Aug. 11 (Bloomberg) -- The National Collegiate Athletic Association has an option that provides possible political protection from future rulings like last week’s licensing decision, which further opens the door for athletes to be paid and threatens to undo the foundation of the organization.
U.S. District Judge Claudia Wilken ruled Aug. 8 that the NCAA’s current structure creates a cartel that violates antitrust laws by limiting what schools can offer athletes. She said college sports’ governing body can no longer cap scholarships below the cost of attendance, and that players should be paid for the use of their names, images and likenesses.
While the NCAA said it will appeal the ruling, CBS Sports analyst and attorney Len Elmore said the Indianapolis-based organization should try a different route -- asking Congress for an antitrust exemption that, coupled with some reform, could help the NCAA better police its far-ranging domain and maintain the basic model of college sports.
“Congress may have a responsibility to invoke its power, provide the carrot of an antitrust exemption to let the sheriff come in and tame the Wild Wild West,” Elmore, 62, a former All-American basketball player at the University of Maryland, said in a telephone interview. “But you have to do it within these parameters, otherwise you lose the privilege.”
Those parameters include accepting the tenets behind Wilken’s 99-page decision, which struck down the NCAA’s claims that its current restrictions preserved competitive balance and amateurism in college sports. It stopped short of completely opening the market, saying the NCAA could limit payments to football and men’s basketball players as long as the cap was above $5,000 a year.
“This sets a baseline for some of the other lawsuits that are coming down, specifically the antitrust lawsuit being brought by Jeffrey Kessler, which is the real threat to the NCAA going forward,” said former Duke University basketball player Jay Bilas. Bilas is now an analyst on ESPN and an of counsel lawyer with Moore & Van Allen in Charlotte, North Carolina.
The lawsuit brought by Kessler, a labor lawyer who helped bring free agency to the NFL, seeks to remove all restrictions on athletes receiving their full market worth, not just in regard to name, image and likeness. It could result in free agency at the college level, which Elmore said would be “earth-shattering.”
In current broadcast contracts alone, the NCAA and its five richest leagues are guaranteed more than $31 billion total. The largest athletic programs pull in more than $100 million in annual revenue.
The NCAA announced yesterday that it would appeal Wilken’s decision, saying it hasn’t violated antitrust laws and that its restructured governance is a move toward satisfying some of Wilken’s mandates. NCAA spokeswoman Stacey Osburn said no one from the organization was available to comment yesterday.
Andrew Zimbalist, a sports economist at Smith College, said granting a blanket antitrust exemption to the NCAA would allow the organization to maintain its power and continue acting in a “self-interest, hypocritical way.” Like Elmore, he said that a conditional exemption, contingent on benefits for athletes, academic standards and spending restrictions, might provide a middle-ground resolution less chaotic than those offered by appeals and more lawsuits.
“I think it makes sense for Congress to have some hearings to see what kind of limited antitrust exemption that’s conditioned on a variety of factors, what kind of new policy, might make sense,” Zimbalist said in a telephone interview.
There is a precedent for a possible NCAA move toward an antitrust exemption, according to Marc Edelman, a law professor at Baruch College’s Zicklin School of Business. He said that with its Sports Agent Responsibility and Trust Act, Congress in 2004 “seemed to support, if not indoctrinate” certain aspects of the NCAA’s restraints into federal law.
“Because many of the largest college programs are state universities, it would not be entirely surprising if some members of Congress were willing to grant an exemption to protect the interests of the coaches and athletic directors within their states’ public universities,” Edelman said.
Elmore said an antitrust exemption -- and the prospect of losing it -- may also improve the NCAA’s enforcement, which has been criticized for its inability to stop violations. NCAA investigators have no subpoena power and can’t penalize false testimony with perjury charges.
The idea of an antitrust exemption has been proposed in the past by organizations such as the Drake Group as a way to keep an emphasis on education and curtail spending. University of Alabama football coach Nick Saban has a $6.5 million annual base salary, more than sixteen times that of U.S. President Barack Obama.
“Coaches’ salaries make no sense economically,” said Zimbalist, a member of the Drake Group’s advisory council. The organization is a group of college educators who advocate for academic integrity in college sports.
Gaining the exemption, similar to one the Major League Baseball has had since 1922, would require winning over lawmakers and possible concessions on the NCAA’s part. Last month the U.S. Senate Committee on Commerce, Science and Transportation held a hearing on the state of college sports, with topics ranging from sexual assault allegations against athletes to academic fraud and the growth of revenue.
“People keep saying that amateurism is a sham -- it is, but it isn’t,” Elmore said. “Certainly amateurism has to evolve over the years based on market forces and peoples’ perceptions, but nevertheless there’s still an important line to be maintained between professionalism and college sports.”
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