Court Strikes Down Payments to College Athletes

30 Sep 2015 | Author: | No comments yet »

Appeals court agrees NCAA violates antitrust law in Ed O’Bannon case.

In a significant opinion from the Ed O’Bannon case, the US Ninth Circuit Court of Appeals upheld a lower court’s decision that NCAA rules restricting payment to college athletes violate antitrust laws, but determined a federal judge erroneously allowed players to be paid up to $5,000 per year in deferred compensation. “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. It does not require more.” The panel affirmed in part and reversed in part US District Judge Claudia Wilken’s ruling from August 2014 related to NCAA rules prohibiting athletes from being paid for use of their names, images and likenesses.

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 five major conferences created a rule last January allowing cost of attendance stipends and that additional money is currently being applied throughout college sports.

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. The Ninth Circuit disagreed with the NCAA’s interpretation of a 1984 Supreme Court decision that the association has used as a defense for decades in relation to its amateurism rules. College athletes, many of whom come from poor backgrounds, have complained that schools exploit their talent by making tens of millions of dollars through television contacts, tickets sales and marketing deals while not paying them more than the cost of a scholarship and room and board. 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. 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.

They have been especially bothered by seeing replicas of their jerseys sold for more than $100 and seeing themselves in video games while not receiving royalties themselves. 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. The amateurism rules’ validity must be proved, not presumed.” In the opinion, the panel acknowledged that “the Board of Regents Court certainly discussed the NCAA’s amateurism rules at great length, but it did not do so in order to pass upon the rules’ merits, given that they were not before the Court. Rather, it held that, because many NCAA rules (among them, the amateurism rules) are part of the ‘character and quality of the [NCAA’s] product … no NCAA rule should be invalidated without a Rule of Reason analysis. The Court’s long encomium to amateurism, though impressive-sounding, was therefore dicta.” The opinion could set up an attempt by the NCAA or the O’Bannon plaintiffs to have O’Bannon heard before the Supreme Court.

NCAA president Mark Emmert said the ruling provides “great clarity” on the fundamental notion that pay-for-play is at odds with amateurism. “The ruling has those statements in pretty direct language that I hope will limit some of the legal arguments being made,” Emmert said. 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.

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