Judge rules against NCAA

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Saturday, August 9, 2014

Major college football and men's basketball student-athletes could be in line for paydays worth thousands of dollars once they leave school after a landmark ruling Friday that might change the way the NCAA does business.

A federal judge ruled that the NCAA can't stop players from selling the rights to their names, images and likenesses, striking down NCAA regulations that prohibit players from getting anything other than scholarships and the cost of attendance at schools.

U.S. District Judge Claudia Wilken, in a 99-page decision that followed a contentious three-week trial in June, ruled in favor of former UCLA basketball star Ed O'Bannon and 19 others who sued the NCAA, claiming it violated antitrust laws by conspiring with the schools and conferences to block the athletes from getting a share of the revenues generated from the use of their images in broadcasts and video games. The injunction she issued allows players at big schools to have money generated by television contracts put into a trust fund to pay them when they leave.

"The Court finds that the challenged NCAA rules unreasonably restrain trade in the market for certain educational and athletic opportunities offered by NCAA Division I schools," Wilken wrote.

Wilken rejected the NCAA's arguments in defense of its economic model, saying the "justifications that the NCAA offers do not justify this restraint and could be achieved through less restrictive means" while preserving college sports competition.

In a partial victory for the NCAA, though, Wilken said it could set a cap on the money paid to athletes for use of their names, images or likenesses. However, ESPN.com legal analyst Lester Munson says that the injunction and the written opinion Wilken delivered are somewhat at odds.

In her injunction, Wilken writes that the NCAA is restrained from prohibiting an athlete from getting deferred compensation of $5,000 or less (currently, an athlete receives nothing). Munson said the injunction sets the figure as a $5,000 cap. However, in her 99-page opinion, the judge writes that the deferred compensation can't be less than $5,000. The ruling also states that individual schools could offer less money, she said, but only if they don't unlawfully conspire among themselves to set those amounts.

That means Football Bowl Subdivision players and Division I basketball players who are on rosters for four years potentially could get no less than $20,000 when they leave school. Wilken wrote that she set the $5,000 annual number to balance the NCAA's fears about huge payments to players. Munson says that lawyers on both sides are certain to ask for a clarification.

"The NCAA's witnesses stated that their concerns about student-athlete compensation would be minimized or negated if compensation was capped at a few thousand dollars per year," Wilken wrote.

The compensation will be paid into a trust fund. However, if a school does not try to sell anything with the players' names, images and likenesses, there will be no money to pay into the trust fund. A player then would be limited to his cost-of-attendance scholarship.

Any payments to athletes would not be immediate. The ruling said regulations on pay will not take effect until the start of the next FBS football and Division I basketball recruiting cycle. Wilken said they will not affect any prospective recruits before July 1, 2016.

Lawyers for O'Bannon and the 19 others had sought to have millions of dollars put in trust funds for the athletes. Former athletes will not be paid, because they gave up their right to damages in a pretrial move so the case would be heard by a judge, not a jury.

"I'm excited and trying to keep it all together," O'Bannon said. "When we decided to take on this case [in 2009], we knew it would be a marathon, that it would get people talking -- and that hopefully talk would spark change. And here we are.

"I hope that the players get what they deserve, with all the billions they are helping make for college sports."

The NCAA said in a statement that it disagreed with the decision but was still reviewing it.

"We disagree with the Court's decision that NCAA rules violate antitrust laws," NCAA chief legal officer Donald Remy said in a statement. "We note that the Court's decision sets limits on compensation, but are reviewing the full decision and will provide further comment later. As evidenced by yesterday's Board of Directors action, the NCAA is committed to fully supporting student-athletes."

Bill Isaacson, co-lead counsel for the plaintiffs, who examined NCAA president Mark Emmert during the trial, said he was pleased with the verdict.

"This is a major step towards decency for college athletes," he said. "The judge's decision strikes down NCAA rules restricting their compensation and permits reasonable but significant sharing with athletes -- both for the costs of education and to establish trust funds -- from the billions in revenues that schools earn from their football and basketball players."

Sonny Vaccaro, the former athletic shoe representative who recruited O'Bannon to launch the suit, said it was a huge win for college athletes yet to come.

"The kids who are going to benefit from this are kids who don't even know what we did today," Vaccaro said. "It may only be $5,000 but it's $5,000 more than they get now. The future generation will be the benefactor of all this. There are now new ground rules in college sports."

As part of her ruling, Wilken rejected both the NCAA's definition of amateurism and its justification for not paying players. But she did not prohibit the NCAA from enforcing all its other rules and regulations, and said some restrictions on paying players might still serve a limited purpose if they are necessary to maintain the popularity of major college football and basketball.

However, she said she will enter a permanent injunction prohibiting "certain overly restrictive restraints."

The case could be appealed. The NCAA previously said it would take the issue all the way to the Supreme Court.

The ruling comes after a five-year battle by O'Bannon and others on behalf of college athletes to receive a share of the billions of dollars generated by college athletics' huge television contracts. O'Bannon, who was MVP of the 1995 UCLA national championship basketball team, said he signed on as lead plaintiff after seeing his image in a video game authorized by the NCAA that he was not paid for.

Wilken was not asked to rule on the fairness of a system that pays almost everyone but the athletes themselves. Instead, the case was centered on federal antitrust law and whether the prohibition against paying players promotes the game and does not restrain competition in the marketplace.

In a scathing post-trial brief, attorneys for the plaintiffs argued that the NCAA basically staked its defense on a 1984 Supreme Court decision that said the fundamental rule of amateurism was at the core of the NCAA's regulation of college athletics and that the organization could have suggested other remedies to help athletes to justify its control of the college sports marketplace.

"In some places, it is as if our three-week trial did not occur," plaintiffs' lawyers wrote.

Attorneys for the NCAA, though, said moving away from the concept of amateurism in which players participate for the love of the game would drive spectators away from college sports and would upset the competitive balance among schools and conferences. They said some of the relief sought by the plaintiffs would allow for third parties to play players and that universities would lose control of their programs.

Several players testified during the trial that they viewed playing sports as their main occupation in college, saying the many hours they had to devote to the sport made it difficult -- if not impossible -- to function like regular students.

O'Bannon portrayed himself as a dedicated athlete who would stay after games to work on his shot if needed, but not much of a student. He said his job at UCLA was to play basketball and that it took up so much time that just making it to class was difficult.

"I was an athlete masquerading as a student," O'Bannon said. "I was there strictly to play basketball. I did basically the minimum to make sure I kept my eligibility academically so I could continue to play."

But witnesses called by the NCAA during the trial spoke of the education provided to athletes as payment for their services and said the college model has functioned well for more than a century. They contended that paying players would make college sports less popular and could force schools to cut other programs funded by the hundreds of millions of dollars taken in by big-time athletics.

The head of the Big Ten painted a dire picture of what college sports would look like in his testimony, saying his conference likely would cease to exist and the Rose Bowl probably would not be played.

Jim Delany said the idea of paying players goes against the entire college experience and that he couldn't see league members agreeing to it. If some did, he said, they likely would be kicked out of the conference because the move would create an imbalance among schools that could not be resolved.

"There wouldn't be a Rose Bowl if either they or we were operating in a very different wavelength in terms of paying players," Delany said.

That theme has since been echoed by college and conference administrators, even as they move forward on plans -- prompted in part by the O'Bannon suit, other suits that argue athletes have a right to better compensation and a unionization effort by players at Northwestern -- to give expanded benefits to athletes in the 65 schools that comprise the five biggest conferences in the country. This week, the NCAA's board voted to allow those five wealthiest conferences to set their own rules, paving the way for those schools to potentially offer richer scholarships and health benefits.

Rutgers law professor Michael Carrier, a specialist in antitrust and intellectual property law, said the outcome might not be scary at all because the money might not be huge and will be paid only after a player's career is over.

"My sense is something like making these payments after graduation are not really big game changers," Carrier said. "They're just giving the plaintiffs a little piece of the money many people would view them as entitled to. I don't think it will put college athletics out of existence."

While the player licensing created under the ruling could complicate future negotiations for TV contracts, ESPN said in a statement that the ruling would have no effect on the broadcast of sporting events.

"The decision speaks to the relationship between the student-athletes and their schools and does not disrupt any of our broadcast rights," the statement said.

Information from Tom Farrey of "Outside the Lines," ESPN.com's Lester Munson and The Associated Press was used in this report.

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