U.S. College Athletes Get School Costs Paid But No Cash

  • Appeals court says amateurism rule is too restrictive
  • Athletes should be compensated for attendance cost, court says

U.S. colleges don’t have to pay student athletes beyond covering the cost of their education, an appeals court ruled in a decision that maintains their amateur status while stripping some power from the National Collegiate Athletic Association.

The ruling endorses a practice that the NCAA implemented five years after athletes sued in 2009. Since Aug. 1, the NCAA has allowed member schools to give student athletes stipends -- typically $3,000 to $7,000 a year -- to meet the total cost of attendance.

The appeals court struck down a trial judge’s order that the colleges also pay student athletes no less than $5,000 a year for the use of their name, image and likeness, ruling that would open the door to moving them to professional status. Such payments would have cost athletic departments about $1 million each a year.

“This is a huge victory for the NCAA” and the top-tier athletic conferences, Stephen Ross, a law professor at Pennsylvania State University and director of its sports law institute. While the ruling reaffirms that the NCAA is subject to antitrust law, it leaves the power-conference schools paying athletes no more than they’ve already pledged for education costs, Ross said in a phone interview.

Lawyers for the athletes, as well as the NCAA, claimed partial victories Wednesday. Neither side ruled out further appeals, possibly all the way to the nation’s highest court.

Future Lawsuits

The ruling doesn’t fully protect college sports’ governing body from future lawsuits, including one set for a pivotal hearing Thursday before the same trial judge in Oakland, California, that aims to remove all limits to compensation. That case, brought by labor lawyer Jeff Kessler, who won free agency for National Football League players, is considered by most legal experts to be the the biggest threat to the NCAA’s current model. That case will now be harder for the athletes to win, some lawyers said.

The court said NCAA “rules have been more restrictive than necessary to maintain its tradition of amateurism in support of the college sports market.” The panel emphasized that its ruling is meant to be limited in scope.

"The difference between offering student-athletes education-related compensation and offering them cash sums untethered to educational expenses is not minor; it is a quantum leap,” U.S. Circuit Judge Jay Bybee wrote. “Once that line is crossed, we see no basis for returning to a rule of amateurism and no defined stopping point. … At that point the NCAA will have surrendered its amateurism principles entirely and transitioned from its ‘particular brand of football’ to minor league status.”

The 2009 lawsuit by ex-college basketball player Ed O’Bannon challenged the treatment of students as amateurs as college basketball and football evolved into multibillion-dollar businesses, with money flowing to the NCAA, broadcasters, member schools and coaches -- everyone but the players.

15-Day Trial

In August 2014, U.S. District Judge Claudia Wilken, who held a 15-day trial in Oakland, California, rejected the NCAA’s claims that its rules against pay for student athletes preserved competitive balance and amateurism in college sports. Wilken stopped short of allowing a completely open market on athlete licensing. She ruled the NCAA could limit payments to football and men’s basketball players as long as the cap was at least $5,000 a year.

With Wednesday’s ruling saying Wilken’s analysis was “largely correct” but that the $5,000 payment is the wrong remedy, O’Bannon and thousands of other ex-college athletes lost a right to a slice of the billions of dollars of revenue from NCAA’s use of their images in television broadcasts and video games.

“It didn’t go the way that I wanted it to,” O’Bannon said Wednesday in a phone interview. “I can’t control it. Rules probably won’t change right now, but they will change.”

The NCAA and its five richest leagues -- the Atlantic Coast, Big 12, Big Ten, Pac-12 and Southeastern conferences -- are guaranteed more than $31 billion in current broadcast contracts.

Lawyers zeroed in on different aspects of Wednesday’s ruling to predict how it will help or hurt the NCAA going forward.

‘Pyrrhic Victory’

“This is a complete Pyrrhic victory for NCAA,” said Glen A Rothstein, an entertainment and sports lawyer in Los Angeles. He said the appeals court appeared to have less of a problem with the notion of athletes being paid than with a $5,000 fixed amount for publicity rights. He predicted an appeal to the U.S. Supreme Court.

Gabe Feldman, director of the sports law program at Tulane University, said the ruling is a win overall for the NCAA because it upholds the organization’s “bedrock anti-trust argument” -- amateurism.

“This makes it clear that any payment for performance would violate amateurism and destroy the pro-competitive benefits that the court says the NCAA gets from that amateurism model,” Feldman said in a telephone interview.

NCAA President Mark Emmert said Wednesday that while it now lets colleges pay students’ expenses not covered by scholarships for tuition or other set costs,
“We disagree that it should be mandated by the courts.”

Further Appeals

Sathya Gosselin, a lawyer for the athletes, and Donald Remy, chief legal officers for the NCAA, said in separate statements it’s too soon to say whether they’ll pursue further appeals.

It is “very significant” that the appeals court agreed with Wilken that the NCAA engaged in price fixing and rejected the organization’s argument that “no compensation was valid as a matter of law,” Gosselin said.

If the issue ultimately makes its way to the U.S. Supreme Court, Marc Edelman, a sports law professor at Baruch College’s Zicklin School of Business, predicts a majority of the justices will find the NCAA’s system runs afoul of antitrust concerns.

“I believe this country will ultimately have a free market” in connection with college athletes’ rights to compensation for use of their images, he said.

O’Bannon said he doesn’t know how the issues his lawsuit raised will be resolved, but that he’s glad to see progress.

“I’ve always said, from day one, my whole mission was, and is, to get the ball rolling, to spark conversation,” he said.

The case is O’Bannon v. National Collegiate Athletic Association, 14-17068, U.S. Court of Appeals for the Ninth Circuit (San Francisco).

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