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Judge rules in favor of plaintiffs in O’Bannon antitrust case against NCAA


A federal judge has ruled in favor of the plaintiffs in the Ed O’Bannon class-action case, declaring that NCAA rules barring college football and men’s basketball players from being compensated for the use of the names, images and likenesses “unreasonably restrain trade” and are in violation of antitrust laws.

In a 99-page ruling released Friday, U.S. District Judge Claudia Wilken issued an injunction preventing the NCAA “from enforcing any rules or bylaws that would prohibit its member schools and conferences from offering their FBS football or Division I basketball recruits a limited share of the revenues generated from the use of their names, images, and likenesses in addition to a full grant-in-aid.”

The injunction also prohibits the NCAA from “enforcing any rules to prevent its member schools and conferences from offering to deposit a limited share of licensing revenue in trust for their FBS football and Division I basketball recruits, payable when they leave school or their eligibility expires.”

The injunction does not prevent the NCAA from capping the amount of money that can be paid to college athletes while they are enrolled in school, but any cap cannot be below the cost of attendance. It also allows the NCAA to set a cap on a trust fund at $5,000 for every year an athlete is academically eligible to compete.

The NCAA had argued that college student-athletes have no name, image and likeness rights for which to be compensated and that its restrictions are “necessary to uphold its educational mission and to protect the popularity of collegiate sports.”

Wilken, however, found that “(t)he procompetitive justifications that the
NCAA offers do not justify this restraint and could be achieved through less restrictive means.”

She was not persuaded by NCAA arguments that allowing players to be compensated would damage consumer demand and found that its restrictions on such compensation “do not promote competitive balance” and  “generally do not serve to enhance academic outcomes for student-athletes.”

What’s more, she described the NCAA’s definition of amateurism, another key defense, as “malleable.”

“The association’s current rules demonstrate that, even today, the NCAA does not consistently adhere to a single definition of amateurism,” she wrote.
“A Division I tennis recruit can preserve his amateur status even if he accepts ten thousand dollars in prize money the year before he enrolls in college. A Division I track and field recruit, however, would forfeit his athletic eligibility if he did the same. Similarly, an FBS football player may maintain his amateur status if he accepts a Pell grant that brings his total financial aid package above the cost of attendance. But the same football player would no longer be an amateur if he were to decline the Pell grant and, instead, receive an equivalent sum of money from his school for the use of his name, image, and likeness during live game telecasts. Such inconsistencies are not indicative of ‘core principles.'”

The case arose from the use of college football and men’s basketball players’ likenesses in video games, with no compensation to the athletes themselves.

Wilken found that markets exist for student-athlete name, image and likeness rights in live television broadcasts, video games, re-broadcasts and advertisements, opening the door for players to be paid for those rights through group licenses. But she did not find that the live TV broadcasts violate antitrust law because any harm to the plaintiffs in that market was not the result of “a restraint on competition.”

She agreed, however, with the plaintiffs’ contention that the NCAA “has the power — and exercises that power — to fix prices and restrain competition in the college education market.”

Wilken stopped short of allowing student-athletes to be compensated through third-party endorsements. “Allowing student-athletes to endorse commercial products would undermine the efforts of both the NCAA and its member schools to protect against the ‘commercial exploitation’ of student-athletes,” she wrote.

The injunction won’t take effect until the next football and basketball recruiting cycles, and Wilken said it will not be stayed pending appeal. The plaintiffs will be allowed to recover their costs from the NCAA.

The ruling was expected to be appealed no matter which side it favored.

“We note that the Court’s decision sets limits on compensation, but are reviewing the full decision and will provide further comment later,” NCAA chief legal officer Donald Remy said in a written statement to CBSSports.com. “As evidenced by yesterday’s Board of Directors action, the NCAA is committed to fully supporting student-athletes.”

The NCAA’s Division I Board of Directors on Thursday approved a new governance model that will allow its five high-profile conferences to potentially enact new rules allowing cost-of-attendance scholarships and extended medical and insurance benefits.

O’Bannon, a former UCLA basketball star, told CBSSports.com he’s happy with the outcome.

“I think the players will have a little more control over what goes on,” O’Bannon said. “To me, it boggles the mind that billions of dollars are made and the players — the people that are actually doing a lot of the work to make these billions of dollars — don’t see any of it.”

This article was republished with permission from the author, Mike Herndon. The original article was published in AL.com and can be viewed by clicking here.


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