By Joe Davison
College athletics, like professional sports, have become a multi-billion dollar business. As the NCAA and its conferences sign lucrative media contracts, many have started to question the lack of compensation for college student-athletes. This has resulted in an outbreak of antitrust action against the National Collegiate Athletic Association (NCAA). In O’Bannon v. National Collegiate Athletic Association, plaintiffs challenged the restrictions on student-athletes receiving compensation for the use of their names, images, and likenesses. Plaintiffs are a group of twenty current and former college student-athletes who played either Division I men’s basketball or football between 1956 and the present. They represent a certified class of all current and former student-athletes who “compete on, or competed on, an NCAA Division I . . . men’s basketball [or] . . . football team and whose images, likenesses and/or names may be, or have been, included . . . in game footage or in videogames licensed or sold by Defendants, their co-conspirators, or their licensees.” Named Plaintiff, Edward O’Bannon, was a student-athlete who played on the 1995 University of California, Los Angeles (UCLA), national championship team.
The O’Bannon Complaint alleged that the NCAA’s rules restricting compensation for the use of the names, images, and likenesses of men’s football and basketball players are illegal restraints of trade in violation of the Sherman Act. Specifically, plaintiffs “challenge[d] the set of rules that bar student-athletes from receiving a share of the revenue that the NCAA and its member schools earn from the sale of licenses to use the student-athletes’ names, images, and likenesses in videogames, live game telecasts, and other footage.” The complaint also alleged that such regulations allow the NCAA to enter into licensing agreements to distribute student-athlete images without consent from and compensation for the student-athletes. As such, the plaintiffs requested, among other things, that the court enjoin the NCAA from enforcing any contracted releases that purport to have caused any member of the class to relinquish rights to compensation for use of their names, images, and likenesses; and prevent any such agreements between the NCAA and its student-athletes in the future.
The United States District Court for the Northern District of California conducted a two-week trial in June of 2014. The court ruled that the NCAA must raise the restrictive cap on payments to all student-athletes to the full cost of attendance and allow for the creation of a trust for each student-athlete that can hold up to $5,000 per year of attendance, payable when the student-athlete leaves school or is no longer eligible to play. Full cost of attendance is defined as the full “grant in aid” (tuition and fees, room and board, and required course-related books) plus non-required books, supplies, transportation, and other living expenses. The court noted that the $5,000 cap on additional compensation is comparable to the amount of money that the NCAA permits student-athletes to receive if they qualify for a Pell grant.
Recently, the Ninth Circuit affirmed in part, finding that the NCAA’s rules have been unnecessarily restrictive. It upheld the district court’s requirement that the NCAA permit its schools to provide up to the full cost of attendance to their student-athletes. But, the Ninth Circuit vacated the district court’s judgment requiring the NCAA to allow its member schools to pay student-athletes up to $5,000 per year in additional compensation. The court found that such a payment was not tethered to educational expenses and thus eliminates the element of amateurism from college sports. Such a decision could set the stage for either the NCAA or the plaintiffs to appeal the case to the Supreme Court.