Legal Cases Are Blowing Up the NCAA Big Business Model — Why It Matters (Forbes.com) August 11, 2014Posted by daviddavenport in Newspaper Columns/Essays, Op/Eds.
Venerable Kansas State football coach Bill Snyder voiced the concerns of a lot of people when he said recently that college athletics has “sold out” to “dollars and cents.” “It’s no longer about education,” Snyder continued, but we have reached the point where schools build athletic palaces, coaches make millions and games are broadcast every night, all in the pursuit of “glitz, glitter” and gold.
But even more powerful than the reflections of a well-respected coach is the opinion of a federal judge rendered Friday that the big money generated when the NCAA and its member schools sell the images of their own athletes for television and videogames, but do not share any of the revenue with the student-athletes themselves, violates the U.S. antitrust laws. This, along with the opinion earlier this summer of a National Relations Hearing Board officer that Northwestern University’s football players are university employees who may unionize, stands to blow up the NCAA business model and revolutionize college sports.
In the closely watched case of O’Bannon v. NCAA, a federal district court in Northern California considered the class action claim brought by 20 current and former Division I football and basketball players that the NCAA ban on their receiving any revenue from the use of their images and names on television and in videogames violated the antitrust laws. In a sense, any sports league or athletic conference creates restraints on trade by their rules and policies, but reasonable rules that allow leagues or sports to operate have generally been found by courts to help, not hurt, competition. But just because a league or sports association joining together is not per se illegal, they may not enforce any rule or regulation they want. Each individual rule must be reasonable and generate more benefit to competition than harm under the law.
The NCAA defended its refusal to show athletes the money on several grounds: that it would harm the tradition of amateurism, hurt competitive balance among teams, diminish the integration of academics and athletics, and decrease the total output of its product. But federal judge Claudia Wilken, using the testimony of economists and other experts, batted down each of those arguments in her 99-page opinion. She found the NCAA’s commitment to amateurism to be uneven at best, pointing out that a tennis player may earn $10,000 in prize money the year before college without losing amateur status whereas a track and field athlete may not. Similarly, she found little competitive balance among teams, noting the NCAA itself awards far more revenue to big schools than small. And so it went.
Further, as Judge Wilken pointed out, if there is a less restrictive alternative that will allow the NCAA to achieve its purposes but cause less harm to the athletes, the NCAA rule will fall. In this case, she found two less restrictive alternatives: colleges paying athletes the full cost of attendance (not just the grant-in-aid) and colleges placing commercially-generated revenue in trust for athletes until they leave college or lose their eligibility. In the end, the court held that the NCAA ban on revenue for athletes when their names or likenesses were used commercially amounted to illegal price fixing in restraint of trade and were enjoined. The NCAA has already said it would appeal the case.
One of my law professors used to say, “bears win, bulls win, only pigs lose.” And that’s the message of this case, as well as the earlier unionization case. The NCAA simply went too far in making money and regulating the lives of college athletes without sharing the wealth and power. In a sense, these cases constitute a recognition by the law of something most people have known for a long time—college sports is too little about student-athletes and too much about money and power. Finally, in the wake of these two monumental legal opinions, a tipping point has been reached, and the NCAA will be forced to reevaluate how it deals with student-athletes if it wants to survive.