|Sports on Earth|
After five years of legal wrangling, a bench trial of the landmark antitrust lawsuit filed by former UCLA basketball star Ed O'Bannon against the National Collegiate Athletic Association begins on Monday in Oakland, Calif. under U.S. District Judge Claudia Wilken. How will the courtroom battle be fought, and what could the outcome mean for the future of college sports? Glad you asked:
So what is this trial all about?
At its core, the O'Bannon case is about economic power and control -- specifically, how much of both the NCAA and its member schools should be allowed to have over men's college basketball and football players.
Currently, college sports follow the golden rule -- those who have the gold, make the rules. NCAA members all agree to not compensate college athletes for playing sports beyond the value of a scholarship (tuition, room, books and board) and/or anything else the union of schools deems acceptable (like bowl game swag bags), a restraint known as amateurism. At the same time, those schools take in billions of dollars from television networks selling games featuring the names, images and likenesses (NILs) of the restrained athletes.
The O'Bannon plaintiffs -- which include former college football players and NBA Hall of Famer Bill Russell -- and their lawyers argue that NCAA amateurism is a price-fix that violates antitrust law because it: (a) eliminates economic competition among schools for talented recruits in the college education market, thereby harming athletes by reducing the amount of compensation they would otherwise be receiving; and (b) prevents athletes from earning money from schools, networks, video game makers and other sources by shutting them out of the group licensing market for their NILs.
In other words: the system is unfair. NCAA schools have rigged the rules of the game to illegally and unduly profit at the expense of college athletes. If not for amateurism, O'Bannon could have gotten a cut of the revenues for an EA Sports college basketball video game that included a classic UCLA team featuring his digital likeness. If not for amateurism, current men's basketball and football players would be able to pocket some of the broadcast money flowing into their schools and athletic departments, as well as license their NILs to video game makers and others.
For its part, the NCAA counters that college athletes are not being restrained economically because no actual television market for their NILs exists. Moreover, the association's lawyers argue, amateurism is an integral part of college sports that is necessary for men's basketball and football to exist and thrive in the first place. No amateurism? Fewer games and lower quality. Which would hurt athletes and fans alike.
Before we get into the legal arguments, what's a bench trial?
A bench trial means no jury. Instead, Judge Wilken -- a Clinton administration appointee who has overseen the case from its inception -- will take in and weigh the relevant arguments, testimony and evidence, and then issue a written verdict.
What are O'Bannon's lawyers attempting to prove at the trial?
Three major things:
1. NCAA schools conspire;
2. The agreement among schools unreasonably restrains trade -- that is, the restraint produces anticompetitive effects within a market that outweigh any procompetitive effects;
3. The objectives of the restraint in question can be achieved in a less restrictive manner.
Can you put that in plain English?
Sure. Conspired means that the schools worked together and all agreed to the same restraint -- in this case, amateurism. Anticompetitive is self-explanatory: actors who would otherwise compete in a marketplace, like tech companies looking for programming talent, do not. Harm results typically by someone getting screwed out of money they otherwise would be making, and sometimes by consumers getting screwed out of more choices, better products or lower prices.
Procompetitive takes a bit more explaining. It's a legal concept that allows for otherwise verboten cooperation between marketplace rivals when that cooperation is necessary for the overall health of a product or market. Here's an example I've used before: Flash drive manufacturers agree to a USB standard, but compete on the basis of memory size and price. The courts approve. Why? Without a collective standard, the overall market for computer memory peripherals would be harmed.
Point No. 3 is related to the above. Basically, O'Bannon's lawyers will attempt show that amateurism restrictions on athletes profiting from NIL sales aren't necessary for for big-time college football and men's basketball to exist or be healthy -- and while they're at it, they also will try to demonstrate that any supposed benefits amateurism provides to the college sports market could be achieved and enjoyed with a looser definition of the term.
Okay, so what is the NCAA trying to prove?
Pretty much the opposite of the above. First, amateurism doesn't cause market harm to athletes or consumers of college sports products, because the market for NILs within the context of sports broadcasting does not actually exist. (Don't laugh: it's not as completely batty as it sounds, and more on this in a bit). Second, amateurism is procompetitive, necessary for big-time college football and men's basketball to be popular and to achieve the NCAA's self-proclaimed educational goals.
Actually, yes. The NCAA's final pre-trial brief argues that there shouldn't even be a trial, because amateur athletics are the association's "core product" -- with rules prohibiting athletes from being paid for their NILs are designed to maintain said product. From the brief:
… the antitrust laws permit the NCAA's members to define their own product and protect consumers' freedom to choose that product over others …
Wow. Amateurism is just the NCAA protecting consumers' freedom. Did Frank Luntz pen the association's brief?
Is that the most ridiculous, Orwellian thing the NCAA's lawyers say about their -- ahem -- core product?
Of course not. Also from the brief:
… these and other rules are promulgated by an entire Amateurism Cabinet, which is comprised of college administrators and educators and guided by the principle that "student participation in intercollegiate athletics is an avocation, and student-athletes should be protected from exploitation by professional and commercial enterprises" …
So when the power conferences pocket Sports Cable Bubble megabucks and the NCAA's website sells jerseys searchable by athlete name on its website and the association bans any and all drinking cups at the NCAA men's basketball tournament that do not feature the logo of official sponsor Powerade, including cat mugs, that's just the heroic
You got it.
The NCAA does so much protecting, association president Mark Emmert might as well be The Dark Knight. On the other hand, college sports officials have said that "[college] athletes are amateurs. Intercollegiate athletics is not." Meanwhile, the NCAA's 2009 Task Force on Commercialism concluded that commercialism "should be embraced" and that "while participating is to be an avocation for students, college sports as an enterprise is a professional undertaking for everyone else."
Given the above, could you reasonably conclude that the NCAA's Amateurism Cabinet maybe probably should look into protecting college athletes from commercial exploitation by … the NCAA's Amateurism Cabinet?
You could, but then you'd be Ed O'Bannon.
Is it all obnoxious for the NCAA to spend time and space in its pre-trial brief for Judge Wilken arguing that there shouldn't be a trial in the first place, given that she already heard the arguments in the assocation's bid for summary judgment and, you know, ordered a trial?
Maybe a little, though the NCAA's lawyers likely are just laying groundwork for a possible appeal. Besides, it's not nearly as obnoxious as using air quotes in the same brief to describe O'Bannon's "expert" witnesses and "evidence."
The NCAA really used air quotes?
Speaking of experts and evidence, what are the main supporting arguments O'Bannon's team will present during the trial?
O'Bannon's lawyers first will have to establish that both a conspiracy and a restraint exist. They'll point out that the NCAA constitution -- agreed and adhered to by all member schools -- says that athletes lose amateur status and are ineligible to play if they "use [their] athletics skill (directly or indirectly) for pay in any form in that sport or accept a promise of pay even if such pay is to be received following completion of intercollegiate athletics participation." They'll also point out that NCAA rules authorize schools and the association to use athlete's NILs to promote events, championships and activities involving sports participation, with "all monies" going to schools or conferences.
As for the NIL market being real, O'Bannon's team claims an EA Sports representative will provide testimony and documentation at the trial showing that the company not only wanted to obtain the rights for more precise likenesses and names of every college athlete on the company's sports game rosters, but also was willing to pay more money to both the NCAA and the athletes themselves in order to do so. In addition, expect O'Bannon's lawyers to cite the testimony of NCAA expert witness and former CBS Sports executive Neal Pilson, who said the following in a pretrial deposition:
"In our television industry, when a broadcaster and rights holder negotiate a deal, the NILs of the people whose - who are in the event are part of the broadcast agreement … the practice in the industry is that the NIL of the people participating in the sports event are included within the broadcast agreement."
O'Bannon's lawyers will attempt to show that NCAA amateurism produces anticompetitive effects and harm, including:
1. Athletes have been denied the opportunity to make money via compensation for the use of their detailed, licensed NILs in video games;
2. Athletes have been denied the opportunity to make money via compensation for the use of their licensed NILs in live game broadcasts and archival footage;
3. Athletes have been denied the opportunity to make money via economic competition during the recruiting process, and instead face an increased cost of college attendance;
4. Consumers have fewer and lower-quality licensed college sports products to choose from;
5. Amateurism causes what economists call inefficient substitutions -- that is, workarounds that are costly and less perfect than what a free, competitive market would provide. Examples: EA Sports programmers create their college football games with real player names, then remove those names before shipping to stores; instead of bidding for the services of talented athletes with varying financial offers, NCAA schools instead compete indirectly by spending money on lavish athletic facilities, big-name coaches, large recruiting staffs and the like.
Right, so what are the NCAA's primary supporting arguments?
The first is a doozy: Amateurism doesn't harm athletes -- can't harm athletes -- in the market for sports broadcast NILs rights, because neither that market nor the rights exist in the first place.
From the NCAA's pre-trial brief:
… [Athletes] do not have that right because they do not create college football or basketball games or control the stadiums where they are played. Their colleges and universities -- either among themselves, or, in the case of the Division I Men's Basketball Championship, through the NCAA -- do.Take, for example, the Cal-Stanford football game, which has been played 116 times since 1892. Cal and Stanford have scheduled this game long before any of the [athletes] who will play in it have enrolled at either school. Cal and Stanford decide who can play in the game, march in the band, be part of the cheerleading squad, and buy tickets to enter the stadium. Cal and Stanford funded the training and equipment for the football teams, built the stadium where the game will be played and contracted for security to control access to it.As such, as a very practical matter, Cal and Stanford have the power to keep every network out other than ABC and charge ABC for the privilege. The athletes do not. They are only in the stadium at all because their colleges and universities have agreed to let them play, just as they have agreed to let the band march, the cheerleaders cheer, and the fans with tickets sit in the stands. [Athletes] cannot own the right to broadcast their games when they need the same permission that broadcasters do to be in the stadium at all …
Uh, that sounds a lot like Donald Sterling's "who makes the game? Do I make the game, or do they make the game?" riff.
Doesn't it, though?
Will Judge Wilken buy that?
Probably not. Without much success, the NCAA has been arguing for a while that networks like ESPN and CBS don't fork over billions for the right to broadcast athletes, but actually just pay for the exclusive right to have cameras in stadiums at particular times -- oh, and hey, if a well-known athlete or team happens to do something sportsy and amazing in front of those cameras at the same time, well, that's just the magic of live TV!
Nope. In fairness to the NCAA's lawyers, however, there are some state right-of-publicity laws that can be interpreted to support their position.
What about video games?
The NCAA claims that there's no market for athlete NILs, because EA Sports games didn't use college athletes' real names or faces.
Uh, didn't the same games very much use their likenesses? Isn't that why O'Bannon sued in the first place?
Yes. And yes. O'Bannon became involved in the lawsuit after seeing a friend's child playing an EA Sports video game featuring his likeness -- bald, left-handed, same height and jersey number -- while a former longtime EA Sports producer testified under oath that the company's games were designed to replicate actual players without using their names.
What else will the NCAA argue?
That amateurism is procompetitive. How so? Let's count the ways:
Amateurism is essential for men's college basketball and football to exist as consumer products. Suppose you're an Auburn University football fan. And suppose the school announces that effective immediately, players will be allowed to be paid. Meanwhile, the University of Alabama decides to keep enforcing amateurism. Would you stop rooting for Auburn? Would you start rooting for Alabama?
The NCAA argues that most Auburn fans would choose the first option, and maybe even the second. Because college sports fans aren't just fans of college sports -- they're fans of amateur college sports. During the trial, the association plans to submit an opinion survey showing that if college athletes receive payment, the public will have less interest in watching and attending games.
Amateurism enhances competitive balance between schools, which also is essential for college sports as a consumer product. In its pre-trial brief, the NCAA argues that if schools are allowed to pay athletes for their NILs, "many recruits will have significant -- in many cases, six-figure -- incentives to attend schools with more revenue. In those circumstances, it is basic economics that allowing cash payments for NIL for the first time will tilt the distribution of talent and success towards colleges and universities with more cash to spend." In other words, the schools with the biggest sports budgets will land the best players and dominate their competition.
Wait. Stop right there. Are the NCAA's lawyers really arguing that the distribution of talent and success in college sports doesn't already tilt toward schools with more cash to spend? Have they ever heard of Kentucky basketball or Alabama football?
Apparently not. O'Bannon's lawyers plan to hammer this assertion -- in part by demonstrating that year after year, wealthy BCS conference schools overwhelmingly land the top high school recruits and win games accordingly; in part by noting that the NCAA keeps changing its squishy language on the matter, from competitive balance to competitive equity to commitment to fair competition; in part by having economists argue that restricting athlete compensation to athletic scholarships actually decreases competitive balance, because less wealthy schools don't have the opportunity to outbid blue blood programs for individual athletes.
(In a nutshell: the No. 1 high school basketball player in the country will always be worth more to Kentucky than Ball State, but the No. 100 player might be worth more to the latter -- only under amateurism, Ball State can't put its money where its heart is).
Similarly, O'Bannon's team will dispute the idea that college sports fans are primarily interested in watching unpaid athletes, as opposed to watching the country's best 18-22 year old football and basketball players compete with cherished school affiliations. In their pre-trial brief, they call the NCAA's survey "irrelevant and dated"; point out that while past surveys indicated public disapproval of professional athletes competing in the Olympics, the actual professionalized Olympics are more popular and lucrative than ever; and note that high-profile violations of amateurism rules have not made fans less interested in college sports:
… fans still flocked to watch Ohio State play in the 2011 Sugar Bowl although six of its athletes had violated NCAA rules by selling signed memorabilia. Likewise, in 2013, although Texas A&M's quarterback Johnny Manziel was suspended for the first half of the season opener for allegedly selling autographs, that game, which featured Manziel in the second half, finished 61% above the average ESPN rating for comparable telecasts …
Also expect O'Bannon's lawyers to show that amateurism always has been a flexible term that essentially means whatever the NCAA says it means. At various points in time, schools have allowed athletes to be compensated with tuition; school supplies; a $15-a-month "laundry money" allowance that would be worth nearly $2,000 in today's cost-adjusted dollars; unlimited bagel toppings; and bowl game gifts. At other times, all of those things (and more) were verboten. As O'Bannon's pre-trial brief says about recent propose association rules changes that would allow athletes to receive additional money to cover the full cost of attending school:
… NCAA member schools have been urging sweeping changes to the no-compensation rules, without a hint that any of these measures might extinguish college sports altogether …
Another question on competitive balance -- if the NCAA's lawyers are saying that amateurism restraints are necessary because bidding wars for recruits funded by NIL compensation money would harm competitive balance in college sports, aren't they also inadvertently admitting that contrary to their legal position, there is a market that currently is being restrained and harmed?
Sure seems that way.
College sports officials constantly argue that restricting compensation to men's football and basketball players is necessary in order to fund women's and men's non-revenue sports -- that if athletes are allowed to be paid, women's rowing is toast. Will they get to make that argument in court?
Nope. Judge Wilken has ruled it out. However, the NCAA's lawyers have tried to sneak it back in -- albeit sideways -- by claiming that men's football and basketball's benefit from non-revenue sports via enhanced student body diversity and the "opportunity to attend games in other sports."
Let me see if I have the NCAA's argument straight: Sorry you're not allowed to make any money. But enjoy tonight's volleyball game, which features a setter from Croatia!
That's about right. Oh, and the association makes a similar claim about outsized coaching salaries and gold-plated athletic departments, insisting that both qualify as benefits for college athletes. And probably the trust funds of Alabama football coach Nick Saban's great-great-great-great-great grandchildren, too. But mostly his players!
What about the NCAA's argument that amateurism enhances education? Will that be allowed?
Yes, provided that the association can demonstrate a concrete, cause-and-effect relationship between having less money and better academic performance. NCAA lawyers plan to argue three points:
1. Amateurism ensures that college athletes participate in sports as "students rather than professionals," which makes them spend their time "doing what students do rather than trying to make as much money as possible, which is what professionals do."
2. Football and men's basketball players "graduate and achieve success at equal or higher rates than other young people with similar backgrounds."
3. Allowing high school students to participate in "a bidding war would undermine their ability to be effective students."
No offense to the NCAA's legal team, but the first point doesn't make a lick of sense. College students with campus or side jobs "try to make as much money as possible" all the time -- and they still "do what students do," which presumably in this context means going to class and studying. How are athletes different? Moreover, the Northwestern football unionization ruling made it clear that elite college athletes can spend up to 50 hours a week on their sports. Why would paying them more than the value of a scholarship for a non-scholastic activity they're already doing anyway somehow detract from their academics?
Good questions -- and questions O'Bannon's lawyers likely will bring up in court. In addition, expect the plaintiffs to present data and testimony from former college athletes purporting to show that big-time football and men's basketball players largely are receiving crummy educations, and that playing sports actually interferes with learning.
Oh, cool. Rashad McCants is going to testify?
Nope. A little too late for that.
So who's on the witness list?
O'Bannon, Emmert, Big Ten commissioner Jim Delany, other current college sports administrators, former college athletes and a half-dozen economists acting as expert witnesses for each side.
How long will the trial last, and when can we expect a decision from Judge Wilken?
The trial is scheduled to last up to three weeks. Wilken is expected to issue a written decision later this summer.
What happens if O'Bannon wins?
O'Bannon and his lawyers aren't asking for damages. They are asking for an injunction that would prevent the NCAA from colluding to deny college athletes the ability to license their NILs or receive a share of revenue associated with that licensing. Translation? College athletes would be allowed to be paid -- as a group -- for appearing in game broadcasts and in video games.
So how would college athletes be paid?
First things first: schools and conferences would not be required to pay athletes group royalties. However, they finally would be free to do so -- and athletes would be similarly free to negotiate -- without either party being punished by the NCAA.
In their pretrial brief, O'Bannon's lawyers proposed a kind of compromise with the association's current amateurism restrictions, suggesting that the simplest solution for actual payment would be to place NIL licensing money in a trust that athletes could access after their NCAA eligibility expires.
A O'Bannon victory also makes it likely that individual players would be able to earn money via autograph sales and other uses of their own NILs.
What happens if the NCAA wins?
In the short term, the college sports status quo would be maintained. Victory might also yield useful case precedent that would help the NCAA defend its economic model against other legal challenges.
(Note: a loss could do the opposite, making the association more vulnerable to the next lawsuit).
What other threats does NCAA amateurism face?
In the previously mentioned Northwestern football unionization case, the national office of the National Labor Relations Board currently is reviewing a regional office ruling that the school's scholarship football players qualify as employees, a conclusion that strikes at the heart of college sports amateurism. Meanwhile, two other antitrust suits that have been merged and will be overseen by Judge Wilken directly challenge the NCAA's scholarship restraints and seek to establish an open market for college athletes; one of those cases is led by sports labor attorney Jeffrey Kessler, who famously argued the case that brought free agency to the National Football League.
Oh, and if O'Bannon wins, individual plaintiffs could sue the NCAA for damages over NILs. Which could prove expensive over time.
What are the odds that O'Bannon and the NCAA settle during the trial?
It's possible, but highly unlikely. While Sports Illustrated's Michael McCann reports that O'Bannon's lawyers remain open to the possibility, the NCAA seems committed to an all-or-nothing roll of the dice -- likely because it's very, very hard to say goodbye to such a sweet business model, and also because the circular underlying logic of amateurism requires cult-like devotion.
Regardless of who wins or loses the O'Bannon case, will Judge Wilken's decision be appealed?
Without doubt. The case will go to the U.S. Court of Appeals for the Ninth Circuit, a process that could take as long as two years. After that, the losing side could appeal to the Supreme Court -- something the NCAA already has promised to do.
What happened the last time a NCAA antitrust case went to the Supreme Court?
The association lost. Badly. As I've explained before, the University of Oklahoma and the University of Georgia brought an antitrust suit against the NCAA in the 1980s over the its iron-fisted control of televised college football rights. NCAA lawyers claimed the restrictions were procompetitive and necessary for the survival of the sport because they encouraged both in-stadium game attendance and competitive balance. Oklahoma and Georgia argued that the same restrictions were anticompetitive because they fixed the price of game broadcasts and placed an artificial cap on the total number of televised games -- two things that were hurting college football.
Sound familiar so far?
Federal courts ruled against the NCAA. The Supreme Court agreed. The subsequent explosion in television revenue -- an explosion made possible by a college sports marketplace free of collusion -- has made schools and conferences unfathomably richer, setting the stage for the O'Bannon case and other antitrust challenges.
So schools are denying athletes the same freedom they previously won from the NCAA via an antitrust lawsuit, while a desire to share in the financial fruits of that freedom is basically why athletes are suing in the first place.
Exactly right. Like former NCAA president Myles Brand's "Catch-22" shaming-logic for justifying amateurism -- college athletes can't be paid because they're amateurs, and they're amateurs because they can't be paid -- we've come full circle.
Read the original article at Sports on Earth