As March Madness Begins, NCAA Returns To Court To Keep Players From Being Paid

CREDIT: (AP PHOTO/JAE C. HONG, FILE)
CREDIT: (AP PHOTO/JAE C. HONG, FILE)

Before the NCAA Tournament begins with opening round games in Dayton, lawyers for the organization that will haul in an estimated billion dollars in revenue from college basketball’s biggest event will be in a California courtroom fighting off a threat to its current model and its future. And unlike the tournament, the NCAA may be far less likely to come out ahead.

The antitrust lawsuit over athlete compensation brought by former UCLA basketball star Ed O’Bannon returns to court Tuesday, when oral arguments will begin as the NCAA fights to overturn a decision it largely lost in August. Federal judge Claudia Wilken ruled then that the NCAA unlawfully restricts athletes’ rights to revenues from the use of their names, images, and likenesses in video games, television broadcasts, and other forms of publicity and as a result, schools will soon be able to offer future football and basketball players as much as $5,000 per year in additional benefits derived from broadcasting and other publicity revenues.

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The O’Bannon case represented a significant, if not sweeping, victory for advocates of allowing college athletes to further share in the growing revenue pie they help create. The NCAA’s appeal, based on the idea that college athletes are “amateurs” who should not share in those revenues, asks the Ninth Circuit Court of Appeals to overturn the decision, and the importance of the case to NCAA officials could soon extend far beyond a single courtroom.

The NCAA’s appeal rests on the idea that Wilken wrongly interpreted another legal case involving college athletics and antitrust. Previous courts have used that case — NCAA v. Board of Regents of the University of Oklahoma, decided by the Supreme Court in 1984 — to uphold the NCAA’s amateurism ideals in the past under the idea that it does not engage in commercial activity and thus is not subject to federal antitrust law.

Wilken, however, didn’t buy that argument, finding that while the Supreme Court ruling “gives the NCAA ‘ample latitude’ to adopt rules preserving ‘the revered tradition of amateurism in college sports,’” in this particular instance, the NCAA is involved in interstate commerce and that its broad rules restricting players from sharing in name, image, and likeness revenues are both subject to and violated federal antitrust laws.

As a result, the NCAA could face an uphill battle in its appeal, said Marc Edelman, a law professor at the City University of New York who specializes in sports law and antitrust. Edelman published a legal review last year arguing that the O’Bannon ruling was correct, and possibly even narrower than it should have been.

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“My view is that the NCAA claim fundamentally misconstrues the Supreme Court’s ruling in Board of Regents v. NCAA and that the NCAA’s argument should be rejected,” Edelman said. “However, because the argument should be rejected does not mean with absolute certainty that that will happen.”

Wilken also found that the NCAA cannot use “amateurism” alone as a defense. These two findings are primarily what made the O’Bannon ruling a significant victory for college athletes: they partially undermined the NCAA’s key argument that college athletes are amateurs who cannot receive additional compensation beyond the value of the scholarship (and at the biggest schools a full cost-of-attendance stipend). But it didn’t go all the way, as Wilken placed the $5,000 annual cap on the amount athletes can receive from likeness-related revenues. The ruling also does not allow compensation from third-party actors, like memorabilia vendors or other businesses that might pay college athletes for use of their names or images. For that reason, it wouldn’t allow players like former Texas A&M; quarterback Johnny Manziel or former Georgia running back Todd Gurley to accept cash for signing memorabilia, an issue that arose when both were involved in high-profile eligibility disputes in recent seasons.

In that sense, the O’Bannon case poses a major threat to the NCAA for an even larger reason beyond merely preserving the athletes’ victory in this case. Should an appellate court uphold Wilken’s ruling that the NCAA is subject to antitrust law, the O’Bannon case could “open the door” for “far more dramatic changes” brought about by other legal challenges, Edelman said.

The NCAA is currently facing multiple lawsuits that seek even bigger changes than the O’Bannon plaintiffs wanted. Former West Virginia running back Shawne Alston and prominent labor attorney Jeffrey Kessler filed separate suits in the past two years that go even farther, seeking permanent injunctions against the NCAA’s cap on the amount schools can provide athletes as part of scholarship agreements. Those cases were consolidated into a single antitrust case on behalf of current athletes, and the O’Bannon ruling will no doubt influence the arguments in it. Victory in that case could upend the current NCAA model and allow players to share in revenues in a way the O’Bannon case alone will not.

And that’s exactly why the NCAA is fighting so hard and will continue to do so beyond this appeal.

“The NCAA is taking the position that it has no interest in conforming to generally accepted principles of antitrust law unless compelled to do so,” Edelman said. “So it seems inevitable that the NCAA will take absolutely every step possible to avoid changing the status quo.”

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If it loses its appeal, it is likely the NCAA will petition the Supreme Court to review the case — its top lawyers said before the O’Bannon case went to trial that they were prepared to defend amateurism to the highest court in the land if necessary — and could pursue other methods. NCAA and conference officials, for example, have already said that they may petition Congress for a federal antitrust exemption, which Major League Baseball already has, in the future.

For now, the proceedings in the O’Bannon case remain the most imminent challenge to the NCAA. And while a ruling likely won’t come until after a champion is crowned in Indianapolis, what happens in the courtroom is even more important for the future of the NCAA.