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Explaining the NCAA v. O'Bannon college athletics case

Joe Robbins

The O'Bannon v. NCAA case, which could give college athletes the ability to profit off their likeness, will go to trial on June 9 in Oakland, California, and no matter the outcome, it will be the most important trial in the history of the National Collegiate Athletic Association.

The suit was filed by former UCLA basketball player Ed O'Bannon in July 2009. O'Bannon and the other plaintiffs (including now-retired basketball greats Bill Russell and Oscar Robertson) are suing the NCAA for licensing college athletes' likeness without their legal consent. The NCAA's current model — its version of amateurism — does not allow athletes to receive any form of compensation beyond the value of a scholarship, so none of the hundreds of millions of dollars of NCAA television revenue can go to the players.

The O'Bannon plaintiffs are seeking an injunction, which essentially means that if they win, the NCAA will no longer be allowed to keep players from gaining access to that revenue. The plaintiffs are asking for group licensing for athletes, meaning the athletes would transfer their rights to the school or the conference (or possibly a union), and everyone would get an equal cut, similar to how licensing works in professional leagues.

Initially, the plaintiffs were seeking a class action suit for both billions of dollars in damages, plus an injunction. However, Judge Claudia Wilken opted to certify only the injunction class, meaning that if O'Bannon wins, the NCAA would only be forced to change its rules in the future, not pay back athletes from the past. Still, for an organization that rarely changes how it operates, and for one that believe so strongly in the existence of amateurism, there is a lot at stake.

What are they arguing over?

The suit alleges that the NCAA is illegally profiting off players' likenesses in television broadcasts without the players validly transferring their broadcast rights.

In 2010, the suit was combined with one filed by former Arizona State and Nebraska quarterback Sam Keller, who sued the NCAA, Electronic Arts (EA) and the Collegiate Licensing Company (CLC) for illegally using players' likenesses in video games. However, the Keller plaintiffs settled with EA and the CLC for $40 million, and EA announced that it would no longer make college sports video games.

EA used to get around the licensing issues by not using player names. However, Keller argued that Arizona State's "QB #9" was clearly him, and had his same height, weight and hometown. The same goes for most players in the game, and it turns out real player names were actually hidden in the game.

The NCAA did not settle, and in an effort to delay the O'Bannon trial, it had hoped to keep the lawsuits combined, citing its Seventh Amendment right for facts in the two trials to not overlap. However, Judge Wilken disagreed that the Seventh Amendment was applicable, and she announced the O'Bannon trial would go on as scheduled on June 9, with the Keller trial set for March 2015. The NCAA has filed an emergency petition — the latest of several delay attempts — with the 9th U.S. Circuit Court of Appeals, though that court has denied a different delay attempt already.

Now that the video games portion of the suit is essentially out of the way, the main focus for the June 9 trial is television rights. The NCAA makes hundreds of millions of dollars in television revenue each year, while the schools and conferences have their own broadcast deals worth tens of millions per school in the major conferences. The plaintiffs are looking for the athletes to have a cut of that revenue, meaning there's a chance they could collectively receive a few hundred million dollars to divide up each year.

What are the NCAA's arguments?

The NCAA's arguments center around its desire to maintain its definition of amateurism. The organization says that the strict price cap placed on players' value is necessary to maintain competitive balance, and at trial, that's going to be its main responsibility — prove that keeping all of the television revenue away from its primary generators is necessary for the organization.

Traditionally, the NCAA has simply invoked the term "amateurism" as if that settles all arguments about player compensation. But Judge Wilken has already said that at trial, the NCAA must prove how its current version of amateurism, "actually contributes to the integration of education and athletics," as the organization claims. They cannot, in other words, just tautologically argue that not paying the players is necessary to preserve the principle that the players are unpaid. Perhaps the NCAA's biggest reality check came when Wilken said"I don't think amateurism is going to be a useful word here."

The NCAA also had two major arguments dismissed by Wilken. The organization had tried to argue that it has a First Amendment right to negotiate television contracts of live sporting events. Fox and the Big Ten Network — a partnership between Fox and the Big Ten Conference — and a number of other television companies have supported this defense. However, Wilken ruled that the First Amendment does not apply in this situation because the athletes have not validly transferred their likeness to the schools for licensing. The NCAA has also tried to argue that networks pay for rights to the stadiums, not the players, when they broadcast games, and Wilken even "chuckled" at the implication.

The NCAA has long argued that it cannot pay revenue sport athletes (football and men's basketball) because those sports are used to subsidize other sports. However, Wilken said the NCAA cannot use that argument at trial, because it has not said why it can't change its revenue-sharing rules to accommodate those needs. Moreover, NCAA critics have rejected that argument, because schools funded those sports long before they received millions in television revenue.

What are the O'Bannon plaintiffs' arguments?

The arguments from the O'Bannon plaintiffs are a bit simpler, and basically, they're the opposite of all of the NCAA's arguments. The plaintiffs argue that the NCAA has broken antitrust law by colluding to not allow athletes to receive any compensation from broadcasts. They claim the athletes have not validly transferred their rights to the schools and the NCAA, and that they need to in order for their likeness to be used.

A lot of the criticism about the plaintiffs' stance has been focused on how it would be possible. Group licensing provides for a relatively simple solution, since it would be very difficult for athletes to license their likeness on their own. Complexity is part of the reason the damages portion of the suit was thrown out — it would simply be impossible to determine the worth of past players.

Wilken also rejected a portion of the plaintiffs' argument apart from the damages claim. The plaintiffs argued that players have a right to broadcast revenues because television broadcasts are commercial speech. However, Wilken said that is not a legitimate argument, because advertisements are separate from the games themselves, which are not solely commercial in their own right.

At trial, the O'Bannon plaintiffs are likely to focus on how much money the major conferences and the NCAA bring in, and how such a big industry cannot be treated like a struggling non-profit with unpaid labor.

What will the trial look like, and who could testify?

Because the plaintiffs were still seeking individual damages in addition to the injunction up until right before the filing deadline, the case looked like it would be decided by a jury. However, the individual damages claim was dropped at the last minute, so the case will now proceed as a bench trial decided by Judge Wilken.

While Wilken has been skeptical of both sides' arguments, this could play in the plaintiffs' favor, since it might be tough to explain all the complexities of the legal arguments to a jury. Wilken already understands the background of the case and should be able to make a more informed decision either way.

The NCAA was not happy with the plaintiffs' last-minute decision. According to USA Today, their lawyers wrote that they were, "surprised and troubled by the Plaintiffs' last minute and abrupt decision to attempt to avoid having a jury decide" the outcome of the case.

A recent court filing revealed the witness lists for both sides. It includes NCAA president Mark Emmert, a number of university athletic directors and commissioners, various economists and professors, the NCAA's former Director of Corporate Relationships, a current athlete who is the vice-chair of the Student Athlete Advisory Committee and former players.

What will happen to college sports if O'Bannon wins?

Everyone has different opinions on this one. What we know for sure is that the players will get some television revenue — the plaintiffs are asking for up to half — and they will all get an equal cut through group licensing. The implications on college sports are debatable. Some firmly side with the NCAA, despite Judge Wilken's objection, on the opinion that non-revenue sports will disappear, as schools try to replace lost television revenue with the funding for those sports.

The NCAA has also argued that since many of its top athletic departments lose money, it won't have enough money to pay out any television money, and thus some people — ncluding Big Ten commissioner Jim Delany and former Northwestern president Henry Bienen — have threatened that schools could go to the NCAA Division III model and not offer athletic scholarships if amateurism is threatened in any way. However, that claim has been discredited by basic economics, and even Delany admitted he was bluffing.

The most likely scenario is that schools will be forced to cut down on excessive facilities spending — no more waterfalls in locker rooms — and skyrocketing coaches pay. Non-revenue sport teams could also play more regional schedules to help balance the budget.

What other legal issues are facing the NCAA?

The NCAA has become a magnet for lawsuits in the past few years, and the others could be just as damaging as the O'Bannon case. A suit filed by notorious antitrust lawyer Jeffrey Kessler is attacking the NCAA and the five major conferences — the ACC, Big 12, Big Ten, Pac-12 and SEC — for colluding to fix athletes' compensation at the price of a scholarship. Kessler claims that there are no viable alternatives for athletes hoping to play sports after high school, and thus, this price-fixing is illegal.

If he wins, Kessler's suit could open up the ability for players to market themselves without restriction, meaning they could do ads and get sponsorships. At the very least, it could cause the formation of a players union that would negotiate a collective bargaining agreement with the NCAA.

There are a number of smaller suits, as well. The NCAA is facing a group of consolidated concussion lawsuits, as well as an antitrust suit filed by former Florida football star Sharrif Floyd that includes women's basketball players and the smaller Football Bowl Subdivision conferences, and argues the NCAA schools have illegally fixed compensation below the full cost of attending universities.

The Northwestern unionization case also looms large over the NCAA. While the organization is not a party to that case, it still threatens the ideal that athletes are students first, and it could create real competitive balance issues if some schools can bargain and others cannot, since bargaining power for athletes at public schools will be decided on a state-by-state basis.

Will this end in Oakland?

There's almost no chance of that. The NCAA is sure to appeal, as its chief legal officer Donald Remy announced.

"We're prepared to take this all the way to the Supreme Court if we have to," Remy told USA Today. "We are not prepared to compromise on the case."

The NCAA has vowed to change, promising more autonomy for larger schools to provide benefits for athletes. However, the organization still won't budge on amateurism, and that's the deal-breaker. The O'Bannon trial will give us the first legal opinion on whether the word really is "useful" beyond the NCAA's rhetoric.