An Amateurism Challenge Evaporates, but Others Loom for NCAA

The Supreme Court’s decision not to hear the O’Bannon case protects college sports’ amateurism model for now, but earlier ruling that the association violates antitrust laws leaves the model vulnerable.

October 4, 2016
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Leaving the issue of paying college athletes in a state of limbo, the U.S. Supreme Court on Monday declined to hear the Ed O’Bannon antitrust case against the National Collegiate Athletic Association.

The Supreme Court’s decision, which it offered without explanation or comment, means the NCAA’s amateurism model survives, but in letting a lower court's ruling stand, the court also left that model open to further scrutiny, setting the stage for two other antitrust lawsuits that both seek to allow compensation for athletes beyond athletic scholarships.

Last year, the U.S. Court of Appeals for the Ninth Circuit upheld a district court opinion that NCAA rules limiting what college athletes can be paid violate antitrust laws. By declining to hear the O’Bannon case, the Supreme Court has ensured an opening for other antitrust lawsuits to argue that it is illegal for the NCAA to limit athletes’ compensation, provided they can persuade the courts that striking down amateurism would not fundamentally alter the demand for college sports.

"Future plaintiffs now have a road map to bring antitrust cases against the NCAA," Marc Edelman, a law professor at the City University of New York’s Baruch College and expert on sports and antitrust law, said in an interview. "Future cases will be decided on the facts of the case and on whether the payment of athletes would or would not harm consumer demand. The legal burden has already been met."

In August 2014, Judge Claudia Wilken ruled in a lawsuit brought by the former college basketball player Ed O’Bannon that the NCAA had violated antitrust law by not allowing athletes to be paid for the use of their names and likenesses. The ruling would have allowed, but not required, colleges to pay players about $5,000 each year beginning that fall. The payments would have been capped at that amount and held in a trust fund until the students completed their athletic eligibility.

The decision was seen at the time as a major blow to the NCAA, and the association appealed the ruling. The appellate court last year said that it agreed with the original ruling that the NCAA violated antitrust laws, but it backed the association’s opinion that college athletics should not be thought of as minor league sports. Thus, the judges wrote, compensation for athletes should be limited to funds related to their education.

The panel stated that the “difference between offering athletes education-related compensation and offering them cash sums untethered to educational expenses is not minor,” calling the difference a quantum leap.

“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 [Antitrust] Act's rules,” the 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. The rule of reason requires that the NCAA permit its schools to provide up to the cost of attendance to their student athletes. It does not require more.”

The NCAA praised the latter part of the decision, and, at the association’s annual meeting in January 2015, the NCAA’s five wealthiest conferences voted to allow programs to offer full cost of attendance to athletes. But the NCAA decided to challenge the ruling that it had violated antitrust laws. O’Bannon and his lawyers also petitioned the Supreme Court, arguing again that players should be allowed more than just full cost of attendance.

“The NCAA was found guilty of illegal price-fixing in two courts and the Supreme Court is allowing those rulings to stand,” said Ramogi Huma, a former college football player and executive director of the National College Players Association, an advocacy group for college athletes. “This makes clear that the NCAA is not above the law and that college athletes deserve equal protection under the law.”

Where the O’Bannon case failed, said Edelman of Baruch College, was in not fully challenging the assumption that payment of college athletes would harm consumer demand for college sports. Part of the problem, Edelman said, was that the case began as a lawsuit focused on the right of publicity. O’Bannon's lawsuit originally argued that current and former players should be compensated when their name, image or likeness is used in video games, and it only later grew into an antitrust case.

“The Supreme Court leaves open the possibility of later hearing the very real substantive antitrust issues in a more straightforward case,” Edelman said. “The O’Bannon case was flawed in that it started as a case related to name-and-likeness rights for former college athletes and concluded as an antitrust case related to current college athletes. But there are now cleaner cases coming up right behind O’Bannon.”

Two cases being heard in lower courts both more directly challenge the NCAA’s right to cap compensation for college athletes.

In March 2014, lawyers representing a former West Virginia football player named Shawne Alston filed a class action against the NCAA alleging that the association had violated antitrust law by limiting compensation to athletic scholarships. That same year, Jeffrey Kessler, a leading antitrust lawyer who has previously won major victories for National Football League and National Basketball Association players, filed a lawsuit on behalf of a former Clemson University football player named Martin Jenkins.

The suit -- which would be decided by the same judge who ruled in the O’Bannon case in 2014 -- focuses not just on issues of name and likeness, full cost of attendance, or capped athletic scholarships, but on unlimited compensation. As the O’Bannon case made its way through the courts, the Jenkins case has loomed in the background as potentially the largest threat yet to the NCAA’s theoretical amateurism model. At a meeting of the Knight Commission on Intercollegiate athletics last year, Lorry Spitzer, a tax lawyer and professor at Boston College Law School, said the Jenkins lawsuit “really would end the world as we know it” for college sports.

A Jenkins win is far from a guarantee, however.

“If Jenkins prevails, it would upend the NCAA’s system of amateurism,” Michael McCann, the director of the University of New Hampshire’s Sports and Entertainment Law Institute, wrote for Sports Illustrated. “O’Bannon’s victory at the Ninth Circuit, while more muted in effect than he sought, can be used as precedent for Jenkins. At the same time, the NCAA might use the O’Bannon decision to highlight the judicial reluctance to imposing sweeping changes to amateurism. The NCAA would insist that the changes sought by Jenkins would interfere with the NCAA’s stated goals of promoting education and the college experience.”

During the O’Bannon case, the NCAA presented a study that suggested fans of college sports would stop supporting their teams if athletes were paid more than just being provided with athletic scholarships. The study, which was based on a survey of 2,445 college sports fans, found that 69 percent of fans said they would stop attending games if players were paid.

Mark Nagel, a professor of sports and entertainment management at of the University of South Carolina, questioned the accuracy of the study’s conclusion. After Wilken’s decision in 2014 and the vote at the January 2015 NCAA meeting, Nagel noted, the association began allowing institutions to pay players' full cost of attendance, not just the amount of a scholarship. Starting last year, many colleges provided the additional aid in the form of a stipend that covered the difference between a scholarship and the various other expenses that accompany being a college student, such as paying for food, laundry and travel.

At some institutions, the stipends were around $2,000 per year, while players at other programs received more than $5,000 -- an amount even larger than the suggested payments proposed by Wilken. Fans of big-time college sports did not walk away.

“I don’t think the marketplace really cares,” Nagel said. “They care about seeing a matchup like Clemson against Louisville, not about compensation. A vast majority of fans are not going to change their behavior just because those great quarterbacks they’re watching are now getting paid. They might want to say they would, but actions speak louder than words.”


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