NCAA, Top Conferences Called a Cartel in Player Pay Suit
The National Collegiate Athletic Association and five top conferences are a “cartel” that generates billions of dollars in revenue and illegally caps the pay of student athletes, a group of football and basketball players claim in a lawsuit that seeks to reshape college sports.
Four athletes filed an antitrust complaint today on the eve of the NCAA men’s basketball tournament seeking to bar the association and five “power conferences” from enforcing rules that ban colleges from competing financially for players and limit payments to tuition and related fees.
The antitrust suit, if successful, may lead to bidding wars for top high-school talent. It joins a separate case, scheduled for trial in June, in which athletes seek to overturn an NCAA rule barring college players from profiting from their names, images and likenesses. Recent lawsuits over head injuries and scholarship caps also attack the NCAA.
“This is yet another danger to the current model of current athletics,” said Gabe Feldman, director of the Sports Law program at Tulane University in New Orleans. “This becomes an instantly credible threat to the NCAA.”
The players, including Clemson University football player Martin Jenkins and Rutgers University basketball player Johnathan Moore, sued the NCAA and the Southeastern, Big Ten, Pac-12, Atlantic Coast and Big-12 conferences in federal court in Trenton, New Jersey. They seek unspecified money damages for themselves and to overturn NCAA rules that apply to top football and men’s basketball programs at Division I schools including the universities of Alabama, Texas and Oregon and Duke University. The colleges weren’t sued.
NCAA spokeswoman Stacey Osburn declined to immediately comment on the lawsuit.
The proposed class-action, or group lawsuit, will “affect everything from recruiting on up,” the players’ lawyer, Winston & Strawn LLP partner Jeffrey Kessler, said in an interview.
The complaint takes aim at NCAA and conference rules that permit payments to players for only tuition, room, board, books and fees. College athletes may not otherwise get paid or benefit financially under the rules.
“Those restrictions have no legitimate pro-competitive justification,” according to the 45-page complaint.
College athletes generate more than $16 billion in television contracts for the NCAA and its conferences, as well as revenue from sponsorships, ticket and merchandise sales and payouts for championships, the plaintiffs said in their filing. The 65 schools in the conferences reported $5.15 billion in related revenue in 2011-12, much of it from long-term television broadcast contracts, according to the complaint.
In 2010, the NCAA signed a 14-year, $11 billion agreement with CBS Corp. (CBS) and Turner Sports Inc. to show the Division I men’s college basketball tournament. In 2012 Walt Disney Co. (DIS)’s ESPN agreed to pay $5.64 billion over 12 years to broadcast a college football playoff that debuts this season. About 73 percent of the football playoff money will go to power conference teams, according to the complaint.
The NCAA and five conferences “earn billions of dollars in revenues each year through the hard work, sweat and sometimes broken bodies of top-tier college football and men’s basketball athletes,” according to the complaint.
The lawsuit is endorsed by the National College Players Association, which is seeking to become the collective bargaining voice of Northwestern University football players who last month asked the National Labor Relations Board to recognize them as school employees. It would be a step toward their becoming the first unionized U.S. college athletes.
“College athletes are more informed than they’ve ever been, more organized and more courageous,” Ramogi Huma, the NCPA’s executive director and a former University of California at Los Angeles football player, said in a telephone interview. “They’re showing courage to challenge this multibillion-dollar industry.”
The complaint comes at a tumultuous time for the NCAA.
The association is the lone defendant remaining in a case brought by former UCLA basketball player Ed O’Bannon and other athletes who seek to profit over the use of their likeness in video games.
Last year, Electronic Arts Inc. (EA), the second-largest U.S. video-game publisher, agreed to pay $40 million to resolve the case. Lawyers for the NCAA and the former athletes met for confidential settlement talks today in federal court in San Francisco. The attorneys declined to comment after the all-day meeting, citing a judge’s order.
Separately, the NCAA is expected as early as April to reach an agreement to boost safeguards for college athletes who suffer concussions. A deal would mark a broadening of concerns over sports head injuries after former professional players struck a $914 million concussions pact with the National Football League.
Earlier this month, the NCAA and five conferences were sued in San Francisco by Shawne Alston, a former West Virginia University player who claims they conspired to limit the value of scholarships to less than the actual cost of attendance.
Today’s case adds a new threat.
“Instead of permitting individual institutions to compete for the services of players who participate in their major college sports businesses, the NCAA and the power conferences act as a cartel in placing a cap on the athletes’ compensation,” Kessler said in a statement.
Kessler, who has represented the unions in the four major U.S. sports leagues, previously litigated a case that brought free agency to the NFL.
Because the U.S. service academies and schools in the Ivy League don’t offer athletic scholarships, they aren’t part of the lawsuit, according to the complaint.
The case is Jenkins v. National Collegiate Athletic Association, U.S. District Court for the District of New Jersey (Trenton).
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