It’s been more than six years since former basketball player Ed O’Bannon originally filed a lawsuit against the NCAA and Collegiate Licensing Company, and now, a decision from the US Court of Appeals has ensured that the case will continue on for at least a little while longer.
The new decision, which was handed down Sept. 30, ruled that the NCAA’s policies restricting payment to college athletes were in violation of antitrust laws.
“The NCAA is not above the antitrust laws, and courts cannot and must not shy away from requiring the NCAA to play by the Sherman Act’s rules,” read the case opinion.
For those in need of a history refresher, the primary purpose of the Antitrust Act was to reduce the prevalence of anti-competitive businesses — such as monopolies — but the expanse of the document’s grasp also restricts any questionable business conduct that may inflict damage on the economy.
The Court cited the Rule of Reason, a specific clause of the Act, in their decision, meaning that the trouble for the NCAA came down to its unjustified reasoning for imposing the payment-restricting policies on athletes. The NCAA would have you believe that their sole concern in the matter is their moral crusade in maintaining amateurism in college sports, but it likely didn’t take much effort for the Court to see through to the thinly-veiled truth.
Last year, USA Today collected sports revenue data from 230 universities around the country and the total comes out to over $8.6 billion — just $2.6 billion less in annual revenue than the NFL. The NCAA receives a healthy portion of these earnings and has a vested interest in keeping athletes’ hands out of their shares.
The direct implications of this case, however, likely won’t shift any money from the pocket of the NCAA into the collective pockets of the many thousands of student-athletes across the nation. In fact, the decision will prove to be a short-term financial setback for athletes because the Court simultaneously reversed a 2014 district court decision allowing players to earn up to $5,000 per year,the disbursement of which would be deferred until their graduation.
“The difference between offering student-athletes education-related compensation and offering them cash sums untethered to educational expenses is not minor; it is a quantum leap,” read the opinion. “Once that line is crossed, we see no basis for returning to a rule of amateurism and no defined stopping point.”
In other words, colleges compensating athletes beyond academic-related expenses would contradict their amateur status and the Court fears that this would lead down the road of athletes maximizing their real market value. At a glance, such a reality may seem just but it would be the end of college sports as we know it; universities would become glorified sponsors and the “student” part of student-athlete would become even more of an afterthought than it is today.
However, there is some hope for a fair resolution after all. It’s just going to take more time, unsurprisingly. The decision has not directly ruled out the legality of compensation above academic expenses from all corners of the college sports industry; it only rejected deferred compensation from the schools themselves and that’s far too narrow of a scope in a world where lawyers exist.
The future of the O’Bannon case, which, if you recall, originally attacked the NCAA and Electronic Arts (EA) for their depiction of college athletes in video games without consent, lies in putting those name, image, and likeness (NIL) rights back in the hands of the players. Despite fears of the NCAA that athlete endorsement of “commercial products would undermine the efforts of both the NCAA and its member schools to protect against the “commercial exploitation” of student-athletes,” I think the athletes would be just fine with the modest but tangible monetary gains to be had from such an arrangement.
The most significant payoff would likely come from a contract with EA or another video game developer and wouldn’t amount to much more than what athletes were retroactively awarded in an out-of-court settlement with EA just last year — up to $4,000 for approximately 100,000 former and current college athletes.
To put this in further context, a Drexel University study reported on the average fair market values for college athletes from 2011 to 2015 and the results are nothing short of shocking: $178,000 per football player and $375,000 per basketball player. The most valuable player cited, former Kansas Jayhawks basketball player Andrew Wiggins, would be worth more than $1.6 million for the single season he played at the school.
I’ll end with a little piece of advice for the NCAA: let the athletes have their NIL rights before you find yourself in a world of financial collapse and ruin.
