Antitrust and Amateurism in Sports: Are Scholarships “Enough” to Compensate Collegiate Athletes?

Photo Credit: http://footballscoop.com/news/nike-adidas-or-ua-who-wears-what-in-fbs/

By: Jacey G. Mann 
Committee Chair, American Journal of Trial Advocacy

           This conversation has been circulating for years: Should collegiate athletes be paid for their services and for the use of their likeness, or are they already compensated enough? Historically, the courts have refused to get involved in such cases. This refusal may be related to personal biases with particular athletes or teams; or maybe courts recognize how such a decision could drastically change the entire amateur system. The conversation stems from an NCAA rule that prohibits players from profiting off the use of their name, likenesses, or image.[1] In maintaining their position to not weigh in on this discussion, the Supreme Court recently refused to consider the Ed O’Bannon antitrust case against the NCAA,[2] leaving in place the arguably antitrust-violating rules of the NCAA.

O’Bannon

           Ed O’Bannon was one of many athletes who sued the NCAA back in 2009, claiming collegiate athletes were entitled to compensation for the NCAA’s use of their likenesses.[3] The O’Bannon case “centers on whether collegiate athletes are entitled to receive compensation beyond school-related expenses, both for playing their sport and from video games and television broadcasts using their names, images, and likeness.”[4]

           When the case first went to trial in June 2014, United States District Judge Claudia Wilken called into question whether the NCAA rule violated antitrust laws and ruled the NCAA could not restrict athletes from selling the rights to their own names, likeness, and images.[5] Wilken further ruled the NCAA could not cap compensation to players at any less than the total cost of attendance.[6] However, Wilken’s attempt to resolve the antitrust issues concerning the case was overruled when the Ninth Circuit panel in a 2:1 hearing “threw-out the deferred compensation remedy.”[7] The court reasoned,

           The difference between offering student-athletes education-related compensation and offering them cash sums untethered to educational expenses is not minor; it is a quantum leap. Once that line is crossed, we see no basis for returning to a rule of amateurism and no defined stopping point; … At that point the NCAA will have surrendered its amateurism principles entirely and transitioned from its ‘particular brand of football’ to minor league status.[8]

           In the wake of the Ninth Circuit’s ruling, “the O’Bannon plaintiffs argued that reasoning was improper because it was circular.”[9] They argued, “‘Amateurism’ is not ‘effect’ of the restraint at all. It is simply another way of describing the restraint itself.”[10] This is where the conversation once again stalls, especially with the Supreme Court refusing to hear the case. What’s left of the conversation is 1) the NCAA claiming their rules are legally prohibitive and not in violation of antitrust laws; 2) the NCAA continuing to profit off collegiate athletes supplying compensation to the athletes only up to the cost of attendance; and 3) the athletes desperately wanting due process rights and the opportunity to reap the benefits of their hard work through the profitability of their names, likenesses, and images.

           Just when all seemed to be lost for the O’Bannon plaintiffs and other similarly situated athletes, the National Labor Relations Board ruled that the particular restrictions on one school’s football players were unlawful.[11]

NLRB

           As ESPN stated, the decision by the National Labor Relations Board (NLRB) was an “unprecedented foray into college sports.”[12] The ruling specifically referred to Northwestern University football players and referred to those players as “employees.” This is a noteworthy milestone for collegiate athletes, because courts and other governing bodies have refused to classify collegiate athletes as “employees.” With employment status, collegiate athletes would be subject to substantially more contractual and discretionary rights. The refusal of the classification for collegiate athletes has meant decades of limited – if any – due process rights, and the inability to transfer schools, profit from personal likenesses, and freedom of expression. The NLRB’s ruling in the Northwestern University case “found that [collegiate athletes] must be freely allowed to post on social media, discuss issues of their health and safety, and speak with the media.”[13]

           While the NLRB’s ruling is currently limited to Northwestern University, it could apply to the other private football programs that play in the Football Bowl Subdivision (FBS).[14] Why only private programs and universities? The “NLRB governs relations between private employers and their employees, so it has no power over public schools.”[15]

So, What Does O’Bannon and the NLRB Ruling Mean for Collegiate Athletes?

           Despite the Ninth Circuit’s overruling of deferred compensation plans in the O’Bannon[16] case, the NLRB ruling[17] is a beacon of hope for collegiate athletes following the Supreme Court’s refusal to hear O’Bannon.[18] Even though the NLRB ruling specifically did not address compensation for collegiate athletes, the platform for the conversation now exists where it had not prior to the ruling.[19] Of course, as mentioned, the NLRB’s jurisdiction is limited to private employers and universities.[20] However, this ruling and the granting of “employee” classification for Northwestern’s collegiate athletes might stir up the long-term traditions and law that the NCAA has leaned on for its support over the years just enough to extend the platform for the conversation to all universities. Rewriting decades of court precedent on the matter is not taken lightly, nor is it assumed to occur quickly; however, the additional thoughts from the NLRB are present, and they likely will now be contributing to future conversations regarding this matter.

 

[1] Emily Atwood, Judge Sends O’Bannon Class Action Against NCAA to Trial, Athletic Business (Feb. 2014), http://www.athleticbusiness.com/governing-bodies/judge-allows-class-action-suit-against-ncaa-to-go-to-trial.html.

[2] Jason Scott, Supreme Court Won’t Hear O’Bannon Case, Athletic Business (Oct. 2016), http://www.athleticbusiness.com/college/supreme-court-won-t-hear-o-bannon-case.html?eid=221044528&bid=1545327.

[3] Laura Godlewski, NCAA to Pay $46 Million for O’Bannon’s Legal Fees, Athletic Business (July 2015), http://www.athleticbusiness.com/civil-actions/ncaa-to-pay-46-million-for-ed-o-bannon-s-legal-fees.html.

[4] Scott, supra note 2.

[5] O’Bannon v. Nat’l Collegiate Athletic Ass’n, 7 F. Supp. 3d 955, 982-83 (N.D. Cal. 2014).

[6] O’Bannon, 7 F.Supp.3d at 975.

[7] Steve Berkowitz & A.J. Perez, Supreme Court Will Not Consider the Ed O’Bannon Antitrust Case Against the NCAA, USA Today (Oct. 3, 2016, 5:07 PM), http://www.usatoday.com/story/sports/college/2016/10/03/supreme-court-ed-obannon-ncaa-antitrust-case/91462090/.

[8] O’Bannon v. Nat’l Collegiate Athletic Ass’n, 802 F.3d 1049, 1078-79 (9th Cir. 2015).

[9] Berkowitz & Perez, supra note 7.

[10] Id.

[11] Lester Munson, Free to Tweet: Northwestern’s Restrictions on Football Players Ruled Unlawful, ESPN (Oct. 10, 2016), http://www.espn.com/espn/otl/story/_/id/17765516/nlrb-rules-northwestern-restrictions-unlawful.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] O’Bannon, 802 F.3d at 1078-79.

[17] Munson, supra note 11.

[18] Scott, supra note 2.

[19] Munson, supra note 11.

[20] Id.

 

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