A federal appeals panel awarded the NCAA a clear victory in the organization’s defense of amateurism Wednesday but left open a big window that keeps college athletics’ embattled business model vulnerable to future courtroom challenges.
The three-judge panel upheld U.S. District Court Judge Claudia Wilken’s decision last year that the NCAA violated federal antitrust laws and that its rules “unreasonably restrain trade.” But Wilken’s deferred compensation plan for student-athletes was vacated in Wednesday’s ruling by the U.S. Court of Appeals for the 9th Circuit panel.
Wilken called for colleges to set aside up to $5,000 annually for each athlete, money that would then be paid out after the athlete leaves school. The appeals panel called this proposal “erroneous,” saying “the district court ignored that not paying student-athletes is precisely what makes them amateurs.”
“The difference between offering student-athletes education-related compensation and offering them cash sums untethered to educational expenses is not minor; it is a quantum leap,” the panel said in its ruling. “Once that line is crossed, we see no basis for returning to a rule of amateurism and no defined stopping point.”
Wednesday’s ruling in what has come to be known as the O’Bannon case is the latest in the ongoing debate over college athletes’ rights, a clash taking place on multiple fronts. The NCAA has dug in its heels amid challenges by athletes, lawyers and labor unions.
Many legal observers noted that the most important part of Wednesday’s ruling is that the panel supported the crux of Wilken’s opinion.
“The NCAA is not above the antitrust laws,” the panel found, “and courts cannot and must not shy away from requiring the NCAA to play by the Sherman Act’s rules. In this case, the NCAA’s rules have been more restrictive than necessary to maintain its tradition of amateurism in support of the college sports market.”
Michael Carrier, a Rutgers law school professor who specializes in antitrust matters, said, “A different ruling on any of these could have paved the way for quick dismissals of future challenges to NCAA rules.”
Of particular interest, it means that sports labor lawyer Jeffrey Kessler can move forward unhindered with his lawsuit challenging the NCAA and the five largest conferences, in which he effectively calls for dismantling of the NCAA’s current model. That suit was filed in March 2014 and is slowly making its way through the court system.
Wednesday’s ruling could make it more difficult for future courts to reward athletes compensation under the NCAA’s current model. In dismissing Wilken’s proposed plan for deferred compensation, the appeals panel noted that the dollar amount was “arbitrary.”
“[We] have little doubt that plaintiffs will continue to challenge the arbitrary limit imposed by the district court until they have captured the full value of their NIL [names, images and likenesses],” the ruling stated. “At that point the NCAA will have surrendered its amateurism principles entirely and transitioned from its ‘particular brand of football’ to minor league status.”
The O’Bannon case was originally filed in 2009 by former UCLA basketball all-American Ed O’Bannon, who charged the NCAA with violating the Sherman Antitrust Act by profiting from the use of athletes’ names and likenesses. The NCAA has argued that sharing that revenue with student-athletes essentially would professionalize college sports and upend a time-honored system and business model.
There have been slight concessions along the way but not many. After Wilken’s decision, schools in the NCAA’s five biggest conferences agreed to allow “cost-of-attendance” payments, money that might fill the gap between the cost of a scholarship and what an athlete actually requires to attend school, which includes various bills, travel and living expenses.
NCAA President Mark Emmert issued a statement Wednesday saying “we agree with the court that the injunction ‘allowing students to be paid cash compensation of up to $5,000 per year was erroneous.’ Since Aug. 1, the NCAA has allowed member schools to provide up to full cost of attendance; however, we disagree that it should be mandated by the courts.”
The NCAA still could challenge the appeals panel’s antitrust ruling and take the matter to the U.S. Supreme Court. Still, the governing body for college athletics emerged from the appeals process with at least a modest win, following a lower-court decision that many labor observers regarded as especially adverse.
“This case demonstrates yet again that judges should not involve themselves in complicated business solutions to difficult issues,” said Robert McTamaney, a New York antitrust lawyer. “Justice [John Paul] Stevens’s conclusion is still correct. The preservation of amateur athletics requires that amateurs not be paid. That was sound law in 1890 when the Sherman Act was created, and it is sound law today.”