Ed O’Bannon ruling further erodes power of NCAA

A judge’s ruling in the Ed O’Bannon case allows college athletes to receive money from licensing agreements, but it also took the NCAA to task.

08/16/2014 7:38 PM

08/16/2014 7:39 PM

A battle over words will determine the NCAA’s future after 99 pages of them came on Aug. 8 in Judge Claudia Wilken’s decision in the Ed O’Bannon v. NCAA case.

Wilken ruled that the NCAA must allow schools to give athletes some of the money they bring in by licensing an athlete’s name, image and likeness (NIL) to companies. She also wrote that the NCAA cannot cap the value of a scholarship below the actual cost of attendance, which is usually a few thousand dollars more than current scholarships are worth.

Wilken wrote plenty more, though. And many of her other words concerned one area: amateurism. Wilken exposed the NCAA for changing the definition of amateur several times to fit its needs in the past. Preserving a contrived idea is not a viable reason to break antitrust laws, she concluded.

“The most impactful and powerful portion of the finding is the dicta,” said Miami-based sports lawyer Darren Heitner, using the legal word for a judge’s opinion beyond the specific question presented.

Words have been a savior for the NCAA, which has continuously argued for the need to protect the sanctity of amateurism. Wilken took the power out of their favorites.

Her ruling will not affect anything on the field this season (it only affects athletes entering school after July 1, 2016), but her words will impact an evolving debate.

THE CASE

O’Bannon v. NCAA, decided in California, was not the first lawsuit against the NCAA regarding its business practices. Far from it.

A University of Denver student took the organization to court in 1953, demanding workers’ compensation for an injury. In 1984, the U.S. Supreme Court decided the NCAA violated antitrust laws by prohibiting individual schools from negotiating individual TV contracts.

In his dissenting opinion, Justice Byron White, a former football player himself, predicted the arms race the decision would cause.

“Without regulation,” he wrote, “the desire of member institutions to remain athletically competitive would lead them to engage in activities that deny amateurism to the public.”

As White foresaw, the value of TV contracts exploded and college sports became big business, leading student-athletes to ask why they did not receive part of the profits.

Jason White and others sued the NCAA in 2006, leading to a $10 million settlement after the players claimed the organization violated antitrust laws by capping the value of a scholarship.

Afterward, the NCAA considered allowing schools to offer athletes a stipend, but the proposal was ultimately shot down.

All of that set the stage for O’Bannon, a former UCLA basketball player who sued the NCAA for not asking for his permission or compensating him before using his image in video games and on TV.

He was at a friend’s house in 2009 when he saw himself in an EA Sports college basketball video game. His name was not there, but the game’s UCLA power forward wore O’Bannon’s number and featured his height, weight, skin tone and left-handed form.

O’Bannon’s concern led him to Sonny Vaccaro, a former Nike executive who has called for student-athlete compensation, and esteemed lawyer Michael Hausfeld.

Following years of legal back and forth, Wilken cited two of those earlier cases while dismissing the NCAA’s arguments for continuing to place certain restrictions on the student-athlete market.

She wrote that popular demand for college sports would not decrease if athletes were paid. She also argued that competitive balance is not an issue because certain teams already dominate recruiting under the current system.

In response to NCAA claims that athletes could not take full advantage of academic opportunities if they were paid, Wilken pointed out that they would be like rich students or others with jobs on campus. Lastly, she said evidence did not support the argument that schools would leave Division I competition if they had to pay players.

Talking about the decision on the Dan Le Batard Show on 790 The Ticket last week, O’Bannon explained that he will not receive any compensation from the ruling, but that was never his motivation.

“My motives aren’t greed, my motives are righting a wrong,” he said.

O’Bannon later added that he was “on cloud nine,” after the decision.

Still, Wilken did give the NCAA some small victories. A cap can be set on the size of the trust fund as long as it is at least $5,000 per player per year, she said. All Division I basketball and football players would be eligible for payments equal to those of other eligible athletes at their school. They could receive the money when their NCAA eligibility expired.

Wilken also determined that the NCAA can continue preventing students from receiving money for endorsements or selling their NIL rights individually.

But the NCAA has already announced it will appeal the decision. The case could reach the Supreme Court.

With legal uncertainty still ahead, FIU athletic director Pete Garcia released a statement and said nothing else.

“Last week’s ruling is something that we have seen coming for quite some time,” he wrote. “We will keep monitoring all developments. One thing I am sure of is that college athletics will continue to change and change quickly over the next few years.”

University of Miami athletic director Blake James also declined further comment after writing, “I will support whatever decisions are ultimately made by the courts regarding this issue. I believe in the collegiate athletics model and want the very best for our student-athletes.”

Entrenched in training camp, Hurricanes players said they have not discussed or kept up with potential changes in NCAA rules.

“All we are really focused on right now is preparing for the first game,” defensive tackle Michael Wyche said. “We don’t have time to follow it.”

Still, senior Jon Feliciano said he does sympathize with the case former athletes are making, though he added that it is not something he focuses on.

“There has to be some way that we should get compensated for all the stuff we do and all the games and merchandise and stuff like that,” he said.

WHAT’S NEXT?

Before Wilken’s ruling leads to change, the NCAA’s appeals will have to be resolved, and schools will have to figure out how the decision affects issues such as taxes and Title IX.

Still, the words Wilken used and the reactions they elicited point toward a future with a weaker NCAA, freer schools and more empowered athletes.

The NCAA took itself in that direction, granting the five most powerful conferences (SEC, Big Ten, Big 12, ACC and Pac-12) and Notre Dame some autonomy. Members of those conferences have suggested the change will allow them to give athletes certain types of compensation that lower-level schools cannot afford.

In the market-driven approach that could result from all of this change, some schools might stick to traditional ideals while others include more professional-style perks.

That could mean more exposure for agent Drew Rosenhaus.

For the first time in years, Rosenhaus got to meet with select UM players and officials last year, ultimately landing quarterback Stephen Morris and wide receiver Allen Hurns as clients.

Rosenhaus said he thinks that a school more open to player-agent interaction would be attractive to prospective players, and rule changes giving schools more autonomy give them the opportunity to experiment.

In terms of importance, the agent issue pales in comparison to the unresolved debate at the center of all of this: Should school’s pay players directly for their service?

That is a question that could be answered in upcoming lawsuits. Jeffrey Kessler, who brought free agency to the NFL through a lawsuit, and a Minneapolis law firm that has attacked the NCAA on the concussion issue both recently have filed lawsuits alleging that players must be allowed to negotiate contracts with schools.

With those cases still years away from resolving the debate that Wilken’s words have helped shape, there does not appear to be an end in sight — except, maybe, for the NCAA as we know it.

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