|Sports on Earth|
Not to say I told you so, but: I told you so. Federal judge Claudia Wilken issued a ruling last Friday in the landmark antitrust case brought by former University of California, Los Angeles basketball player Ed O'Bannon and others against the National Collegiate Athletic Association, determining that the association illegally prohibits campus athletes from profiting from the use of their names, images and likenesses in video games and television broadcasts.
What do Wilken's 99-page decision and accompanying injunction order mean for amateurism? For the future of college sports? Glad you asked:
V-Day! Let economic freedom ring! Brett Hundley can ask UCLA for a salary -- and a car! The next Johnny Manziel can sign as many autographs-for-cash as he likes! Missy Franklin doesn't have to choose between appearing in commercials and swimming at school, and the University of Oklahoma's pasta police can hand in their badges and their guns! Amateurism is finally dead. College athletes finally get to enjoy the same basic rights of American citizenship as the rest of us. Huzzah!
Slow down. We're not there just yet.
Um, okay, then how about this: college sports are doomed! No more women's rowing scholarships! The University of Alabama will now spend $200 million a year on football, and hock its English department so it can afford to outbid Auburn University for a third string cornerback! Disgusted fans will stop watching! The Big Ten will drop down to Division III, just as the lawyer who writes Jim Delany's legal declarations promised!
Nope, that's not happening, either.
Wait. I thought the O'Bannon lawsuit was The Big One. The case that will change college sports forever, ending amateurism as we know it. It's not?
Not quite. After five years of legal wrangling and a three-week bench trial, Wilken issued an injunction prohibiting the NCAA from enforcing any rules that restrict schools from offering big-time football and men's basketball players a "limited share" of the money generated from the use of their names, images and likenesses (NILs) in video games and television broadcasts.
So college athletes can now be paid?
But those payments are limited?
Very limited. Starting in 2016 and under the terms of Wilken's injunction, the NCAA and its member institutions cannot enforce any rules that would prevent schools from:
* Increasing the financial value of athletic scholarships to cover the full cost of attendance via stipends;
* Depositing as much as $5,000 a year per athlete -- drawn from NIL revenues -- into a trust fund that would pay out to said athletes upon graduation and/or the expiration of their playing eligibility.
In other words, big-time football and men's basketball players soon will be free to receive cost-of-attendance stipends while they're in school, and as much as $25,000 in deferred compensation after they leave?
Are schools being forced to give athletes bigger stipends and deferred compensation?
Nope. For that matter, the NCAA doesn't have to pass new rules: a) capping stipends at the full cost of school attendance; b) capping deferred compensation at $5,000 a year per athlete; c) preventing athletes from borrowing against the value of their deferred compensation while in school. But given the association's self-proclaimed core value of price-fixing via amateurism, it probably will do just that.
Did Wilken strike down the NCAA rules preventing individual athletes from cashing in on their NILs via commercial endorsements -- for example, a star quarterback lending his smiling face to an advertisement for a local car dealer, or someone like Franklin selling signed photographs?
Nuh-uh. Those are still violations. Even though O'Bannon's lawyers asked for an injunction allowing commercial athlete NIL use.
Are former players like O'Bannon potentially getting any money?
Again, no -- O'Bannon and the other former college athletes named in the suit, like NBA Hall of Famer Bill Russell, surrendered their claim to damages prior to the trial in order to have the case heard by Wilken alone, as opposed to a jury.
Wait a second. The major college conferences just voted for NCAA legislative changes that will give them more latitude to set their own financial rules and give athletes greater benefits. Association president Mark Emmert already has pushed for a $2,000 cost-of-attendance stipend, while the presidents of the Big Ten and Pac-12 schools have endorsed stipends and other small, athlete-friendly reforms like four-year guaranteed scholarships. What are schools actually losing here?
Beyond a potential extra $25,000 in cash -- about the cost of a new Toyota Camry -- per major college basketball or football player? Nothing.
So why is everyone acting as though the O'Bannon case is such a big deal?
Because Wilken's injunction is only half the story. Actually, not even half. More like a footnote. The real news is in her decision, and the headline is as follows: as a legal defense theory, amateurism is now about as useful as Zoroastrianism.
Remember: this is an antitrust case. Antitrust law exists to encourage marketplace competition and discourage the formation of price-fixing monopolies and cartels. When prospective employers out-bid each other to offer you the highest salary or stores slash prices to entice you to buy a new cell phone, that's good; when a single entity or collusive group uses overwhelming market power to limit salaries or charge extra, that's
Enter the NCAA. For decades, everyone from former association president/architect Walter Byers to one of the association's own expert O'Bannon trial witnesses has noted the obvious: the NCAA's member schools conspire to cap compensation for otherwise valuable college athlete labor at the value of athletic scholarships. Imagine that you're an emergency room doctor. Or an athletic director. If every hospital or school in America agreed to only pay you in room, tuition and board -- and if you took a dollar more, you'd be suspended from working anywhere -- would you accept it? Or would go find a lawyer?
Such is the basic situation facing college athletes. Only the NCAA has very cleverly redefined college students who are very good at running and jumping -- but still, it should be noted, American citizens -- as "student-athletes" and "amateurs," and therefore undeserving of the same protections under antitrust law the rest of us take for granted. Amazingly enough, a long line of federal judges have bought this argument. Bought it so thoroughly that collusion-via-amateurism had never been put on actual trial. Not until the O'Bannon case.
Under antitrust law, marketplace restraints that would otherwise be considered illegal -- like limiting college athletes' freedom to negotiate and enter into contracts both with schools and other interested parties -- are sometimes allowed, provided they're procompetitive. What does that mean? Basically, a procompetitive restriction is one that's necessary for a product or industry to exist or thrive in the first place.
(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).
During the O'Bannon trial, the NCAA put forth a number of procompetitive justifications for amateurism -- arguments that were remarkably similar to the ones made by status quo-favoring college coaches and athletic directors on a near-daily basis. In her decision, Wilken demolished each and every one:
* Competitive balance: Without amateurism, the association claimed, rich schools would be able to dominate on-field competition by outspending rivals for the most talented high school recruits. Wilken noted that this already happens -- only instead of paying their workforce a competitive wage, schools simply funnel cash into multimillion-dollar coaching salaries and lavish, gold-plated facilities.
Oh, and if the NCAA was truly concerned about Alabama's financial advantages vis-a-vis Troy University, it would do a whole lot more to share revenues between the power conference schools and everyone else.
"The fact that high-revenue schools are able to spend freely in these other areas cancels out whatever leveling effect the restrictions on student-athlete pay might otherwise have," Wilken wrote in her decision. "The NCAA does not do anything to rein in spending by the high-revenue schools or minimize existing disparities in revenue and recruiting."
* Education: In a pre-trial brief, the NCAA argued that amateurism helps integrate athletics with its core mission of academics -- largely by ensuring 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."
In other words: if we pay athletes, they'll spend less time studying and more time playing and practicing.
Problem No. 1: as the Northwestern University unionization case has made clear, big-time college athletes already can spend 50 or more hours a week on their sports. Problem No. 2: plenty of other students hold down part- and full-time campus jobs, yet still manage to study, graduate and do what students do. Wilken kiboshed the NCAA's baseless assertions, rightly noting that without amateurism income restrictions:
… the student-athletes' own incentives to perform well academically would remain the same, particularly if they were required to meet these academic requirements as a condition of receiving compensation for the use of their names, images, and likenesses. Such a requirement might even strengthen student-athletes' incentives to focus on schoolwork …
As for the association's related argument that empty wallets help elite college athletes fit in with their non-sports peers -- for argument's sake, just pretend this $7 million private chef-equipped Kentucky basketball dorm doesn't already exist -- Wilken wrote it was "not clear" why the same logic doesn't apply to wealthy students, or why "paying student-athletes would be any more problematic for campus relations than paying other students who provide services to the university, such as members of the student government or school newspaper."
Hmmm. Where have I heard that before?
* Fan preference: The association contends that fans adore college sports not only because the elite 18-to-22-year-old athletes on the field and court are students wearing university colors -- thereby creating a lucrative marriage between brand and talent; between spectacle and rooting interest -- but also because they're unpaid. Change that, and the same fans whose passionate interest creates the billions of revenue that allow coaches and athletic directors to get paid plenty would turn off their televisions, pack up their tailgate grills and find something better to do with their Saturdays. Like yard work.
Needless to say, this argument ignores the Olympics, which dropped amateurism years ago yet remain lucrative and popular. It disregards professional tennis, which beat the Olympics to the pay-players punch. It contradicts the example of every sports league ever, none of which have adopted amateurism in a shrewd bid to attract more fans. But whatever. During the trial, the NCAA offered as supporting evidence … a public opinion survey. A glorified poll. Of the same public that once opposed school desegregation, same-sex marriage and free agency in baseball.
Wilken was not impressed:
… This survey -- which contained several methodological flaws and did not ask respondents about the specific restraints challenged in this case -- does not provide reliable evidence that consumer interest in FBS football and Division I basketball depends on the NCAA's current restrictions on student-athlete compensation. Further, Plaintiffs offered evidence demonstrating that such surveys are inevitably a poor tool for accurately predicting consumer behavior … [highlighting] various polls and surveys which documented widespread public opposition to rule changes that ultimately led to increased compensation for professional baseball players and Olympic athletes even as Major League Baseball and the IOC were experiencing periods of massive revenue growth. This evidence counsels strongly against giving any significant weight to [the NCAA's] survey results …
* Product survival: Big Ten commissioner Delany and other college sports power brokers swear that without amateurism, their conferences and/or schools would drop out of Division-I sports altogether, becoming the first multibillion-dollar industry in recorded human history to pack things in rather than give its employees raises. Wilken found this "not credible," which is the legal term of art for bulls--t.
* Because amateurism: Believe it or not, the NCAA's core amateurism legal defense long has been a laughable exercise in semantics and tautological logic: athletes can't be paid because they're amateurs, and they're amateurs because they can't be paid. Such is our core principle. Wilken didn't buy it -- possibly because she's a federal judge, and therefore capable of complex thought beyond the level of a particularly clever golden retriever; probably because O'Bannon's lawyers demonstrated that amateurism isn't an actual principle in the first place, but rather a nebulous term that consistently means whatever the association says it means. Jon Solomon of CBS Sports explains:
… [Wilken] noted that under NCAA rules, a tennis recruit can preserve amateur status by accepting tens of thousands of dollars in prize money before enrolling in college, yet a track and field recruit would forfeit his eligibility if he or she did the same. Also, Wilken said, a football player is deemed an amateur by accepting a Pell grant that exceeds his total financial aid package above the cost of attendance, yet he would not be an amateur if he instead received the same amount of money for use of his name, image and likeness in live broadcasts.
"Such inconsistencies are not indicative of 'core principles,'" Wilken wrote.
Surprisingly, she did not add "LOL."
Who were O'Bannon's star witnesses?
Easy. Everyone who testified on behalf of the NCAA. Time and again in her decision, Wilken uses the association's testimony to support her points. Like Emmert stating that it's not the NCAA's mission to stop rich schools from taking advantage of their pricey athletic facilities. Or University of South Carolina president Harris Pastides admitting that schools probably wouldn't leave Division I in a world without amateurism. Or a parade of NCAA witnesses explaining that fans love college sports for pageantry, tradition, rivalries, school spirit and community pride -- anything and everything except unpaid players. Or Daniel Rubinfeld, the association's expert economist, who in his own college textbook specifically refers to the NCAA as a cartel.
Why does this matter? For one, it's funny. Downright ironic. More importantly, it makes Wilken's ruling less likely to be overturned in an appeal, because the NCAA will once again find itself arguing against … itself.
(And yes, one more time, I told you so).
If the NCAA's suffered such a resounding legal defeat, why is Wilken's injunction so tepid? Why didn't she just issue an order prohibiting all amateurism restrictions?
Two reasons. First, the case itself was relatively narrow, focused on compensation for college athlete NIL use within the context of television broadcasts and sports video games. Second, O'Bannon's lawyers asked for an correspondingly limited injunction, even proposing a trust fund/deferred compensation system that would allow the NCAA to again redefine amateurism and maintain some level of economic control over athletes.
Should they have pushed for more? A wholesale demolition? Perhaps. The association's case was surprisingly weak. That said, the O'Bannon team's restraint was calculated -- likely making it easier for Wilken to rule in their favor by giving her the opportunity to direct college sports toward eventual fairness and antitrust compliance, as opposed to demanding that she dismantle the NCAA's entire economic system all at once.
Will the NCAA appeal the decision?
Yes. The association has little choice. If Wilken's decision stands, college sports amateurism has little chance of withstanding future legal challenges -- most notably a suit filed by prominent sports and antitrust lawyer Jeffrey Kessler that seeks to eliminate the NCAA's restrictions on pay for performance entirely.
Will O'Bannon appeal?
The plaintiffs might appeal the specific $5,000 deferred compensation cap, which could have been better determined by additional negotiations between the NCAA and O'Bannon's lawyers, and seems rooted in former CBS Sports television executive Neal Pilson's trial testimony that he would be "troubled" by college athletes earning $1 million a year, but not by $5,000.
If the NCAA does pass a rule limiting deferred compensation to $5,000, wouldn't that just be more price-fixing at a higher rate? And why should athlete NIL money be deferred in the first place?
Good questions. Kessler will be happy to take them up.
Does Wilken's ruling give the NCAA any chance of winning an appeal? Any ammunition for future antitrust cases? Did she throw them a few bones?
Actually, yes. While Wilken didn't accept any of the association's procompetitive justifications for amateurism, she wrote that some might have partial merit -- particularly the idea that consumer (read: fan) preferences "might justify certain limited restraints on student-athlete compensation."
So the next time amateurism ends up in court, we should expect World Survey War III?
Pretty much. Would you be less likely to watch the University of Texas football team if its players were earning $25,000 a year? $50,000? If they were paid via post-graduation trust fund? Via sacks of Spanish doubloons? Somebody somewhere already is crafting the survey questions. Pollsters need billable hours, too.
What was the strangest part of Wilken's decision?
Easy. In declining to issue an injunction that would allow college athletes to endorse commercial products -- a logical corollary to allowing those same athletes to cash in on the use of their NILs via television and video games, because really, what's the difference -- Wilken wrote:
… allowing student-athletes to endorse commercial products would undermine the efforts of both the NCAA and its member schools to protect against the "commercial exploitation" of student-athletes. Although the trial record contains evidence -- and Dr. Emmert himself acknowledged -- that the NCAA has not always succeeded in protecting student-athletes from commercial exploitation, this failure does not justify expanding opportunities for commercial exploitation of student-athletes in the future …
What exactly constitutes "commercial exploitation?" Why would Manziel appearing on the cover of a video game box be exploitative, while his face scan and real name appearing in the same game's code be perfectly kosher? Wilken doesn't say. (Nor does she explain why she put the term in what almost reads as air quotes). Expect enterprising athlete lawyers to take dead aim at this ambiguity.
Speaking of future lawsuits, what else may be coming?
Lead O'Bannon attorney Michael Hausfeld told CBS Sports' Solomon that his team is considering legal action against networks -- like ESPN and the Big Ten Network -- for their use of athlete NILs. If schools decide to give men's basketball and football players larger stipends and deferred payments, civil rights lawyers may invoke Title IX and demand equal composition for female athletes.
Will the O'Bannon decision affect the outcome of the Northwestern University football unionization case, which is currently being reviewed by the national office of the National Labor Relations Board and could end up defining the school's scholarship football players as campus employees?
Wilken's ruling isn't binding labor-law precedent. However, the board certainly will: (a) read it; (b) seriously consider its reasoning. Neither is good for Northwestern's facts-light, amateurism-heavy case, which makes many of the same arguments the NCAA made against O'Bannon.
If Wilken's ruling holds up and football and men's basketball players start getting stipends and trust fund deposits, what will that mean for me as a college sports fan?
Nothing. Nothing will change. The big fish of college sports will still out-recruit and outperform the minnows, and the compensation caps mean that schools like Ball State won't be able to strategically target their resources and outbid schools such as the University of Kentucky for the occasional five-star high school basketball player. Ohio State University will not replace the University of Michigan on its football schedule with Bard College. Women's lacrosse teams will solider on as money-losing, feel-good university marketing tools. The sky won't fall; it won't even get cloudy. And all of that will make amateurism-defending NCAA Cassandras look increasingly out of touch, downright ridiculous, like the Republicans still railing against the Obamacare freedom-pocalypse that never actually happened.
Will we see college football and basketball video games again, this time with player names and faces?
Good news: It's possible!
Big picture, what happens next?
Suppose you're in a legal war of attrition, and the law ultimately isn't on your side. What do you do? You try to change the law.
According to Dennis Dodd of CBS Sports, the NCAA's board of directors began discussing the possibility of a federal antitrust exemption six years ago -- a year before the O'Bannon case was even filed. The Wall Street Journal's Sharon Terlep recently reported that both the association and major conferences are considering asking Congress for the same.
Odds of success? Hard to handicap. On one hand, lawmakers expressed rhetorical sympathy for amateurism during recent House and Senate hearings on college sports; in an opening statement, senator Jay Rockefeller (D-WV) said that "students play college sports for the love of the game, not love of money. That's the ideal." Moreover, both the NCAA and its member schools enjoy a significant home-field advantage over college athletes on Capitol Hill -- one group can wield money, lobbyists and influence; the other can offer autographs and photo-ops.
On the other hand, public opinion is slowly turning against amateurism. The NCAA itself is increasingly unpopular, and came under fire at a hearing chaired by Rockefeller for issues including athlete stipends, athletic department involvement in campus sexual assault investigations and concussion safety. Moreover, we're talking about Congress -- an institution increasingly loath to get anything done, particularly anything as controversial and high profile as a college sports Get Out of Jail Free card.
Can't the NCAA and its opponents work out some sort of Grand Bargain?
That's the logical endgame. Perhaps college sports could resemble the Olympics, where athletes are free to accept individual gifts and earn endorsement dollars but do not earn salaries for participation. Perhaps they could resemble pro sports, where unionized athletes are paid by schools, but agree to salary caps and some limits on outside income through collective bargaining. Whatever happens, one thing is certain: the status quo cannot stand. Near the end of her ruling, Wilken writes as much:
… to the extent other criticisms have been levied against the NCAA and college policies and practices, those are not raised and cannot be remedied on the antitrust causes of action in this lawsuit. It is likely that the challenged restraints, as well as other perceived inequities in college athletics and higher education generally, could be better addressed as a remedy for the antitrust violations found here. Such reforms and remedies could be undertaken by the NCAA, its member schools and conferences, or Congress …
Speaking with CBS Sports' Solomon, O'Bannon lawyer Hausfeld sounded a similar note. "The NCAA will hopefully never be the same," he said. "It's going to go through a metamorphosis and if it approaches it wisely, it should sit down and discuss with all the interested entities how best to form a new way going forward."
Yes. It should. Thanks to O'Bannon, amateurism is done. A more equitable future beckons. It may come via blunt force legal trauma. It may come through negotiated consent. Through an injunction that could have been much worse, Wilken has bought the association and its member schools time to pick a path; through her devastating, defense-stripping decision, she is telling them to use it. After a century of imperious, impervious obstinacy, will the NCAA finally listen?
Read the original article at Sports on Earth