Life After NCAA Inc.: No Easy Fixes in Judge's Remedies

Photograph by Ronald Martinez/Getty Images

U.S. District Judge Claudia Wilken ruled last week that the National Collegiate Athletic Association has violated the Sherman Antitrust Act by banning student athletes from licensing their names and likenesses. In an earlier post, I distilled her factual findings, focusing especially on the NCAA’s failure to prove that the preservation of “amateurism” demanded that athlete compensation be limited to scholarships. Now let’s move on to Wilken’s remedies.

Fixing the situation, it turns out, is more difficult than pointing out the problems:

1. No damages. Before trial in June, the plaintiffs in this class action dropped their demand for money damages. Which isn’t to say this was an exercise in pure altruism. The successful plaintiffs’ lawyers, led by Michael Hausfeld of Washington, D.C., will ask Wilken to order the NCAA to award multimillion-dollar legal fees and hefty expense reimbursements. But the current and former players on whose behalf the suit was filed won’t see any dough.

2. $5,000 stipends. Wilken granted the plaintiffs’ request that in the future universities be allowed to provide football and basketball players with annual stipends derived from licensing deals with broadcasters, video game makers, and others who want to secure rights to use the players names or images. To allay concerns about excessive commercialization, the stipends could be limited to no more than $5,000 per player per year and could be held in trust until after recipients leave school, the judge said.

3. No endorsements. In a nod to the NCAA, however, Wilken denied the plaintiffs’ suggestion that players be allowed to receive money for endorsements. She wrote: “Although the trial record contains evidence—and [NCAA President Mark] Emmert himself acknowledged—that the NCAA has not always succeeded in protecting student-athletes from commercial exploitation, this failure does not justify expanding opportunities for commercial exploitation of student-athletes in the future.”

Sounds reasonable enough, but on reflection there are questions. Why $5,000? If it was unlawful for NCAA members to cap compensation at the amount of athletic scholarships, then why can they collude to cap annual licensing fees at an arbitrarily low figure? For that matter, why trust funds? If a poor football recruit wants to send his $5,000 home to mom—or make a down payment on a car—why can’t he get his money, um, now?

And what about athletes not on the football and men’s basketball teams? The suit filed before Wilken addressed only those two sports (in fact, it addressed only certain Division I athletes). What about everyone else?

I suppose schools could rationally distinguish between the teams that bring in substantial revenue—football and men’s basketball—and all the others that don’t. But that might leave some baseball players, not to mention field hockey mavens, feeling like second-class citizens.

Speaking of field hockey, a federal law called Title IX requires that women athletes be treated equally to male counterparts. That imperative could complicate Wilken’s order. On the other hand, the likelihood of the field hockey team generating licensing revenue doesn’t seem great. Maybe schools could set up a centralized licensing pool, with all varsity athletes eligible, but with payouts going only to members of those teams whose likenesses are actually in demand.

If nothing else, Wilken has paved the way for terrific exam questions over at the law school.

A final note: Wilken observed at the conclusion of her 99-page ruling that another branch of government—the U.S. Congress—has the authority to intervene in this controversy. Lawmakers could grant an antitrust exemption to the NCAA if they viewed its aspirations to amateurism more generously than the judge did. It’s reasonable to assume that as its attorneys prepare an appeal of the Wilken order, the NCAA’s lobbyists in Washington are readying white papers arguing for just such a statutory exemption.

    Before it's here, it's on the Bloomberg Terminal.