What’s the Future in the Courts for College Sports, Inc.?

By now, you’ve probably heard of the recent ruling in the class action lawsuit against the NCAA headlined by former UCLA basketball player Ed O’Bannon.

You may have read about what money college athletes will and won’t be getting. But another part of that decision will lead to years of additional litigation over paying college athletes.

And another recent court decision could push this payments issue in a direction that’s getting little attention.

In the O’Bannon case, the Ninth Circuit Court of Appeals upheld a trial-court ruling that antitrust law prohibits the NCAA from banning the payment of full cost of college attendance to athletes.

The traditional athletic scholarship only covers tuition, room and board, and books. It doesn’t cover other college expenses, such as travel costs or laundry money.

That ruling is inconsequential because the NCAA already voided its prohibition on paying the full cost of attendance. Many schools pay it already.

In addition, the Ninth Circuit struck down the district court’s holding that antitrust law requires the NCAA to permit paying up to $5000 per year to football and men’s basketball players (paid after leaving college) as a licensing fee for showing them on TV playing in games.

What was less reported was a ruling by the court concerning the applicability of antitrust law to amateurism rules in college sports. The NCAA maintained that a 1984 Supreme Court decision sheltered all NCAA amateurism rules from antitrust attack.

This Ninth Circuit ruled there is no such shelter – NCAA amateurism rules can be attacked under antitrust law. That’s an invitation to class action plaintiffs’ attorneys.

For that reason, many eyes now turn to another antitrust class-action case against the NCAA known as the “Kessler Case,” which attacks all limits on what colleges can pay athletes.

Unlimited pay is unlikely to happen. In the O’Bannon appeal, the court ratified the factual finding that college sports would be far less lucrative if the athletes were paid substantial wages, because the public would see college sports as just minor-league sports.

On top of that, a federal trial court in Tennessee recently dismissed a class-action lawsuit headlined by several former Vanderbilt football players claiming that their “right of publicity” requires that they be paid by television networks that broadcast their games.

In the O’Bannon case, the trial and appellate court ducked this issue by merely finding that whether such publicity rights exist is open to debate and, consequently, television networks that broadcast games will want to pay for such rights to avoid lawsuits.

The Tennessee court held there is no such right of publicity for participating athletes because games essentially are news events.

If that Tennessee ruling stands, it undercuts the antitrust lawsuits seeking to get a share of the television revenue for big-time college sports. Those claims are based upon the possibility that athletes have publicity rights for playing in games on TV.

What’s getting less attention is the possibility of antitrust law pushing college sports into the “Olympic Model.” In the Olympics, athletes can’t be paid to play in the games. But, after a 1985 rules change, they can be paid for advertising and endorsement deals (and they can earn income from competition outside of the Olympics).

Remember that the O’Bannon case struck down paying up to $5000 per year in publicity-rights payments to athletes because of testimony that amateurism is key to the TV appeal of college sports. Well, it would be easy to get testimony that allowing Olympic athletes to do paid ads and endorsements hasn’t wrecked the commercial appeal of the Olympics.

One could imagine a federal court ruling on antitrust grounds that the NCAA is prohibited from barring college athletes from getting paid for ads and endorsements. That doesn’t implicate the right of publicity because it doesn’t concern TV rights to games or ticket sales.

The main drawback would be college boosters setting up phony ad and endorsement deals as a way to pay recruits to choose a school. I don’t know whether that concern would defeat an antitrust lawsuit pushing the Olympic model for college sports.

Paying college athletes is a weird issue. Many arguments made by sports fans over whether college athletes do or don’t deserve to be paid are just equitable ones that have nothing to do with antitrust law. But, because of these recent court decisions, whether the NCAA can maintain strict amateurism is an antitrust issue that’s far from resolved.

Written on October 20, 2015

by John B. Farmer

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