A panel of three judges of the Court of Appeals for the Ninth Circuit ruled that NCAA student athletes do not have to be paid beyond the cost of attending college. However, in the same ruling, the Ninth Circuit stated that the National Collegiate Athletic Association (NCAA) violates anti-trust laws when banning compensation for the use of student athlete’s images and likenesses in advertising, etc., as its anti-competitive behavior.
This decision comes from a suit filed by former University of California, Los Angeles (UCLA), basketball player, Ed O’Bannon, Jr. alleging antitrust violations against the NCAA in 2009 (Edward O’Bannon, et al. v. National Collegiate Athletic Association; Electronic Arts Inc.; and Collegiate Licensing Company). The suit came about when O’Bannon saw his likeness from the 1995 NCAA Championship Team, of which he was a member, in a video game. He had not given permission for his likeness to be used in the video game. The player in the game was a UCLA player, playing a power forward position, matched his height, his weight, his skin tone, his lack of hair, his jersey number (31), and his left-handed shot. Another twenty former college athletes also joined in on the lawsuit.
In August of 2014, Electronic Arts, Inc., and Collegiate Licensing Company departed from the case as co-defendants with the NCAA and reached a settlement with the student athletes for a $40 million dollar settlement which would award approximately $4,000 to around 100,000 student athletes who’s likeness had been used in videos games without permission since 2003. However, the NCAA remained in the lawsuit and defended itself against the antitrust claims, the decision of which was appealed and decided in late September of this year.
The [NCAA] rule of amateurism states that maintaining amateurism is “crucial to preserving an academic environment in which acquiring a quality education is the first priority.”
Crucial to the NCAA’s stance in this 2014 suit was that it wanted to preserve the rule of amateurism it had always had to keep the college student athlete role unique. The rule of amateurism states that maintaining amateurism is “crucial to preserving an academic environment in which acquiring a quality education is the first priority.” The rule of amateurism seems to foster the idea that student athletes are in fact students first, and they are not just in college to play sports, but to get a college education, and the goal of the student-athlete is to get that education. The amateurism requirements of the NCAA state that the following are not allowed: any contracts with professional teams, payment of a salary for participating in athletics at their school, any prize money above actual and necessary expenses, play with professionals, playing with a professional team (including trying out for the team, practicing, or competing), being given benefits from an agent (including prospective agents), agreeing to be represented by an agent, and any delay in the student athlete from being enrolled as a full-time college student to participate in an organized athletic competition.
The 2014 ruling stated that the NCAA was able to cap the amount of money that may be held in trust for student athletes no less than $5,000 in 2014 dollars per year so they may remain academically eligible. The key ruling in the 2014 district court was the two-part injunction. The injunction stated that the NCAA was to permit NCAA student athletes to be paid up to $5,000 per year, and to permit schools to give their student athletes up to the full cost of attendance in the form of scholarships.
The Ninth Circuit held that the NCAA had to let schools offer student athletes scholarships up to the full cost of attendance, but that the decision to allow students to be compensated up to $5,000 per year was absolutely wrong.
These key parts of the injunction were at the forefront of the Ninth Circuit decision on September 30, 2015. The split three-judge panel stated that one part of the injunction could be upheld, but that the other part could not be upheld. The Ninth Circuit held that the NCAA had to let schools offer student athletes scholarships up to the full cost of attendance, but that the decision to allow students to be compensated up to $5,000 per year was absolutely wrong. The cash payments were completely separate from their educational expenses, and could not be permitted.
The NCAA had previously capped student scholarships at a certain amount, and allowing students to offer scholarships in the amount of the full cost of attendance often was a few thousand dollars over that NCAA cap. However, the Ninth Circuit ruled that the NCAA cap could not prevent schools from offering the full cost of attendance in the form of scholarships to its student athletes.
On the other hand, the idea that students could be compensated up to $5,000 per year was against the rule of amateurism, and once that line was crossed, there was no likely return. The Ninth Circuit seemed to recognize the importance of the rule of amateurism. Similarly, the panel concluded that paying student athletes to use their likeness was not just as effective as the NCAA amateurism rules, and the court could only require the NCAA raise the scholarship cap to the full cost of attendance instead of granting a monetary amount that could be paid to the student athletes.
The Ninth Circuit stated that the NCAA is not exempt from antitrust laws…
Key to the Ninth Circuit decision is the recognition that that the NCAA amateurism rules are not exempt from federal antitrust scrutiny. The Ninth Circuit stated that the NCAA is not exempt from antitrust laws, and therefore they cannot succeed in the attempt to get the amateurism rules recognized as more than just serving a legitimate pro-competitive purpose. These amateurism rules are still held to the antitrust scrutiny based on federal law.
The NCAA was supportive of the decision, however, and praised the decision by stating that it appreciated the recognition of the principle of amateurism. Student athletes, they say, are students of the colleges, not their employees. The NCAA has already amended its rules to permit schools to offer student athletes scholarships up to the full cost of attendance.
While the Ninth Circuit has ruled on the NCAA standards and what schools are permitted to pay to their student athletes, it is not certain what would have been the result had Electronic Arts, Inc., and Collegiate Licensing Company remained in the lawsuit. These two corporations settled with the class of collegiate athletes after recognizing that they had in fact used these student athletes’ likenesses in their video games. However, what would have occurred had they stayed in the lawsuit?
While it is speculative that these corporations would have been required to pay the student athletes’ for using their likenesses in the video games for which these companies received significant amounts of money in profits, the rules of amateurism do not really speak to the student athletes receiving payment from another source who wishes to use their likeness in a video game or movie. This further brings the question of whether the student athlete would be able to make this decision, or whether the school or NCAA would be permitted to allow another company to use the student athlete’s likeness in a video game or movie.
[H]ow far do the rules of amateurism stretch to where the student athlete cannot make his or her own decisions outside of their capacity of a student athlete…
This begs the question of how far do the rules of amateurism stretch to where the student athlete cannot make his or her own decisions outside of their capacity of a student athlete for whatever college or university they attend and represent in sporting events. While it might seem fair for the student athlete to be able to go after that company for would this be considered in the receiving “salary for participating in athletics” under the NCAA rules of amateurism. That result is still not entirely clear.
What happens next for the NCAA, universities, and NCAA student athletes? The NCAA has initiated steps to examining time demands of NCAA athletes for major NCAA sports. The consideration and conversation surrounding student athlete compensation might play a significant part in this discussion as well.