In August, US District Court Judge Claudia Wilken determined that the NCAA "unreasonably restrained" the trade of student-athletes in violation of antitrust laws in the class action suit filed on behalf of former UCLA Bruin Ed O'Bannon. In her ruling, Wilken determined that the seminal Supreme Court case of NCAA v. Board of Regents should not preclude student-athletes from being paid during their college years and beyond.
For Wilken's entire decision, click here.
In November, the NCAA appealed the case to the 9th Circuit Court of Appeals. The appeal largely focuses on Wilken's alleged "misinterpretation" of Board of Regents, which the NCAA has repeatedly and successfully cited to protect the concept of "amateurism" since 1984. Wilken ruled that schools could provide scholarships to student-athletes that covered their "full cost of attendance," (at a level "not less than $5,000" per student-athlete). She also ruled that student-athletes should receive deferred ("in trust") compensation for the NCAA's unauthorized use of student-athletes' "publicity rights" -- again, in an amount "not less than $5,000" per student-athlete per year of eligibility. She otherwise left intact all of the other NCAA "Amateurism" Rules.
The NCAA has estimated that this ruling could cost each NCAA Member upwards of $30,000 to $40,000 per student-athlete for a four-year collegiate career, which will likely result in non-revenue-producing varsity sports being cut across the country, leaving only major college football and basketball programs-- with only enough women's varsity sports remaining to satisfy Title IX.
Shortly after the NCAA filed its appeal, fifteen antitrust professors filed an amicus brief supporting the NCAA. The professors stated that Wilken's ruling improperly exceeded her power, and would establish an unwanted precedent allowing federal judges to expand the "rule of reason" prong of analysis for antitrust cases. Why? Because it is virtually unprecedented that a Federal Judge would issue an Order requiring the "not less than" parameters described above. A full list of the professors can be found here.
First off, in considering the fairness (or unfairness) of student-athletes being compensated for their "publicity rights" ("name, image and likeness" when used for commercial purposes) and other athletic contributions to collegiate programs, we should focus on four aspects in particular:
1. Whether Wilken's ruling went against precedent -- Judge Wilken ruled that in the past thirty years since Board of Regents was decided, the economic and commercial landscape of the NCAA has drastically changed. Because of these changes, Judge Wilken decided that Board of Regents did not control this case -- a highly contentious point in this appeal.
2. Whether there was "commercial activity," as the NCAA Rules simply establish "amateurism" -- Yes, the NCAA Rules establish the criteria for maintaining the "amateur" model of the student-athlete. However, by definition, it limits/eliminate student-athletes abilities from monetizing their "commercial activity," so this may not be the best argument for the NCAA.
3. Whether the plaintiffs suffered an antitrust injury. Why a key consideration? Because no state currently recognizes compensation rights for live television use of athletes' names, images and likenesses (NILs) -- While there is no current state law on the matter, the First Amendment has carved out significant compensatory rights for the NILs of professional athletes. The NCAA could reasonably argue their entitlement to use the NILs of student-athletes while in school and for live television, but the reasonableness ceases when they continue to use the NILs perpetually in third party products (video games); sponsored archive footage; sponsored classic games, product/program advertising, etc.
4. Whether Judge Wilken appropriately applied the "rule of reason" analysis -- Restrictive activity is not always impermissible if it can be proven that the restrictions are for pro-competitive reasons, and that less-restrictive options cannot be shown. The NCAA will argue vehemently that these restrictions have allowed the NCAA and its member institutions to advance collegiate athletics to the model that they represent today. Without these restrictions, non-revenue-producing Varsity Sports will be unable to continue to exist.
In the end, the NCAA faces a tough, uphill battle in overturning Judge Wilken's ruling. The likely best case scenario for the NCAA is overturning the "not less than $5,000" rule as being "arbitrary and capricious," though many experts believe that the likelihood of even that result could be considered slim, given the generally "liberal" holdings of the 9th Circuit Court of Appeals.
You Make the Call:
Should student-athletes be paid? Did Wilken exceed her legal power by going against the most relevant antitrust precedents? Does the NCAA have a strong enough argument to overturn Wilken's ruling -- in whole or in part?
I look forward to hearing from you!