By Allen L. Sack and Brian Porto
Just a few weeks before this year’s college football National Championship, the NCAA reached a $208.7 million settlement over cost of attendance scholarships in FBS football and Division I men’s and women’s basketball. This case, Alston v. NCAA, is only one of the antitrust actions brought against the NCAA in recent years. Another, Jenkins v. NCAA, is in the summary judgment stage. Each party is seeking a resolution in its favor that would resolve the case without a trial.
The case of O’Bannon v NCAA, resolved in 2016, is especially significant for future antitrust cases. According to Judge Jay Bybee who wrote the opinion for the Ninth Circuit Court of Appeals in the O’Bannon case, “the district court’s decision is the first by any federal court to hold that any aspect of the NCAA’s amateur rules violate antitrust laws, let alone to mandate by injunction that the NCAA change its practices.”1
In 2014, United States District Judge Claudia Wilken ruled in O’Bannon that the NCAA violated antitrust law by denying to college athletes a share of the profits it earns from the sale of products that use their names, images, and likenesses (NILs). At one point, the NCAA was making millions from videogames that included players’ images and sharing none of the profits with the athletes.
To compensate the players, Judge Wilken ruled that the institutions that play FBS football and Division I basketball should award scholarships covering the full cost of attendance, and a five thousand dollar stipend for every year of competition completed. These stipends would remain in trust until the athletes graduated or left school. According to Sathya Gosselin, an attorney for the plaintiffs, “This landmark decision, rendered after a three-week bench trial…brings a significant measure of justice to student athletes.”2
It is not surprising that Judge Wilken supported paying college athletes a five thousand dollar stipend given her view of the NCAA’s arbitrary use of the term “amateur.” According to Wilkin, the historical record reveals that the “NCAA has revised its rules governing student-athlete compensation numerous times over the years, sometimes in significant and contradictory ways. Rather than evincing the association’s adherence to a set of core principles, this history documents how malleable the NCAA’s definition of amateurism has been since its founding.”3
The NCAA had its first business meeting in 1906. The new organization’s position on amateurism was clearly stated and perfectly consistent with the values of the British leisure class. Article VI of the bylaws banned the offering of financial inducements to players to enter universities and colleges because of their athletic skills. Need-based aid unrelated to sports was consistent with amateurism. Athletic scholarships, though, were a form of pay or financial compensation.4
As paying spectators crowded into college stadiums, the pressure increased on institutions and alumni to subsidize the best players. Trying to regulate behavior it could not control, the NCAA decided in 1956 to abandon the historical definition of amateurism in favor of a semi-professional model that allowed athletes to be paid in the form of room, board, tuition, and fees in return for their athletic services.
Walter Byers, the NCAA director at that time, later characterized these “scholarships” as “a nationwide money laundering scheme” that allowed under-the-table payments to be funneled though the school’s financial aid office.5 This is a powerful affirmation that athletic scholarships were a form of pay from the outset. They also served as a cap on how much athletes could earn from their athletic participation, thus leaving schools vulnerable to anti-trust lawsuits in the future.
In 1973, the NCAA replaced four-year scholarships with one-year-renewable scholarships. Under this counterfeit version of “amateurism,” a coach could cancel financial aid in the same way a boss can “fire” an employee. The perception that college athletes were much like employees spawned a number of workers’ compensation cases by athletes with catastrophic injuries.6 The NCAA revived “optional” multi-year scholarships in 2012 after a student sued the NCAA on antitrust grounds for limiting his opportunity to bargain for a multiyear scholarship7
The historical record leaves no doubt that the NCAA has radically altered its model of amateurism over time in order to recruit and subsidize athletes to participate in a multimillion dollar entertainment industry. The term amateur, one can argue, has been retained primarily to justify a salary cap that denies athletes a larger cut of the profits they help to generate. The Ninth Circuit recognized that the labor of college athletes “is an essential component of the NCAA’s product and a rule setting the price of labor goes to the heart of the NCAA’s business.8
In 2015, the Ninth Circuit reviewed Judge Wilken’s findings and concurred that the NCAA had violated antitrust laws and should award the athletes scholarships covering the full cost of attendance. However, it did not support her proposal for five thousand dollar yearly stipends. In the appellate court’s opinion, cash payments “untethered” to education would damage the NCAA’s amateur brand, thus lowering consumer demand. It would also give the impression of “pay for play.9
The Ninth Circuit’s O’Bannon decision has left unanswered questions that could dramatically affect future antitrust cases in college sports. Would the outcome have been different had O’Bannon’s attorney sought five-thousand-dollar stipends tethered to education? For instance, what if the stipend were used to attend law school or, for an athlete who leaves college early, to enroll in a vocational school? The possibilities are endless, and they invite speculation about whether stipends tethered to education would comport with antitrust law.
The answers to these questions may emerge from a case titled Martin Jenkins et al v NCAA. The parties argued their respective motions for summary judgment in January. During the hearing the players identified a list of seventeen benefits, presently prohibited by the NCAA, that they contend are tethered to education.
Examples include a guaranteed post-eligibility scholarship to complete a bachelor’s degree any time after eligibility expires; a guaranteed post-eligibility scholarship or grant for a graduate degree; subsidized vocational training; cash compensation to pay for study abroad during the summer or a semester abroad. Some of the items listed exceed the five-thousand-dollar-per-year stipends discussed in O’Bannon. The NCAA and its member institutions could be on the hook for much more than that if Jeffrey Kessler, the lead attorney for the Jenkins plaintiffs, can persuade the court that all seventeen listed benefits are indeed educational.
Allen L. Sack, Emeritus Professor at the University of New Haven, is a co-author with Ellen Staurowsky of College Athletes for Hire: The Evolution and Legacy of the NCAA’s Amateur Myth.
Brian Porto, Professor of Law at Vermont Law School , is the author of The Supreme Court and the NCAA: The Case for Less Commercialism and More Due Process in College Sports.
Notes
1. O”Bannon v. NCAA, 802 F.3d 1049, 1053 (9th Cir. 2015).
2. Gosselin, S. quoted in Berowitz, S. (2014). O’Bannon Plaintiffs Won’t Appeal Ruling in Case vs. NCAA, USA Today Sports. Retrieved from Https://www.usatoday.com/story/sports/college/2014/09/08/ed-obannon-plaintiffs-wont- appeal-ruling-ncaa/15276977/
3. O’Bannon v. NCAA, 7 F. Supp 955, 1000 (N.D. Cal. 2014.
4. Intercollegiate Athletic Association of the United States, NCAA Proceedings of the First Annual Convention, 29 December 1906, 9-17.
5. See Byers, Walter, “Unsportsmanlike Conduct: Exploiting College Athletes,” (Ann Arbor: The University of Michigan Press, 1995, p. 73.
6. Sack, Allen, “Counterfeit Amateurs: An Athlete’s Journey Through the Sixties to the Age of Academic Capitalism pp. 145-50.
7. Katie Thomas, N.C.A.A. Sued Over One-Year Scholarships, New York Times, 25 October 2010. Retrieved from http://www.nytimes.com/2010/10/26/sports/ncaafootball/26ncaa.html
8. O’Bannon v. NCAA, 802 F.3d 1049, 1066 (9th Cir. 2015).
9. O’Bannon, 802 F.3d at 1078.
