Five key things to know about O’Bannon vs. NCAA


(Jae C. Hong / AP)

On Friday, Judge Claudia Wilken of the U.S. District Court in Oakland, Calif., dropped a bombshell on the NCAA, handing down a 99-page landmark decision that struck down a key component of how college sports conducts business.

In Ed O’Bannon, et al, v. the NCAA, Electronic Arts and Collegiate Licensing Company, Wilken ruled that rules limiting compensation to college athletes “unreasonably restrain trade” in violation of antitrust laws and issued an injunction against rules that forbid athletes from earning money from the use of their names, images and likenesses in video games and on broadcasts. “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. She added that the restraint “could be achieved through less restrictive means” without destroying the structure of college sports.

[Related: Ruling could be bellwether, legal experts say.]

There’s a lot to be determined in the wake of the ruling, which will be appealed by the NCAA, but here are a few things to keep in mind:

1) Although the decision represents a victory for college athletes, there’s a little something for both parties in the decision. Wilken set a cap on the money the NCAA must pay athletes for the use of their names, images and likenesses so long as it allows at least $5,000 per athlete per year of competition for players at the big Football Bowl Subdivision and basketball schools. That would, at maximum, come down to $20,000 per athlete over four years. If the school does not use players’ names, images or likenesses, there would be no money to be placed in trust and an athlete would be limited to receiving the cost-of-attendance scholarship.

2) This decision doesn’t usher in an era of pay-for-play or endorsement deals. Money is to be held in trust until the athletes’ college careers end. While they are students, they can receive only a scholarship or another figure covering the full cost of attending college. (Don’t forget, the NCAA in the spring changed rules to allow unlimited meals and snacks after Connecticut’s Shabazz Napier drew headlines for saying, “There are hungry nights that I go to bed and I’m starving.”)

3) What doesn’t change for the NCAA and athletes? The organization can still set rules governing eligibility, the number of scholarships, and practices. It still has the power to keep athletes from signing endorsement deals.

4) When does this brave new world begin? Because the changes will not be stayed while the NCAA is appealing, the next recruiting cycle is likely to be the one affected. That means athletes who enroll in colleges on or after July 1, 2016.

5) Other factors may come into play during an appeal that may go all the way to the U.S. Supreme Court and two of those could dwarf the O’Bannon decision. Unionization, a movement begun by Northwestern football players, could gain steam. And there is the antitrust lawsuit filed in the spring by Jeffrey Kessler, a sports labor attorney, in a New Jersey federal court on behalf of a number of college basketball and football players. It argues that the NCAA cannot cap player compensation at the value of an athletic scholarship.

“The main objective is to strike down permanently the restrictions that prevent athletes in Division I basketball and the top tier of college football from being fairly compensated for the billions of dollars in revenues that they help generate,” Kessler told ESPN. “In no other business — and college sports is big business — would it ever be suggested that the people who are providing the essential services work for free. Only in big-time college sports is that line drawn.”

In addition to the NCAA, the lawsuit also names the five largest conferences as defendants. ESPN noted the distinction in the Kessler lawsuit, which is more broadly aimed at the concept of amateurism in college sports, in May:

By contrast, the Kessler suit dispenses with the cost-of-attendance argument and does not ask for damages as a group. It simply states that no cap is legal in a free market and asks the judge to issue an injunction against the NCAA ending the practice. It contends that NCAA member universities are acting as a cartel by fixing the prices paid to athletes, who presumably would receive offers well in excess of tuition, room, board and books if not restricted by NCAA rules.

“We’re looking to change the system. That’s the main goal,” Kessler said. “We want the market for players to emerge.”

Against the backdrop of the O’Bannon and Kessler lawsuits, the NCAA last week took steps to revamp its structure, granting schools in the “Power Five” conferences the autonomy to make their own rules, apart from smaller NCAA member schools. So, one way or another, change is coming — even if no one can envision just now how extensively college sports will be altered.


Ed O’Bannon in 1995. (Eric Draper / AP)
After spending most of her career in traditional print sports journalism, Cindy began blogging and tweeting, first as NFL/Redskins editor, and, since August 2010, at The Early Lead. She also is the social media editor for Sports.
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