Why the NCAA Lost Round 1 of the Amateurism Fight, and What It Means

A federal judge handed down a landmark legal victory for student athletes on Friday, ruling that the NCAA’s amateur model constitutes an antitrust violation by limiting the amount of revenue athletes can make off their names and likenesses.

It’s been a long and winding road for Ed O’Bannon, a former University of California at Los Angeles basketball star, and his fellow plaintiffs. Here’s what you need to know to get caught up:

So are college athletes going to be paid now?

No. Judge Claudia Wilken of the U.S. District Court in Oakland, Calif., has issued an injunction that bars the NCAA from enforcing any rules that ”prohibit its member schools and conferences from offering their FBS football or Division I basketball recruits a limited share of the revenues generated from the use of their names, images, and likenesses in addition to a full grant-in-aid.” That doesn’t mean universities are going to start handing out paychecks on Monday.

The effects of the injunction are murky, especially because the NCAA will almost certainly appeal the ruling.

But this is a sign of things to come, right?

In the long run, most likely. In the short term, it’s less clear. Legal observers have said the NCAA is likely to win on appeal, a ruling the plaintiffs would then appeal. It’s going to be a long time before O’Bannon v. NCAA is settled.

That said, there are several more legal challenges to the NCAA in the pipeline. Most observers have their eyes on a lawsuit, brought by the sports-labor lawyer Jeffrey L. Kessler, that directly challenges the NCAA rules that cap compensation for football and basketball players at the value of a scholarship.

Meanwhile, football players at Northwestern University this year won a significant victory when a regional official of the National Labor Relations Board determined that they qualified as employees who could form a labor union. The players voted in April on whether to form a union, but the ballots were impounded after the full National Labor Relations Board granted Northwestern’s request to review the decision.

And the NCAA has already begun to move toward allowing more benefits for athletes. On Thursday the association’s Division I Board of Directors voted to allow more autonomy for its five most-powerful conferences, which they say will allow them to provide greater benefits.

Back to O’Bannon. What was the judge’s rationale?

Judge Wilken’s ruling is an economic one. Its crux: The NCAA’s defense of amateurism as promoting demand for its product—as opposed to unfairly restricting competition—doesn’t hold water. The judge picks apart the association’s argument point by point:

  • First, restrictions on compensation have not been proved to promote demand for college sports, which is largely determined by “school loyalty and geography.”
  • Second, the NCAA has not demonstrated (a) that restrictions on compensation help achieve competitive balance among teams or (b) that competitive balance actually promotes demand.
  • Third, the NCAA has not shown that limiting compensation is a necessary step toward ensuring that athletes receive all the academic benefits that the association touts.
  • Finally, the alternative models of compensation suggested by the plaintiffs would not do anything to diminish the demand for college sports.

Why don’t you sum it up for me in a few sentences?

Sure. But let Judge Wilken do it:

“The association’s rules prohibiting student-athletes from receiving any compensation for the use of their names, images, and likenesses restrains price competition among FBS football and Division I basketball schools as suppliers of the unique combination of educational and athletic opportunities that elite football and basketball recruits seek. Alternatively, the rules restrain trade in the market where these schools compete to acquire recruits’ athletic services and licensing rights.”

Where can I read more?

Read a primer on how O’Bannon v. NCAA came to be.

No matter what happens, the NCAA is facing change.

Read Friday’s full decision.

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