Four years ago, when Ed O’Bannon filed a federal antitrust lawsuit against the National Collegiate Athletic Association, he had a fairly straightforward grievance. The former UCLA basketball standout argued that he and other former star players deserved a slice of the multimillion-dollar revenue the association brings in from the sale of video games and other commercial products that used their likenesses.
Since then Mr. O’Bannon’s complaint has broadened to include potentially thousands of current and former football and men’s basketball players, all laying claim to a share of the billions of dollars in broadcast revenue flowing into the game. Among their allegations is that the NCAA, through its antiquated concept of amateurism, has illegally prevented players from earning their fair share of the money.
This week a federal judge is set to consider whether to certify the matter as a class action. The ruling on that question is among the most highly anticipated in the case, which is scheduled to go to trial next summer.
What’s at stake is not just the issue of players’ rights to revenue from TV broadcasts and video games, but the very nature of college sports and the NCAA’s role in regulating it, legal scholars say.
“If this case is certified, it would threaten the entire NCAA business model and the assumption that athletes are students first and true amateurs,” says Daniel E. Lazaroff, a professor of law at Loyola Law School Los Angeles and director of its Sports Law Institute. “There is an argument that the NCAA is getting the surplus out of cheap labor, and it would not be as cheap if there were competition for the services of these players.”
Restraint-of-Trade Argument
As a condition of participating in NCAA sports, the O’Bannon plaintiffs say, college athletes are required to sign a form turning over their rights to the commercial use of their image or likeness in perpetuity. The plaintiffs argue that such an agreement “unreasonably and illegally restrains trade,” allowing the association to exploit players well past their competitive years.
The NCAA denies that it has illegally restrained players, and it has a history of fending off antitrust suits that have challenged its principles of amateurism. Although the association has significant and growing commercial interests, when it acts as a regulator to maintain amateurism and competitive balance among member institutions, the courts have largely left it alone. They have typically considered such regulation to be noncommercial activity, for which antitrust laws do not apply.
NCAA leaders believe that the O’Bannon case’s claims are without merit. Further, they argue, the plaintiffs have radically changed the theory of the case since their first complaint, and as a result should be denied class certification.
“They’ve been engaged in a process of throwing things against the wall to see if anything sticks,” said Donald Remy, the NCAA’s general counsel. “We’re playing a game of ‘whack a mole’ to see what the plaintiffs are trying to articulate.”
In defending the NCAA’s position on amateurism, Mr. Remy cited a 1984 Supreme Court case, NCAA v. Board of Regents of the University of Oklahoma, in which the court spelled out a number of important principles regarding antitrust law.
In that case, the court found that the NCAA had violated federal law by limiting the number of television appearances that college-football teams could have. But according to Mr. Remy, the court also suggested that the NCAA’s broader amateurism model was “procompetitive” and was not subject to antitrust laws.
“In order for that model to work, student-athletes must not be paid,” he said. “That’s the law of the land.”
A more recent lawsuit—and one that legal experts say has more in common with the O’Bannon case—was White v. NCAA. That case involved a group of Division I football and men’s basketball players who alleged that the NCAA had restricted the benefits they could receive from their scholarships, which were not equal to the full cost of attending college. The NCAA settled that case in 2008, creating a $10-million fund for former athletes and redistributing more than $200-million to help an increasing number of current players.
‘Heresy’ and ‘Hypocrisy’
In the O’Bannon case, neither side has given any hint of settling. Michael D. Hausfeld, the lead lawyer for Mr. O’Bannon, said he planned to attack the veracity of many claims the NCAA has made, including its longstanding position that big-time athletes are students first and athletes second. Under the NCAA’s principles of amateurism, he said, athletics participation is supposed to be an avocation that is secondary to acquiring academic skills.
Participating in big-time football and basketball, he said, is basically a full-time job—but without the paycheck. He plans to show evidence that few major-college athletes are acquiring meaningful academic degrees, that graduation rates in football and men’s basketball lag behind those of equivalent students, and that colleges deliberately restrict the education of their players by providing one-year renewable scholarships that make it easy to cut players.
“They feel they can control the lives of not only current athletes but prospective and former athletes in virtually all aspects of their value and their education,” Mr. Hausfeld said of the NCAA. “They are using the images and likenesses of players that are the personal intellectual property of these athletes for their own economic aggrandizement, and providing them no compensation—no equitable compensation—in return.”
Further, he said, the NCAA’s own leaders understand the fallacy of their model. To illustrate his point, he described two separate statements made by top association officials. The first came at the NCAA’s 1995 convention, where he said NCAA leaders unanimously agreed that it was “heresy” to permit athletes to have equal access to the marketplace.
“If there was not a market, then what are they talking about?” said Mr. Hausfeld. “If there was no restraint, then why would there be unanimous agreement not to permit them access to the market? And why would it be heresy, which I thought was only confined to the Inquisition?”
Mr. Remy said he was not familiar with the 1995 statement. He questioned whether it came as part of a vote taken by the full Division I membership or some other smaller group. “I simply don’t know,” he said. “I hadn’t heard those words before or read them anywhere.”
“I can say this,” he added. “A student-athlete comes to our member institutions hopefully first and foremost to get an education. If at that time those who were voicing their views were talking about what’s more important—the student getting an education consistent with the mission of our member institutions, or the student-athletes marketing themselves for compensation—then I can understand the notion that the values of this association put an emphasis on the student and getting the education.”
In a separate example, Mr. Hausfeld described an e-mail that Wallace I. Renfro, the NCAA’s former chief of policy, wrote to Mark Emmert, the association’s president, in October 2010. The e-mail is part of a trove of evidence in the case, including thousands of pages of sworn testimony.
“The notion that athletes are students is the great hypocrisy of intercollegiate athletics,” Mr. Renfro wrote, as part of a note that laid out possible challenges the NCAA faced.
Mr. Remy said he was not familiar with the remark, but emphasized that it was only a small part of the comments that Mr. Renfro had contributed to the record. Besides, he added, it was the job of Mr. Renfro—who worked at the NCAA for 40 years before stepping down in January—to solicit opinions on important issues, and he often did so with provocative language.
“You know Wally, he’s a provocateur,” Mr. Remy said. “When Wally says something, it doesn’t necessarily mean Wally means it.”
As for its defense, Mr. Remy said, the NCAA plans to attack several theories set forth by the plaintiffs, including one in particular: The idea that, if the NCAA’s amateurism rules were found to violate antitrust law, colleges would all of a sudden start paying athletes.
The vast majority of Division I colleges could not afford to do that—they’ve even failed to agree on providing an extra $2,000 stipend for players. And some conference officials have indicated that they would sooner move to Division III, where they would not have to pay for scholarships, than compensate players.
“It’s just not going to happen,” Mr. Remy said.
The Class-Action Question
As for this week’s hearing, few legal experts are willing to make any predictions. They say the federal judge who is overseeing the case, Claudia Wilken of the U.S. District Court in Oakland, Calif., has shown sympathy toward the plaintiffs by not dismissing the complaint or an early motion to eliminate potential class-action status. But that doesn’t mean she will certify the class.
Matt Mitten, a professor of law at Marquette University and director of its National Sports Law Institute, believes that former players have the strongest chance of being certified as a class.
“It’s not necessary for the NCAA to enforce its rules on former athletes for the purposes of maintaining the amateur nature of its enterprise or promoting competitive balance,” he said. “There’s just not a good reason why they’re not getting a cut of the profit from those videos.”
Others agree that former players deserve to share in the riches, but they don’t see the case as having the harsh impact on the NCAA that some believe it might.
“It seems like a tough position for the NCAA to maintain—that this 18-year-old signed away his rights in perpetuity,” said Gary R. Roberts, dean of Indiana University’s Robert H. McKinney School of Law. “But whether that is an antitrust violation, there’s some doubt.”
Mr. Roberts said he may be in the minority, but he is not convinced of the case’s broader significance.
“I don’t see why, if the NCAA is infringing on former players’ publicity rights in the production of video games, that would lead to a remedy of current players’ receiving TV rights,” he said. “There are people who want that to happen so much that they’ve convinced themselves it’s right. But I don’t think there’s any court that will jump that legal chasm.”