Federal Judge Finds NCAA's Player Rules Violate Antitrust Laws

Isaac Brekken, AP Images

The ruling hands the plaintiffs, who include the former UCLA basketball star Ed O'Bannon, a win in a case that threatens the NCAA's principles of amateurism.
August 09, 2014

The National Collegiate Athletic Association has violated federal antitrust laws by unreasonably restraining big-time athletes from trading on their images and likenesses, a federal judge ruled Friday.

The ruling, which the association is expected to appeal, could give major-college football and basketball players the chance to earn thousands of dollars a year in deferred compensation for the commercial use of their images.

The 99-page decision, by Judge Claudia Wilken of the U.S. District Court in Oakland, Calif., includes an injunction enjoining the NCAA from enforcing rules that prohibit colleges from offering elite football and basketball players a “limited share” of the revenues generated off their names.

In a move that surprised several legal experts, Judge Wilken said the NCAA could cap the amount players could earn, a concession that could help colleges maintain competitive balance and keep college sports from being completely professionalized.

The cap could not be less than $5,000 a year. Colleges could choose to pay less than that, but they could not conspire to set prices, the judge said.

The ruling does not allow players to earn money for endorsements, a move that the judge said would undermine the NCAA’s efforts to protect against the commercial exploitation of athletes.

To pay players, the judge suggested that colleges could set aside money in a trust fund that athletes could tap once they complete their NCAA eligibility.

Lawyers for the plaintiffs, who include Ed O’Bannon, a former UCLA basketball star, called the ruling a “major step toward decency for college athletes.”

Others described it as a landmark decision that could lead to the downfall of amateurism.

“This decision puts the NCAA’s ability to maintain its traditional model of college sports on life support,” said Matthew Mitten, a law professor at Marquette University and director of its National Sports Law Institute.

Darius Robinson, a former Clemson University football player and one of some two dozen plaintiffs named in the case, said the ruling clarifies that college sports is a big business and that players have earned a right to share in the riches.

“This is the turning point,” he said. “It’s going to get real for athletes.”

‘Less-Restrictive’ Means

What has come to be known as the O’Bannon case is the first in a long line of legal challenges for the NCAA, which just enacted a new governance system aimed in part at providing more benefits for players.

In a statement responding to Friday’s ruling, the association said that it had not violated the antitrust laws and that it was committed to fully supporting athletes.

“We note that the court’s decision sets limits on compensation, but are reviewing the full decision and will provide further comment later,” said Donald Remy, the NCAA’s chief legal officer.

During a three-week trial, in June, the NCAA argued that its limits on player pay were necessary to help promote both competitive balance among colleges and the academic integration of athletes. Witnesses for the association, including its president, Mark Emmert, argued that the expense of paying football and basketball players could harm or even doom some lower-profile sports. The association asserted that those pay limits are part of the appeal of college sports for fans, as athletes are competing for the love of the game and not for money.

Judge Wilken saw things differently. She shot down all of the association’s so-called procompetitive justifications for restraining player pay, saying the NCAA’s limits could be achieved through “less restrictive means.”

She also said the association had failed to prove that its restrictions on pay were a "driving force" behind consumer interest in big-time college sports. And she said it was not clear why paying players would be “any more problematic” in terms of the academic integration of athletes than paying other students who provide services to the university, such as the student newspaper's staff members.

Limited restrictions on athlete compensation, she wrote, "may help integrate student-athletes into the academic communities of their schools, which may in turn improve the schools’ college education product.”

In a key finding, she ruled that a market exists for players to share in the revenue generated from live television broadcasts. She cited TV contracts presented by the plaintiffs at the trial that appeared to transfer players' rights to broadcasters.

Many legal experts had considered it a stretch for players to receive a cut of TV money. But some said on Friday that the judge's cap on compensation could help insulate her opinion on appeal.

A 'Professional Approach'

The ruling will not give former athletes like Mr. Robinson or his Clemson teammates a share of licensing revenue that colleges earned from the use of their images, because it will not take effect until the start of the next NCAA recruiting cycle, and it won't begin to offer possible benefits to athletes until July 2016. Former players, however, could still sue for damages they believe they are due.

Mr. Robinson, who completed his Clemson eligibility last season, says it doesn't bother him that the ruling includes no payout for him and other former players. He joined the case a year ago along with a half-dozen other players who were still competing in college sports. He was motivated in part by seeing a resemblance between himself and a senior Clemson cornerback in an NCAA-licensed video game.

In an interview Friday, he said he was grateful for everything Clemson did for him during his three and a half years on its campus. "I think Clemson did take care of us," he said. "They did their best to try to provide us with the most resources possible."

But he and other plaintiffs believed they were due a share of the revenue generated from the use of their images.

"That's what we were aiming for," he said after learning of the ruling. "We wanted to get athletes a little more comfortable. We do hard work and deserve more."

With all of his football commitments—"say what you want about it, but college sports are a big-time business"—he didn't have time to work a regular job during college. So he took a position with a network-marketing company, hoping to sell mobile phones and phone plans on the side.

A Clemson compliance officer learned about Mr. Robinson's job when he mentioned it on social media, Mr. Robinson said, and he was cautioned about an NCAA rule preventing players from using their names to promote a business.

"According to the NCAA, the rule is that a student-athlete can have his own business," Mr. Robinson told Sports Illustrated last year. "But they were saying that I couldn't have it because I couldn't detach my name from it. They were saying I couldn't promote it. ... I didn't see a reason for me having a business if I couldn't promote it."

Assuming it is not overturned, Judge Wilken's ruling would enjoin the NCAA from enforcing rules that inhibit players in those kinds of ways. But it will still be difficult for players like Mr. Robinson to work outside of college and sports, he said.

Mr. Robinson, who trained with the Buffalo Bills this summer before he injured his shoulder and was released, said the commitment college athletes make is no different than that of professional athletes.

"A professional is someone who does something on a consistent basis where they master that skill," he said. "The collegiate athlete, the approach they're taking, it's definitely a professional approach."