As the monetary value of an athlete’s name, image and likeness (NIL) rights has skyrocketed in recent years, the National Collegiate Athletic Association has received more pushback from collegiate (a.k.a. “amateur”) athletes about whether the NCAA is the only party entitled to the profits they generate. The top conferences negotiate billion-dollar television contracts (that’s a “b” not an “m”) and more than 70 NCAA football coaches have yearly salaries over $1 million (ok, that one is an “m”). See last year’s full list here.** The crux of the collegiate athletes’ argument is that the current system is exploitative, even after taking into account the cost of attendance.
[**Understandably, many of the actual classroom educators are scratching their heads when they compare their paycheck stubs with those million-dollar coaches, but that debate is not the subject of this article.]
Quick Note: This legal power struggle is currently limited to “big-time sports,” which was specified by U.S. District Court Judge Claudia Wilken (Northern District of California) to mean Division I football and men’s basketball players. Unfortunately, collegiate swimming does not generate the profits required to be included in the conversation at this time, but perhaps as the NIL rights of the Ryan Murphys, Katie Ledeckys, Joseph Schoolings and Simone Manuels of the world become more lucrative, NCAA swimming (or any female collegiate sport) will get a seat at the table.
Background: The Ed O’Bannon Case
Ed O’Bannon, a former UCLA basketball standout, along with other college athletes, joined together in a class-action and filed a lawsuit against the NCAA in 2014.
In that case, Judge Wilken decided that member schools must pay Division I football and men’s basketball players up to $5,000 a year for NIL rights. That money would then be placed in a trust that would be available to athletes after leaving college. She also ruled that member schools should increase the value of athletic scholarships to meet the federal cost for attendance at each particular school.
The “cost of attendance” can include expenses such as travel between campus and home, clothing and food.
Unhappy with the district court’s ruling, the NCAA appealed the decision to the 9th Circuit, which is based in San Francisco.
First Appeal to the 9th Circuit: A three-judge panel for the 9th Circuit rejected Judge Wilken’s cash proposal because it found that awarding sums that were not related to educational expenses would transform the NCAA into a minor league system.
The verdict, however, while technically a win for the NCAA, contained language that will keep the NCAA looking over its shoulder. The panel agreed with the district court that the NCAA’s amateurism rules violate federal antitrust law because they illegally prevent members schools and conferences from competing to compensate Division I football players and men’s basketball players. The loop hole, for the time being, is that member schools need only provide up to the full cost of attendance to their athletes as compensation.
The panel also told the NCAA “nay” when it argued that challenges to amateurism rules must fail as a matter of law on account of the 1984 Supreme Court decision in NCAA v. Board of Regents. The same antitrust rules that apply to other industries are equally applicable to the NCAA.
Reading between the lines, the NCAA is now vulnerable to future antitrust lawsuits, including those brought by other student-athletes. Unsurprisingly, the lawyers for both sides are spinning the result as a win for their respective clients:
Michael Hausfeld, the lead attorney for the plaintiffs, told USA TODAY Sports,“[W]e remain pleased with our trial victory and the Ninth Circuit’s decision upholding the finding that the NCAA violated the antitrust laws and affirming a permanent injunction to remedy that violation, which enables NCAA member schools to offer college athletes significant additional funds toward the cost of attendance[.]”
Donald Remy, the NCAA Chief Legal Officer, said the NCAA “remain[s] pleased that the Ninth Circuit agree[s] with us that amateurism is an essential component of college sports and that NCAA members should not be forced by the courts to provide benefits untethered to education, including providing any payments beyond the full cost of attendance[.]”
Second Appeal Rejected by United States Supreme Court: Obviously the NCAA, O’Bannon and the other plaintiffs were not completely happy with the 9th Circuit’s ruling because both parties petitioned the Supreme Court to weigh in.
On Monday, after receiving those petitions, the Supreme Court said, “No, thanks.” Therefore, the 9th Circuit’s ruling remains the law of the land. Other circuits are free to disagree with the 9th Circuit, in which case, the Supreme Court or Congress may have to revisit the issue.
Takeaway: The status quo, in practice, remains unchanged. The NCAA, however, should be nervous because the district court and 9th Circuit disagreed with almost every one of its arguments. Fortunately for the NCAA, the judicial system is just too uncomfortable with the idea that students should receive direct cash payments for their athletic endeavors while competing for their academic institutions. Ironically, the courts’ decision-makers don’t have a strong legal justification to back up their discomfort.
The tension is that the NCAA is profiting (hand-over-fist) from a small minority of its athletes, but refusing to share those profits with the earners. The NCAA defends its profit-hoarding by pointing to the thousands of athletes who receive scholarships without profiting their schools, conferences, or the NCAA, which certainly includes swimmers. The NCAA also likes to take the moral high ground in espousing its hallowed mission to educate the nation’s future leaders. (Perhaps the NCAA prefers its acronym because it does not want to call attention to the fact that it is the National Collegiate Athletic Association, rather than the National Collegiate Educational Association.)
All sarcasm and witticisms aside, the issue is not black-and-white—it involves balancing multiple issues that shape the American way of life, including education, rights of the individual and fair competition. How we valued our college athletes in the past is no longer the norm, and the judicial system appears to be grappling with the changes.