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College Athletes Challenge NCAA Compensation Rules

Owen H. Laird, Esq.

The most publicized labor and employment disputes in America are those that take place between athletes and the entities that they play for. An unfathomable amount of ink has been spilled discussing Tom Brady’s four-game suspension from the NFL and the federal lawsuit that overturned it, NBA and NHL lockouts, and Major League Baseball’s steroid suspensions. While all these events are coated in the sheen of sport and celebrity, they are essentially labor and employment issues faced by workers everyday: workplace discipline, collective bargaining, and drug testing.

The most recent athletics-related employment issue to grab headlines was the 9th Circuit Court’s decision regarding compensation for college athletes. Currently, rules promulgated by the NCAA – the governing body overseeing the vast majority of intercollegiate athletics – prohibit athlete compensation outside of scholarships. That is, colleges and universities are only allowed to pay for their athletes’ tuition and accompanying academic expenses; they cannot provide wages or other financial benefits. NCAA athletics, particularly college football and college basketball, generate billions of dollars of revenue each year, which is divided between broadcasters, coaches – most notably the head football and basketball coaches who are often the highest paid public employees in their respective states, videogame companies, and academic institutions, to name a few, but not – apart from scholarships – to the athletes themselves. The NCAA argues that amateurism is fundamental to its product; if college athletes were paid, it would irrevocably harm the marketability of college sport. The NCAA rests its arguments on the ideal of the “student-athlete” who is a student first and an athlete second, and whose primary concern is receiving an education. This contention is belied by colleges’ and universities’ efforts to ensure that their athletes remain eligible to compete – for example, arranging for star athletes to receive passing grades with minimal to academic work – avoiding the academic hurdles faced by the rest of the student body.

In the case in question, Edward O’Bannon, Jr. v. NCAA, former collegiate athletes brought suit against the NCAA, alleging that the NCAA’s rules violated U.S. antitrust laws and arguing that players should be compensated for the gains made by the NCAA and individual academic institutions through the use of players’ images and likenesses.

In 2014, a District Court Judge for the Northern District of California ruled that the NCAA’s rules did violate U.S. antitrust law. The Court also held that the NCAA’s rules limiting athlete compensation to scholarship alone was improper, and set a $5,000 cap – in addition to full tuition costs – that universities and colleges could pay each athlete. This was a major victory for the athletes, allowing them to reap some financial benefit from their work.

On September 30, 2015, the 9th Circuit agreed that the NCAA’s rules violated antitrust law, but struck down the lower court’s additional $5,000 cap. The Circuit Court based its decision on the NCAA’s arguments regarding amateurism, finding that the plaintiffs had not shown that eliminating the amateur aspect of college sports would not detrimentally impact demand for the NCAA’s product.   The court reasoned that any compensation above academic costs and expenses would lead to the inevitable result of each athlete earning the full value of their contribution, which the court interpreted as the transformation of college sports to essentially a “minor league.” Leaving aside the inherent contradiction in treating athletes as “students” while treating schools as profit-maximizing entities, the court’s decision leaves unresolved the fundamental inequity at the heart of this issue. The athletes upon which the NCAA’s entire operation depend are unpaid, yet others make millions. More lawsuits against the NCAA are pending, and this issue is a long way from resolution.

Although the tribulations of star college athletes may seem to be different from problems facing the workforce in general, these cases can be seen as part of the larger popular movement for fair compensation, like the efforts to secure higher wages for fast food workers, fair pay for interns, and increase the minimum wage.

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