilken’s 2014 decision to allow players in the top division of college football and in Division I men’s basketball to be paid.

Limiting the amount college athletes can be paid to the arbitrary figure of $5,000 was always a silly idea, but it’s significant that the appeals court did not offer an alternative proposal for compensating athletes beyond their educational expenses. The 72-page ruling said that while many of the NCAA’s rules are designed to support a fair competitive playing field for its schools and keep from driving athletes from the rest of the student body, they are not exempt from anti-trust exemption.

The NCAA was accused of violating antitrust laws by conspiring to block the athletes from getting a share of revenue generated by the use of their images. Writing for a unanimous three-judge panel, Judge Jay Bybee expressed concern that “offering [student-athletes] cash sums untethered to educational expenses”—such as $5,000 a year for NIL rights—would transform NCAA sports into ‘minor league status.’” Advocates for college sports reform who contend that student-athletes should receive greater compensation will likely greet Judge Bybee’s worry with hostility.

The NCAA said paying college athletes would destroy its system of amateurism, and the rules designed to protect that system had never previously been found by courts to violate antitrust law. At that point the NCAA will have surrendered its amateurism principles entirely and transitioned from its “particular brand of football” to minor league status.” What that passage means is that Ed O’Bannon’s lawsuit against the NCAA has thus far only produced one significant change despite six years of legal wrangling and untold millions in legal fees.

In the case, named for former UCLA star basketball player Ed O’Bannon, players successfully argued that the NCAA could not sell their likenesses to video game companies without paying them for their use. They have insisted that a system where student-athletes do not receive compensation for NIL rights is exploitative, particularly in an era where the NCAA and top conferences negotiate billion-dollar TV contracts and where college coaches earn millions of dollars a year to coach student-athletes.

That additional money is currently being applied throughout college sports. “The NCAA is not above the antitrust laws, and courts cannot and must not shy away from requiring the NCAA to play by the Sherman Act’s rules,” the three-person panel wrote. “In this case, the NCAA’s rules have been more restrictive than necessary to maintain its tradition of amateurism in support of the college sports market. There’s still a chance the O’Bannon lawsuit could lead to further change if either side appeals this decision to the Supreme Court, but for now the NCAA should be pleased with this outcome.

Plaintiffs’ attorney Michael Hausfeld countered that the Supreme Court’s comment was made in passing and was not integral to the outcome of that case. Wednesday’s ruling is a blow to that goal, suggesting courts are not ready to give to players the legal right to profit off of jersey sales and other merchandising. The lawsuit has since come to exemplify the broader debate over whether college athletes in revenue sports should receive more compensation than just their scholarships. One of the biggest prior to Wednesday came last month when the National Labor Relations Board overturned a regional director’s previous decision that Northwestern’s football players were employees with the right to unionize under federal labor law. That has the potential to be damaging for the NCAA with so many challenges still on the horizon — most notably a lawsuit filed by the sports lawyer Jeffrey Kessler seeking to establish a free market for top college athletes.

The panel wrote that “in finding that paying students cash compensation would promote amateurism as effectively as not paying them, the district court ignored that not paying student-athletes is precisely what makes them amateurs.” Chief Judge Sidney Thomas concurred in part and dissented in part with the opinion. The NCAA, meanwhile, got a “strong win” on the issue of NILs that will make it hard for the Shawne Alston and Martin Jenkins lawsuits to seek more money for college athletes. The appellate court disagreed with the NCAA’s opinion of the 1984 case, which ended the NCAA’s monopoly on television broadcasts and had little to do with paying players. Rather, the Court discussed the amateurism rules for a different and particular purpose: to explain why NCAA rules should be analyzed under the Rule of Reason, rather than held to be illegal per se. The point was a significant one.” The appellate judges wrote that the 1984 Supreme Court case “did not approve the NCAA’s amateurism rules as categorically consistent with the Sherman Act.

NCAA attorney Seth Waxman said the O’Bannon ruling creates “flat conflict” with decisions in other circuits and strengthen the NCAA’s possible bid for a Supreme Court review. But they judges said they did not tackle the “thornier questions” of whether athletes on live TV broadcasts have enforceable rights of publicity. Shawne Alston, Martin Jenkins and several other current and former players have sued the NCAA, arguing that the cap on athletic scholarships to tuition, room, board, books and fees is a violation of antitrust law. Michael McCann is a Massachusetts attorney and the founding director of the Sports and Entertainment Law Institute at the University of New Hampshire School of Law.

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