By now, I assume you’ve heard that the O’Bannon ruling has been handed down. At its heart, as the New York Times says, it’s a smack down of the NCAA’s amateurism protocol: “Judge Claudia Wilken’s 99-page decision issued a resounding rebuke to the foundation of the N.C.A.A., issuing an injunction against current rules that prohibit athletes from earning money from the use of their names and images in video games and television broadcasts.” But the relief Judge Wilken has fashioned leaves college athletics with a way forward, if the people running the sport are willing to accept it.
Let’s start with the obvious. All the eye-rolling we did as we took in the testimony of defense witnesses like Mark Emmert and Neal Pilson… well, the judge didn’t find what they had to say any more convincing than anyone else did. And that meant the NCAA’s position got blown up in two significant ways.
1. Bye-bye, amateurism.
Wilken rather famously stated before the trial that, “I don’t think amateurism is going to be a useful word here.” She wasn’t kidding. As Stewart Mandel summarized it,
The NCAA argued that preservation of amateurism is essential to its core identity, as evidenced by its century-plus commitment to the concept. Wilken wrote: “… the NCAA has revised its rules governing student-athlete compensation numerous times over the years, sometimes in significant and contradictory ways. Rather than evincing the association’s adherence to a set of core principles, this history documents how malleable the NCAA’s definition of amateurism has been since its founding.”
Making it up as you go along isn’t a defensible strategy? Mark Emmert is crushed.
But the ruling is more crushing than that. Wilken went out of her way to eviscerate every rationale the organization offered as a justification for its position (however shifting) on amateurism. Again, from Mandel:
The NCAA argued that compensating athletes would negatively impact competitive balance in college athletics. Wilken wrote: “… the NCAA has not presented sufficient evidence to show that its restrictions on student-athlete compensation actually have any effect on competitive balance, let alone produce an optimal level of competitive balance.”
The NCAA argued that paying players would adversely affect the integration of academics and athletics on campuses. Wilken wrote: “Student-athletes would receive many of the same educational benefits … regardless of whether or not the NCAA permitted them to receive compensation for the use of their names, images, and likenesses.”
And the NCAA argued that restricting compensation increases output of its product and if lifted, schools might bolt Division I. Wilken was particularly incredulous about this one. “There is no evidence to suggest that any schools joined Division I originally because of its amateurism rules. While there may be tangible differences between Division I schools and other schools that participate in intercollegiate sports, these differences are financial, not philosophical. For this reason, the NCAA’s assertion that schools would leave FBS and Division I for financial reasons if the challenged restraints were removed is not credible.”
Take that, Jim Delany.
Oh, and the whole competitive balance thing? Phhhht.
In disagreeing with the NCAA’s argument that competitive balance justifies not paying players, Wilken noted the average salary for a head football coach exceeds $1.5 million. She also cited testimony by NCAA president Mark Emmert in which he said it’s not the NCAA’s mission to take away advantages universities have made in building up their facilities.
“The fact that high-revenue schools are able to spend freely in these other areas cancels out whatever leveling effect the restrictions on student-athlete pay might otherwise have,” Wilken wrote. “The NCAA does not do anything to rein in spending by the high-revenue schools or minimize existing disparities in revenue and recruiting.”
“Rein in”? Hell, with this week’s autonomy vote, the NCAA’s rolled out the red carpet.
Wilken didn’t just take a dagger and plunge it into the heart of amateurism. She cut that sucker out, threw it on the ground and stomped the living shit out of it. It’s gone.
2. Of course, players’ names, images and likenesses have value.
This may seem ridiculously obvious, but let’s not forget that Neal Pilson testified that no such value was recognized in standard broadcasting agreements. Wilken didn’t buy it.
“The court finds that a submarket exists in which television networks seek to acquire group licenses to use FBS football and Division I basketball players’ names, images and likenesses in live game telecasts,” Wilken wrote. “Television networks frequently enter into licensing agreements to use the intellectual property of schools, conferences and event organizers — such as the NCAA or a bowl committee — in live telecasts of football and basketball games. In these agreements, the network often seeks to acquire the rights to use the names, images and likenesses of the participating student-athletes during the telecast.”
In ruling that a group market exists for live TV broadcasts, Wilken cited television contracts produced by the plaintiffs, such as old NCAA tournament contracts with CBS and an old BCS deal with Fox. She said testimony by former CBS Sports president Neal Pilson that networks enter into agreements with event organizers for access to facilities is “not convincing.”
Wilken noted that Pilson, an expert witness for the NCAA, admitted that “broadcasters must acquire certain rights even from visiting teams who do not control access to the event facility. … He also acknowledged that broadcasting agreements … sometimes refer expressly to name, image and likeness ‘rights.'”
Her ruling in this area may have bigger ramifications than its impact on the NCAA.
Michael Hausfeld, a lead attorney for the O’Bannon plaintiffs, said his team will now consider whether to take any legal action against networks for use of players’ NILs.
“It’s an open field right now because of the antitrust violation,” Hausfeld said. “We’re going to have to take a look at what our next letter might be to ESPN or CBS or Turner. We’ve been looking at it. For example, maybe we don’t go to the larger networks, but go right to the Big Ten Network or Pac-12 Network. Here you have a conference with a most direct relationship to an athlete. They’re clearly use the name, image and likeness.”
Larry Scott’s decision to go it alone on the Pac-12 Network looks more and more expensive every day.
As bad as that looks – and when it comes to the underpinnings of the NCAA’s case as well as the credibility of those who testified on its behalf, it’s about as bad as it gets – Wilken doesn’t go all scorched earth on the NCAA. It’s almost like watching a sword fight where one fighter is beaten, lost his sword, driven to the ground with the blade against his neck, only to see his opponent pull away and reach out his hand to lift him off the ground. Partly that’s due to the relief the plaintiffs sought. I also suspect Wilken, like most cautious trial judges, sought to fashion a ruling that would be hard to challenge on appeal (although we shouldn’t underestimate Donald Remy on that front quite yet). In any event, she’s given the schools something to work with, if they so choose, that won’t break the bank.
First of all, start with the core of her order.
… Wilken issued an injunction that will prevent the NCAA “from enforcing any rules or bylaws that would 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.” Wilken said the injunction will not prevent the NCAA from implementing rules capping the amount of money that may be paid to college athletes while they are enrolled in school, but the NCAA will not be allowed to set the cap below the cost of attendance.
No more cartel. What does that leave for the schools?
First, the NCAA could permit FBS football and Division I basketball schools to award stipends to student-athletes up to the full cost of attendance, as that term is defined in the NCAA’s bylaws, to make up for any shortfall in its grants-in-aid. Second, the NCAA could permit its schools to hold in trust limited and equal shares of its licensing revenue to be distributed to its student-athletes after they leave college or their eligibility expires. The NCAA could also prohibit schools from funding the stipends or payments held in trust with anything other than revenue generated from the use of the student-athletes’ own names, images, and likenesses.
As much as Jim Delany might snarl otherwise, that’s an affordable solution for the schools. As Mandel puts it,
And in fact, if Wilken’s ruling stands as the lone business change going forward (provided it’s not overturned on appeal), then most major athletic departments would barely feel the brunt. It’s basically a tax. Most SEC teams spend more per year on their defensive coordinator.
Is it sensible to fight that? As one of the plaintiffs’ attorneys put it,
“What are they going to appeal?” Hausfeld said. “This is what at least the major conferences professed they want to do (pay players cost of attendance) and they can’t because of the cartel. The judge just said not only am I letting you five do it, I’m telling everybody it’s an open field. You’ve got no cover not to do this.”
And that gets us to the end game. Let’s get the obligatory Remy quote out of the way first:
Donald Remy, the N.C.A.A.’s chief legal officer, issued a statement saying he disagreed with the ruling. The N.C.A.A. is expected to appeal the decision.
“We note that the court’s decision sets limits on compensation, but are reviewing the full decision and will provide further comment later,” Remy said. “The N.C.A.A. is committed to fully supporting student-athletes.”
Wilken’s ruling kicks in July 1, 2016, so the NCAA has plenty of time to fight in the courts, or to seek Congressional aid to overturn the ruling, if it so desires. Given that it turned down opportunities to fashion a settlement, despite obvious hints that the litigation wasn’t likely to go its way, it seems likely that the fight will go on, at least for a while. And no doubt there are peripheral issues, like Title IX, to be thrashed out. But what the NCAA has to be most concerned about is the next case.
The real significance in Wilken’s ruling might be in where it could lead. Wilken is scheduled to hear another batch of antitrust cases against the NCAA. Where O’Bannon dealt with rights to names, images and likenesses, these deal with more direct compensation, seeking to prevent the NCAA from setting limits on the value of a scholarship. In each case, the plaintiffs will draw from Wilken’s ruling in O’Bannon to try to help make their arguments.
It’s possible Wilken ruled narrowly in this case while recognizing the pending cases strike more directly at the heart of the collegiate model. It’s not that Wilken will necessarily rule against the NCAA in those cases — though she certainly might — but that she’ll have the opportunity to more fully explore the issues in those cases.
The O’Bannon ruling’s significance might not be fully known for several years — and that has nothing to do with the inevitable appeals, and everything to do with those other cases. There’s no way to predict what happens from here.
O’Bannon is now a road map for antitrust lawyers. Jeffrey Kessler knows where he has to go now; the NCAA’s lawyers know, too. More importantly for the latter, they also know that they’re going to have to find more credible support for the position their client takes. Mandel, once more:
But don’t kid yourself. Friday’s ruling only opened the door for years and years of more lawsuits and perhaps even Congressional rulings. Wilken’s strong words in deflating the amateurism model will become the template for thirsty lawyers smelling further NCAA blood – like Jeffrey Kessler, the prominent labor lawyer who filed a claim last March against the NCAA and the Power 5 conferences seeking to lift college athlete compensation restriction entirely.
No one can possibly predict where this will all wind up. All we know is that on August 8, 2014, a federal judge in California sized up the testimony of NCAA President Mark Emmert, Big Ten commissioner Jim Delany and other prominent administrators called to defend college sports’ amateurism model and said — I’m not buying it.
How much is that likely to change? I have my doubts that somebody like Steve Patterson is ready to embrace a new model, even if, ironically, he’s one of those in an easy position to afford to do so. But I’m also skeptical that the schools are going to find the road to an antitrust exemption easy to navigate. Which should mean the signs point one way.
“The NCAA will hopefully never be the same,” Hausfeld said. “It’s going to go through a metamorphosis and if it approaches it wisely, it should sit down and discuss with all the interested entities how best to form a new way going forward.”
I don’t think the NCAA is there yet. More smack downs to come.